Franchise start-up 
Franchise start-up
- The term "franchise business" refers to a continuous business relationship in which a franchisor allows its franchisees to use its own trademarks, service marks, trade names, signs, or any other business marks in selling goods (including raw materials and auxiliary materials) or services in compliance with certain quality standards or business methods, and support, training, and control of its franchisees in regards to their management, business activities, etc., and in which franchisees pay franchise fees to their franchisor in return for the use of business marks and the support and training provided for their management, business activities, etc. (Article 2(1) of the Fair Transactions in Franchise Business Act).
※ How to settle disputes with the franchisor
Disputes can be settled through the Franchise Business Transaction Dispute Settlement Council of the Korea Fair Trade Mediation Agency (www.kofair.or.kr, ☎1588-1490). The Franchise Business Transaction Dispute Settlement Council has been established to settle disputes between franchisers and franchisees arising in connection with unfair transactions, and those with reasonable grounds such as the cancellation of unfair franchise agreements, the return of franchise fees, and the violation of sales areas are eligible to request for mediation.
You may also report a dispute to the Fair Trade Commission (www.ftc.go.kr). After each regional office receives the case, the investigator in charge will be assigned to conduct investigation on any violations of the Fair Transactions in Franchise Business Act and handle the case.
Independent start-up and support for persons who intend to start up a micro enterprise
Independent start-up
- The independent start-up is a concept that is in contrast with the start-up of a franchisee, and it refers to the type of start-up that the person who wishes to start up a nail salon is required to handle on his/her own the various start-up preparation processes such as market research, making decision on the interior concept, promotion, etc.
Support for persons who intend to start up a micro enterprise pursuant to the Act on the Protection of and Support for Micro Enterprises
- The Chairperson of the Small Enterprise and Market Service may conduct projects for any of the following matters, in order to support the start-up of micro enterprises (Article 8 of the Protection of and Support for Micro Enterprises and Article 12(3)-1 of the Enforcement Decree of the Act on the Protection of and Support for Micro Enterprises).
1. Discovery of persons desiring to start a micro enterprise, who have exceptional ideas, etc.
2. Consultation, advice, and education on the procedures, etc. for the start-up of micro enterprises
3. Provision of information necessary for start-up, such as information on financing, human power, marketing, and locations of business places, or
4. Other matters necessary for supporting the start-up of micro enterprises.
Comparison of franchise start-up and independent start-up
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Franchise start-up
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Merits
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▪ Carries lower risk of failure than an independent shop ▪ Management guidance and support are provided ▪ From the customers; point of view, they can rest assured that the same beauty service is provided to customers anywhere and have trust in the service ▪ Co-advertising is highly effective measure
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Demerits
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▪ Start-up expenses such as franchise fees are high ▪ Independent and autonomous management becomes subject to limitations ▪ Terms and conditions of a franchise agreement may be unfair ▪ It is not easy to terminate a contract once it is signed
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Independent start-up
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Merits
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▪ Independent management and promotion strategies are available, and no franchise fees or deposits are incurred ▪ As the business is operated by the founder himself/herself, it is easy to change its concept and trademark, thereby rapidly responding to changes in the market
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Demerits
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▪ Carries higher risk of failure than a franchise ▪ The business has to be operated independently (purchase of equipment and food, and promotional activities must be conducted by the founder himself/herself) ▪ Independent advertising creates smaller advertising effect compared to that of a franchise and it takes a long time for the business to gain consumer confidence
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