- Investigating Practices in Essential Item Trading, Compliance with Revised Laws, Mobile Gift Cards, and Major Issues -
The Fair Trade Commission (Chairman Han Ki-Jeong, hereafter 'KFTC') will conduct a reality survey in the franchise sector from July 1, 2024, targeting 21 industries, 200 franchise headquarters, and 12,000 franchisees.
< Survey Overview >
▪ Survey Period: July 1, 2024 - October 31, 2024
▪ Survey Methods: Online platforms such as Franchise Business Transaction Information Center, mobile, etc.
▪ Survey Targets: 200 franchise headquarters and 12,000 franchisees
▪ Survey Contents: Perception of improvement in unfair practices, satisfaction with policies, awareness of regulations,
status of essential items, operation status of franchisee associations, payment methods for goods, handling of mobile gift cards, etc.
The KFTC conducts annual reality surveys to understand the extent of improvement in trading practices and the operational status of laws and regulations in the franchise sector. This year's survey particularly focuses on the following points.
Firstly, the survey plans to assess the designation of essential items by franchise headquarters and the collection of franchise fees. Overly designated essential items and differential franchise fees have been identified as significant factors worsening the business conditions for franchisees. Therefore, the survey will closely monitor market practices related to essential items to identify and rectify unreasonable practices. Additionally, it aims to evaluate the effectiveness of improvements made to the essential items system initiated by the KFTC last year.
Secondly, it aims to assess awareness of recent legislative amendments and examine compliance with laws by franchise headquarters. Since the introduction of the pre-approval system for advertising and promotional events in July 2022, franchisees are required to obtain consent from a certain percentage of franchisees if such events incur costs.
Furthermore, starting July 3 of this year, franchise contracts must compulsorily specify the types of essential items and methods for calculating supply prices. Through this survey, the KFTC intends to gauge franchisees' awareness of these legislative amendments for future promotional purposes. It also plans to monitor whether franchise headquarters are adhering to the amended laws and whether instances of illegal actions exist.
Lastly, it aims to examine recent contentious issues in detail. Specifically, it will scrutinize the composition and operational status of franchisee associations, unfair practices related to mobile gift cards, the status of payment methods for goods including card payment refusals, etc. It will evaluate whether violations of laws occur and assess the need for system improvements.
The KFTC stated, "We expect this survey to encourage franchise headquarters to self-evaluate their trading practices to prevent unfair practices in advance and to establish reasonable policy directions by listening to various voices from the field."
The results of this survey, following market analysis, are scheduled to be announced in December this year.