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Posted : 2017-10-27 16:04
Updated : 2017-10-27 19:04

FTC shows mixed reaction to franchise reform plans

Fair Trade Commission Chairman Kim Sang-jo, left, shakes hands with Korea Franchise Association Chairman Park Gi-yeong, during a press conference for the announcement of franchise reform plans at K-Biz office in Seoul, Friday. / Yonhap

By Park Jae-hyuk


Fair Trade Commission (FTC) Chairman Kim Sang-jo mentioned both the pros and cons of plans to reform the franchise industry, which were announced by the Korea Franchise Association (KFA), Friday.

The head of the nation's antitrust watchdog attended a press conference on the announcement of the reform plans at K-Biz office in Seoul the same day.

Kim told reporters that he commends the KFA for deciding to suggest franchisers organize a council for franchisees, disclose more information on essential items for businesses and guarantee franchisees' rights to ask for the renewal of contracts.

However, the chairman urged the association to demand franchisers set specific standards for the sharing of costs for promotion and interior construction, and come up with specific measures to minimize lists of essential items.

He also said the association should take specific measures to establish a cooperative to compensate for damages of franchisees as soon as possible.

"It is impossible to come up with reform plans that can satisfy everyone. Such plans end in failure," Kim said. "As an interest group and self-regulatory organization, the KFA should set up its own rules that cannot be made into law."

The KFA launched a reform committee headed by professor Choi Young-hong of Korea University's Law School in August, when the nation's franchise industry was facing criticism over a series of unfair practices and scandals involving franchise owners.

The association at that time promised the FTC that it would draw up reform plans by the end of October.

KFA Chairman Park Gi-yeong said the association will follow the suggestions from committee members.

"Korea's franchise industry will restore consumer trust by eradicating unfair practices," he said at the press conference.

He vowed to cooperate with the government and impose regulations on members conducting unfair practices.

The reform plans, however, have been criticized for a lack of legal basis, because the KFA cannot compel franchisers to follow its reform plans.

"I think franchisers cannot reject market demand," Park said. "If franchisers refuse to follow the reform plans, they will lose customers."

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