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Biz News Korea(Eng)
Korea seeks to toughen penalties on misleading and false franchise recruitment, unfair practices
- Collected
- 2017.02.21
- Distributed
- 2017.02.24
- Source
- Go Direct
Korea seeks to toughen penalties on misleading and false franchise recruitment, unfair practices
The Fair Trade Commission (FTC) has proposed a revision to toughen punitive penalty for false and misleading presentations by franchisors by making them pay triple the damages to shop openers, said a FTC official Tuesday. Floor leaders of ruling and opposition parties recently agreed to pass the revised bill this month designed to heighten protections for mom-and-pop stores as they are mostly opened with all of their retirement savings.
For instance, a shop owner can claim up to 300 million won ($261,757) if he or she had opened a coffee chain store and incurred losses of 100 million won despite being promised of good business by a staff of the franchisor.
The revision came amid a growing case of conflicts between franchisor and franchisee due to false and misleading phrases in recruitment advertising. Such cases brought to a state arbitration panel total 100 a year. In 2014, 12 coffee franchises including Ediya Coffee were fined for deceptive presentation.
Another new provision will enable a franchisee to claim statutory damages of up to three times the actual damage if business loss has been made by supply cuts and other retaliatory acts by a franchisor for reporting on unfair practices to antitrust authority.
By Baek Sang-kyung, Na Hyun-joon
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