ENGLISH

Franchise (Franchise Agreement)
Corrective Measures
Corrective measures
- The Fair Trade Commission may order a franchiser that commits any of the following violations to deposit franchisee fees, provide information disclosure statements, pay expenses incurred in improving the store environment, return franchise fees, discontinue violations, report plans or actions necessary for correcting violations, or take other measures necessary for correcting violations (Article 33(1) of the 「Fair Transactions in Franchise Business Act」).
· Franchiser requests the payment of a franchise deposit in violation of provisions for the deposit of the franchise deposit or by fraudulent or otherwise improper means (Article 6-5(1) and (4) of the 「Fair Transactions in Franchise Business Act」).
· Franchiser fails to provide a prospective franchisee with a registered information disclosure statement (Article 7(3) of the 「Fair Transactions in Franchise Business Act」).
· Franchiser provides false or exaggerated information (Article 9(1) of the 「Fair Transactions in Franchise Business Act」).
· Franchiser fails to return franchise fees within one month of the date on which a franchisee or prospective franchisee makes a written request for the return of franchise fees on the statutory grounds (Article 10(1) of the 「Fair Transactions in Franchise Business Act」).
· Franchiser omits a matter to be included in a franchise agreement (Article 11(1) and (2) of the 「Fair Transactions in Franchise Business Act」).
· Franchiser engages in unfair trade practices (Article 12(1) of the 「Fair Transactions in Franchise Business Act」).
· Franchiser unfairly forces franchisee to improve the store environment (Article 12-2(1) and (2) of the 「Fair Transactions in Franchise Business Act」).
· Franchiser unfairly restricts business hours (Article 12-3(1) and (2) of the 「Fair Transactions in Franchise Business Act」).
· Franchiser unfairly breaches sales area (Article 12-4 of the 「Fair Transactions in Franchise Business Act」).
· Franchiser takes a retaliatory action against a franchisee (Article 12-5 of the 「Fair Transactions in Franchise Business Act」).
· Despite franchiser holding advertising andpromotional events for which the expenses are borne fully or partially byfranchisee, it fails to notify the franchisee of the executiondetails or allow the franchisee to peruse the details if so requested (Article 12-6(2) of the Fair Transactions inFranchise Business Act).
· Franchiser penalizes franchisees on the pretext of the formation, membership, activities, etc, of a franchisees association, or enters into a franchise agreement on the condition that a franchisee must or must not join a franchisees association (Article 14-2(5) of the 「Fair Transactions in Franchise Business Act」).
· Despite franchiser failing to enter into an indemnity insurance contract or the like for franchisees, it uses the mark to fraudulently indicate that the franchiser entered into an insurance agreement or the like (Article 15-2(3) and (6) of the 「Fair Transactions in Franchise Business Act」).
Public announcement and notification of corrective order
- The Fair Trade Commission may order a franchiser to make a public announcement that it has received such an order for correction or to give notice thereof to the trading partners (Article 33(3) of the 「Fair Transactions in Franchise Business Act」).
Sanctions against a failure to respond to corrective measures
- If a franchiser fails to comply with an order to take corrective measures, it shall be punished through imprisonment with labor for no more than three years or by the imposition of a fine not exceeding 100 million won (Subparagraph 2 of Article 41(2) of the 「Fair Transactions in Franchise Business Act」).
· When a representative of a corporation, or an agent, employee or other worker of a corporation or private individual fails to comply with an order of corrective measures in connection with a business of the corporation or private individual, not only shall the offender be punished, but also the corporation or private individual shall be punished through the imposition of a fine not exceeding 100 million won; provided, however, that the same shall not apply to cases where the corporation or private individual paid considerable attention or diligently supervised the business concerned to prevent such offensive acts (Article 42 of the 「Fair Transactions in Franchise Business Act」).