Registration of Information Disclosure Statement
New registration- A franchiser shall register an information disclosure statement to be provided to prospective franchisees by submitting the following required documents to the Fair Trade Commission or to the competent Special Metropolitan City Mayor, Metropolitan City Mayor, Province Governor or Special Self-Governing Province Governor (hereinafter referred to as "City Mayor/Province Governor") (Article 6-2(1) of the 「Fair Transactions in Franchise Business Act」, Article 5-2(1) and Attached Form No. 1 of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」).
· Application for new registration of an information disclosure statement
· Information disclosure statement (including those in the form of a document or electronic file that uses an information communication network)
· The balance sheet and profit and loss statement for the previous three years (where a franchiser fails to prepare the balance sheet, other documents with which the sales for the previous three years can be ascertained)
· A list of direct retail stores and franchise stores that have been operated as of the end of the previous business year (including representative, location, the date on which a franchise agreement was concluded and telephone number)
· A copy of the franchise agreement form
· A document confirming the number of executive officers and employees working as of the end of the previous business year
· Other documents that the Fair Trade Commission requires in relation to the contents of an information disclosure statement
- On receiving an application for registration of an information disclosure statement, the Fair Trade Commission shall verify the following documents through the joint use of administrative information (Article 5-2(2) of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」).
1) Certificate of corporate registration details (limited to where a franchiser is a corporation)
2) Where a corporation applies for registration before the relevant corporation registers the incorporation, a certified copy of the resident registration card of a promoter intending to establish a corporation
3) Certificate of business registration (the Fair Trade Commission may verify such certificate or an applicant may submit such certificate within 30 days after the date on which the Fair Trade Commission issues a certificate of registration of the information disclosure statement)
※ Provided, however, that where an applicant does not agree to verify 2) and 3) above through the joint use of administrative information, the applicant shall submit the document (a copy of 3) above).
- Once an application for registration of an information disclosure statement has been filed, the Fair Trade Commission shall issue a certificate of registration of the information disclosure statement to a franchiser within 30 days after the date of application for registration (two months if a franchiser whose registration was revoked applies for the registration again) (the former part of Article 5-2(3) of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」).
Registration of modification- Where a franchiser intends to modify matters included in an information disclosure statement that has been registered, it shall register a modification of such included matters with the Fair Trade Commission or with the competent City Mayor/Province Governor by forwarding the required documents with an application for registration of a modification within a prescribed period (Article 6-2(2) of the 「Fair Transactions in Franchise Business Act」, Article 5-3(3), Attached Table 1-2 and Attached Form No. 4 of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」).
· Required documents
1) A modified information disclosure statement
2) A document confirming the modified content
3) A certificate of registration (only applicable where a matter included in the certificate of registration is modified)
- Handling of application
· When an application is made for registration of a modification, the Fair Trade Commission shall re-issue a certificate of registration to a franchiser within 20 days from the date of application (Article 5-3(2) and 5-2(3) of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」).
Reporting of modification- Where a franchiser intends to modify insignificant matters among the registered matters it may make a report of modification in the form of an information disclosure statement by attaching the required documents by the deadline stated below (Proviso to Article 6-2(2) of the 「Fair Transactions in Franchise Business Act」, Article 5-3(5), Attached Table 1-2 and Attached Form No. 4 of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」).
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Classification |
Matters specified in information disclosure statement |
Deadline for modification |
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Matters to report modification |
▪ Subparagraph 2 of the Attached Table 1 of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」: Item (b) (only where the matter is related to a person who is specially related to a franchiser), Item (g) (only where the matter is related to an executive officer other than a representative) ▪ Subparagraph 3 of the Attached Table 1 of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」: Items (a), (h) and (j) ▪ Subparagraph 7 of the Attached Table 1 of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」: All items |
Within 30 days of the end of quarter in which a cause for modification occurs
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- Handling of application
· Reporting of a modification shall be handled in the following order: receipt; review; drafting and approval (reporting and repair); and specification of modified matters in certificate registration. A certificate of registration will not be reissued for a reporting of modification.
- Sanctions in the event of violation
· Where a franchiser fails to make a report on the modification of an insignificant matter in an information disclosure statement or makes a false report, it shall be punished through the imposition of an administrative fine not exceeding three million won (Subparagraph 1 of Article 43(7) of the 「Fair Transactions in Franchise Business Act」).
Refusal of registration or request for modification- In any of the following circumstances, the Fair Trade Commission may refuse the registration of the information disclosure statement or request the modification thereof (Article 6-3(1) of the Fair Transactions in Franchise Business Act and Article 5-5 of the Enforcement Decree of the Fair Transactions in Franchise Business Act).
· An information disclosure statement or any other application document contains any false representation or omits any necessary information.
· The details of the franchise business in an information disclosure statement include matters prohibited by other Acts.
· When newly registering the franchise disclosure document, the franchiser should have no directly managed store that sells goods and services with the same trademark and quality standards of the franchise business indicated presently on the franchise disclosure document, or the period of operation should be below one year (where the executive of a franchiser operated the directly managed store before the franchiser managed it, the period of operation of the directly managed store shall include the period of operation by the incumbent executive of the franchiser at the time of the franchiser’s application for the franchise disclosure document). However, suppose the operation of the directly managed store is deemed unnecessary for the following reasons, such as the franchiser being required to acquire permission or a license under related Acts and subordinate statutes to run the franchise business. In that case, the regulation above shall not be applied.
1. Where the franchiser acquired permission or license or reported or registered according to related Acts and subordinate statutes to run the franchise business
2. Where the franchiser has run a business with the same industry type as the one to register the franchise disclosure document at home or abroad
3. Other matters equivalent to paragraphs 1 and 2 above, resulting in the Fair Trade Committee determining and announcing that the franchiser’s operation of directly managed stores is unnecessary.
Revocation of registration- In any of the following circumstances, the Fair Trade Commission may revoke the registration of the information disclosure statement. In particular, in the case described in 1) below, the Fair Trade Commission shall revoke its registration (Article 6-4 of the Fair Transactions in Franchise Business Act and Article 5-6(2) of the Enforcement Decree of the Fair Transactions in Franchise Business Act).
1) An information disclosure statement has been registered by fraudulent or otherwise improper means.
2) The details of the franchise business in an information disclosure statement include matters prohibited by other Acts.
A. A cover page of an information disclosure statement (Subparagraph 1 of the Attached Table 1 of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」)
B. The general status of a franchiser (Items (a) and (b) (only where it is related to a franchiser), (c) through (f), (g) (only where it is related to a representative), and (h) through (j) of Subparagraph 2 of the Attached Table 1 of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」)
C. The current status of the franchise business of a franchiser (Items (b) through (j) of Subparagraph 3 of the Attached Table 1 of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」)
D. Violations of the law, etc. by franchiser and executive officers thereof (Subparagraph 4 of the Attached Table 1 of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」)
E. Charges of franchisee (Subparagraph 5 of the Attached Table 1 of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」)
F. Conditions of and limitations on business activities (Subparagraph 6 of the Attached Table 1 of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」)
G. Support for management, business activity, etc. of a franchiser (Subparagraph 8 of the Attached Table 1 of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」)
H. Explanation on education and training (Subparagraph 9 of the Attached Table 1 of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」)
3) An important matter that falls under any of the following categories is omitted from the description in an information disclosure statement
4) A franchiser reports the cessation of business
5) A franchiser requests to revoke the registration of an information disclosure statement