- Establishing detailed rules for implementing the revised Act introducing the registration system for franchisee associations and mandatory consultations with registered associations -
August 3, 2026
The Korea Fair Trade Commission (KFTC, Chairperson Biung-Ghi Ju) announced that it will issue a legislative notice on the proposed amendments to the Enforcement Decree of the Fair Transactions in Franchise Business Act from August 3 to September 14, 2026, and an administrative notice on the proposed enactment of the Notification on the Registration of Franchisee Associations and Procedures for Consultation on Changes to Transaction Terms from August 3 to August 24, 2026.
The proposed amendments to the Enforcement Decree and the proposed new notification announced today set out the details necessary to implement the registration system for franchisee associations and the mandatory consultation system with registered franchisee associations introduced under the revised Fair Transactions in Franchise Business Act. The revision of the Act is a key legislative initiative being pursued in connection with comprehensive measures to strengthen the rights and interests of franchisees and the government's policy agenda aimed at addressing the imbalance in bargaining power between franchisors and franchisees and improving the business conditions of franchisees.
Under the revised Act, a procedure will be established allowing franchisee associations that meet certain requirements to register with the KFTC, thereby granting such associations official representative status. Franchisors will also be required to consult with registered franchisee associations. These measures are intended to address the difficulty in reaching smooth agreements between franchisors and franchisees, which has arisen because the appropriate representativeness of franchisee associations has often been questioned even when franchisees formed such associations.
Through meetings and discussions with the KFTC, franchisees have emphasized the need to provide meaningful opportunities for consultation by easing the registration requirements, while franchisors have expressed concerns about the overall burden on the franchise industry. The proposed amendments and new notification were prepared by coordinating and reflecting the views of both stakeholder groups and provide specific rules concerning the registration requirements, registration and amendment procedures, and standards and procedures for consultations.
1. Registration System for Franchisee Associations
-Minimum Membership Ratio and Number of Franchisees Required for Registration
A franchisee association may register with the KFTC if at least 10% or 1,000 or more of the franchisees using the same business name or trademark are members of the association.
This requirement takes into account the current membership rates and operating conditions of associations formed within various franchise brands and is intended to contribute to strengthening the bargaining power of franchisees. However, given that the minimum membership ratio has been set at 10%, a minimum number of members will also be required to reduce the burden on small franchisors. In addition, an opinion-gathering procedure will be established to supplement the representativeness of franchisee associations.
-Registration and Amendment Registration Procedures
When registering, a franchisee association must submit an application for registration to the KFTC. If any registered information changes, the association must submit an application for amendment registration within the prescribed period for each relevant item.
The proposed rules also specify the authority of the registration authority to request relevant materials and the deadline for issuing registration certificates.
-Grounds for Cancellation of Registration
The proposed rules provide examples of the statutory ground for cancellation of registration where an association has been registered "through falsehood or other fraudulent means," thereby improving stakeholders' understanding of the provision.
Specifically, registration may be cancelled where an association was registered by using a franchisee's identity without authorization or by submitting forged or altered documents. Registration may also be cancelled where the right of franchisees to freely form an association has been infringed, such as when a franchisor unfairly forces or induces franchisees to join an association.
2. Mandatory Consultation System with Registered Franchisee Associations
-Basic Consultation Procedures
The proposed rules specify how a registered franchisee association may request consultations with a franchisor and require franchisors to prepare minutes of consultation meetings and notify the association of the consultation results.
Participants in the consultation process will generally be employees or officers of the franchisor and members of the registered association as of the time of participation, including persons who are legally authorized to represent the parties.
In addition, a franchisor that has received a request for consultation may request other registered franchisee associations to participate in the consultation process, thereby promoting consistency within the franchise business.
-Opinion-Gathering Procedure
Where the membership rate of the registered franchisee association requesting consultation is less than 30%, an opinion-gathering procedure for non-member franchisees will be established to supplement the association's representativeness of the entire franchisee community.
When collecting opinions, the registered association must provide notice of the subject of consultation, the association's position on the subject, and the method for submitting opinions. The association may also request the franchisor's cooperation during the opinion-gathering process.
-Effects of the Conclusion of the Consultation Process
To prevent repetitive and unproductive consultations, a registered franchisee association that has completed a consultation process will not be permitted to request another consultation with the franchisor on the same subject for 180 days.
Furthermore, the association will not be permitted to request consultations on separate subjects for 60 days. This is intended to encourage multiple agenda items to be presented together in a single consultation process, thereby facilitating comprehensive and multifaceted consideration of franchise transaction terms and improving the efficiency of the consultation process.
The proposed amendments are expected to provide franchisees with a means to negotiate reasonably with franchisors on their own initiative, thereby helping prevent unfair trade practices in the franchise business sector and improve transaction terms.
At the same time, by clearly establishing rules governing the registration requirements and consultation procedures for franchisee associations, the proposed measures are also expected to address, to a significant extent, franchisors' concerns about the proliferation of franchisee associations and indiscriminate requests for consultations.
The KFTC has continuously held meetings and discussions with stakeholders and gathered their views throughout the first half of this year in preparing the proposed amendments and new notification.
The KFTC will carefully review opinions submitted during the legislative and administrative notice periods and will take follow-up measures to ensure the smooth implementation of the revised Fair Transactions in Franchise Business Act. It plans to complete the amendment of the Enforcement Decree and enactment of the notification within this year.