July 28, 2026
The Korea Fair Trade Commission (KFTC, Chairperson Biung-Ghi Ju) announced that the amendment to the Enforcement Decree of the Fair Transactions in Franchise Business Act passed today's Cabinet meeting. The amended enforcement decree will take effect on January 1, 2028, together with the amended Notification on the Standard Format of Franchise Disclosure Documents, which is to be promulgated on August 4, 2026. However, provisions of the enforcement decree amendment unrelated to the restructuring of the disclosure document system and its contents will take effect immediately upon promulgation on August 4, 2026.
This round of amendments to the enforcement decree and the notification was carried out in connection with the government's policy agenda and the Comprehensive Measures to Strengthen the Rights and Interests of Franchisees (September 23, 2025). The aim is to supplement shortcomings in the operation of the disclosure document system and improve the provision of information on penalty fees upon early termination, thereby guaranteeing the right to information of prospective and existing franchisees. The main revisions are as follows.
First, the items to be recorded in disclosure documents were reorganized, and the update cycle for key items was shortened from once a year to once a quarter, so that prospective franchisees receive the latest necessary information in a timely manner.
Items important to the decision-making of prospective founders were added, while items in the existing disclosure document that were duplicative or unrelated to founding decisions were deleted. In addition, the update cycle for items that are easy to compile and important for brand selection was shortened to once a quarter, with the aim of narrowing the information gap between franchisors and franchisees.
To reflect the changes to the enforcement decree, the Notification on the Standard Format of Franchise Disclosure Documents was also substantially revised. First, the table of contents structure of the disclosure document was reorganized in the order of the franchise's life cycle to improve readability. In addition, a new summary section was added that concisely presents core information affecting founding decisions, such as the number of franchise outlets by region and average annual sales.
Second, the forms and procedures related to new registration and modification registration of disclosure documents were reorganized.
To verify whether franchisors comply with the mandatory direct-operation store system, franchisors are now required to submit documents proving the operation of directly managed stores when newly registering a disclosure document.
Third, a legal basis was established allowing disclosure document registration authorities to use electronic documents when notifying matters such as registration refusal, scheduled disclosure, or registration cancellation.
This provision establishes in the enforcement decree the legality of notification via electronic documents, in order to resolve the problem of review delays caused by waiting for registered mail to be delivered.
Fourth, a legal basis was established for the procedures and management of voluntary cancellation of disclosure document registration, whereby a franchisor directly applies for cancellation of registration due to reasons such as business closure, and a related appended form was newly created.
The procedures for voluntary cancellation of registration, including online processing procedures, were specified in the enforcement decree in order to resolve the inconvenience faced by applicants due to the lack of a legal basis. In addition, to ensure the smooth implementation of the amended enforcement decree, a follow-up reorganization of the Franchise Business Information Provision System is also planned.
In addition, the amendment raises the upper limit for aggravating administrative fines (penalty surcharges) imposed on franchisors who repeatedly violate the law. In connection with this, an amendment to the Notification on Criteria for Imposing Administrative Fines on Violators of the Franchise Business Act is also scheduled to be promulgated on August 4, 2026. The amendment includes raising the KFTC's discretionary range for adjusting administrative fines from a maximum adjustment of 50% to 100%.
The amendment to the enforcement decree that passed today's Cabinet meeting will take effect on January 1, 2028, following presidential approval.