ENGLISH
Franchise (Franchise Agreement)
Dispute Mediation Procedures
Dispute mediation procedures- Where a dispute occurs in relation to a franchise business transaction, the franchisee and franchiser may apply for dispute mediation to the franchise business transaction dispute mediation council (hereinafter referred to as the "council"). The Council shall handle the dispute through the following procedure.
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Application for dispute mediation (submission of dispute mediation application) |
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Meeting of the Council |
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Preparation of mediation protocols |
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Reporting of the Council's mediation results |
Application for Dispute Mediation Application for dispute mediation by disputing parties- Franchise business parties, such as franchisee, franchiser, etc. (hereinafter referred to as the "Disputing Parties") may attach documents that specify the following matters and apply to the Council for dispute mediation to resolve disputes in relation to franchise business transactions (Article 22(1) of the 「Fair Transactions in Franchise Business Act」 and Article 19(1) and (2) of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」).
· The names and addresses of applicant and respondent (where a disputing party is a corporation, the name of the corporation, the seat of the main office, the name and address of the representative thereof)
· Where an agent is appointed, the name and address of the agent
· Reasons for application
· Where an application has already been made for dispute mediation on the same matter to another Council, the related facts
· Where a disputing party receives a notice of application for dispute mediation on the same matter, the related facts
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Documents to be attached to an application for dispute mediation |
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① Document that proves the reasons and facts of the application for dispute mediation ② A power of attorney, if an agent makes an application ③ Other evidentiary documents or materials necessary for dispute mediation |
- Duplicate application for dispute mediation
· Where respective disputing parties file applications for mediation with separate Councils or where a disputing party files duplicate applications for mediation with multiple Councils, a Council selected by the relevant franchisee from the following Councils shall be in charge of such mediation (Article 22(2) of the 「Fair Transactions in Franchise Business Act」).
1. The Council of KOFAIR
2. The Council of the City/Province where the main place of business of the franchisee is located
3. The Council of the City/Province where the main place of business of the franchiser is located
- Effect of interruption of extinctive prescription
· An application for mediation of a dispute shall have the effect of interrupting the period of time leading to extinctive prescription (Main body of Article 22(5) of the 「Fair Transactions in Franchise Business Act」).
· In any of the following circumstances, the period of time leading to extinctive prescription so interrupted shall be resumed (Article 22(7) of the 「Fair Transactions in Franchise Business Act」).
1. A mediation protocol is prepared after the mediation of the dispute is concluded
2. The mediation ends with a failure to mediate the dispute
· However, the foregoing shall not apply when the application for mediation is withdrawn or rejected (Proviso to Article 22(5) of the 「Fair Transactions in Franchise Business Act」).
※ Where any judicial claim, participation in bankruptcy procedures, seizure or provisional seizure, or provisional disposition occurs within six months, the period of time leading to extinctive prescription shall be deemed interrupted by the initial application for mediation of a dispute (Article 22(6) of the 「Fair Transactions in Franchise Business Act」).
- Request for mediation by the Fair Trade Commission
· The Fair Trade Commission may request the Council to mediate disputes arising from franchise business transactions (Article 22(3) of the 「Fair Transactions in Franchise Business Act」).
Supplementation of application- Supplementation of application
· If it is deemed necessary to supplement an application for mediation of a dispute, the chairperson of the Council shall request an applicant to make such supplementation within a reasonable fixed period (Article 21(1) of the Enforcement Decree of the 「Fair Transactions in Franchise Business Act」).
- Notification to parties
· Upon receipt of an application for mediation of adispute, the Council shall immediately notifydisputing parties of the matters brought for mediation; the Council of the City/Do shall inform the Fair TradeCommission and the City/Do thereof (Article 22(4) of the FairTransactions in Franchise Business Act).
- Notification of institution of lawsuit, etc.
· When a disputing party institutes a lawsuit regarding the relevant issue after applying for mediation of the dispute or consents to arbitration, he/she shall notify the Council of such fact without delay (Article 27 of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」).
Matters to be noted when applying for mediation of a dispute- Selection of representatives
· When several people jointly apply for mediation of a dispute, they may select three or fewer representatives from the applicants. Where applicants change representatives, they shall notify the chairperson of the Council of such change (Article 20(1) and (3) of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」).
· Where applicants fail to select representatives, the chairperson of the Council may recommend them to select representatives (Article 20(2) of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」).
- Succession to position of disputing parties
· Where a disputing party cannot continue the proceedings for mediation due to his/her death or loss of capacity or for other reasons before the proceedings for mediation is terminated, the Council may have a person who has succeeded to his/her position pursuant to a statute succeed to the position of the party to mediation (Article 26 of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」).
Refusal or Discontinuance of Mediation Mediation of dispute- Upon receipt of an application for mediation or a request for mediation, the Council shall initiate a dispute mediation procedure without delay. (Article 23(1) of the 「Fair Transactions in Franchise Business Act」).
- Even if a disputing party applies for the mediation of a dispute, the Council must reject the mediation application in the following cases. In this regard, the Council must verify with the Fair Trade Commission whether the act or event for which dispute mediation was requested corresponds to subparagraph 3 below (Article 23(3) of the Fair Transactions in Franchise Business Act):
1. The mediation applicant has no direct interest in the content of the application.
2. The mediation application concerns an issue that is not subject to the Fair Transactions in Franchise Business Act.
3. The mediation application pertains to a case for which the Fair Trade Commission had initiated an investigation under Article 32-3(2) of the Fair Transactions in Franchise Business Act before the mediation request was made. However, this is not applicable if a dispute mediation application is made after receiving corrective measures or similar dispositions from the Fair Trade Commission.
Meetings of the Council Application for challenge- If any member of the Council is judged as not being in a position to conduct the mediation fairly, a disputing party may file an application with the Council to challenge the role of such member (Article 20(2) of the 「Fair Transactions in Franchise Business Act」).
Statement, etc. of opinion- A disputing party may attend a meeting of the Council to state his/her opinion or submit relevant documents (Article 19(7) of the 「Fair Transactions in Franchise Business Act」).
Closed meetings- In principle, the content of all Council meetings shall remain confidential. However, when the chairperson of the Council deems it necessary, he/she may have the disputing parties and other stakeholders attend the meeting (Article 18(2) of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」).
Appearance of disputing party- The Council may request the disputing parties to submit the relevant documents or appear before it (Article 23(6) of the 「Fair Transactions in Franchise Business Act」).
- Where a disputing party is unavoidably unable to appear at a meeting of the Council, he/she may submit his/her written opinion in advance (Article 24(2) of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」).
Termination of Mediation Mediation termination- In any of the following circumstances, the Council shall terminate the mediation procedure (Article 23(4) of the 「Fair Transactions in Franchise Business Act」).
· If the mediation is successfully concluded because the disputing parties accept the Council's recommendation or mediation proposals, or mediate on their own, etc.
· If the mediation is not concluded within 60 days (90 days if both of the disputing parties agree to extend the period) after the date on which an application or request for mediation is filed.
· If the mediation is suspended by the Council and the continuance of the mediation procedure has no practical benefit.
Recommendation for correction and corrective measures- The Fair Trade Commission shall not recommend or order corrective measures to the corresponding disputing parties until the mediation process is concluded regarding dispute resolution matters for which no actions, such as corrective measures, were taken before the start of the mediation procedure (Article 23(7) and Article 32-3(2) of the Fair Transactions in Franchise Business Act).
Preparation of Mediation Protocols Preparation and reporting of mediation- When the mediation is successfully concluded for matters dealt with in the mediation, the Council shall prepare a mediation protocol to which the Council members who have participated in the mediation and the disputing parties shall affix their names and seals or write down their names (Article 24(1) of the 「Fair Transactions in Franchise Business Act」). The Council shall send a report of the result of the mediation to the Fair Trade Commission, accompanied by a copy of the mediation protocol (Article 25 of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」).
- However, where the disputing parties reconcile with one another and request the preparation of a mediation protocol before the commencement of the mediation procedure, the Council shall prepare the mediation protocol (Article 24(2) of the 「Fair Transactions in Franchise Business Act」).
Implementation of Agreed Matters and Submission of Implementation Results- The disputing parties must implement the matters agreed upon in the mediation and submit the results of the implementation to the Fair Trade Commission (Article 24(3) of the Fair Transactions in Franchise Business Act).
- Where an agreement is reached for dispute resolution matters for which no actions, such as corrective measures, were taken before the start of the mediation procedure and the agreed-upon matters are implemented, the Fair Trade Commission shall not take corrective actions or make corrective recommendations (Article 24(4) of the Fair Transactions in Franchise Business Act).
Effect of mediation protocols- Where the mediation protocol has been prepared, the protocol shall have the same effect as a judicial reconciliation (Article 24(3) of the 「Fair Transactions in Franchise Business Act」).
Notification, etc. of Mediation Results Notification of mediation results- Where the Council rejectsan application for mediation or terminates the procedure thereof, the Councilof KOFAIR shall report in writing on the details of mediation, the grounds forrejecting the application for mediation or for terminating the procedurethereof, etc. to the Fair Trade Commission and the City/Do Council to the FairTrade Commission and the relevant City/Do along with the related documents, andthey shall notify the disputing parties of such fact (Article 23(5) ofthe Fair Transactions in Franchise Business Act).
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Useful statutory information - 2 |
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Q. What should the status be, once mediation is completed?
A. Once mediation is completed, the work shall, in principle, be performed even during the mediation period. However, the same shall not apply where both parties agree on the performance period. If a matter on which both parties agree is not performed, an agreement or a mediation protocol may not be an executive title that can be executed in a court. Thus, an applicant shall go through separate judicial procedures to obtain the executive title.
<Source: The Korea Fair Trade Mediation Agency (http://www.kofair.or.kr/goMain.do) - FAQ> |
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