In the future, if sales are sluggish in the first year of opening a convenience store, laundry service, or car maintenance franchise, the store owner can terminate the contract with the headquarters without penalty. In order to request environmental improvement (renewal) of the interior, etc. from the store owner, the head office must directly prove that the facility is actually worn out.
FTC, standard affiliate contract enactment and revision
When renewing affiliated stores, the headquarters proves the necessity
Convenience stores lined up in downtown Seoul. yunhap news
On the 23rd, the Fair Trade Commission prepared and announced a new standard affiliate agreement for the convenience store, laundry, and automobile maintenance industries. In order to relieve the burden of violating the law on companies operating through affiliated stores, the FTC has created a standard contract, which is adopted and used by most affiliates.
According to the new standard franchise agreement, the contract can be terminated without penalty when the average monthly sales of convenience stores, laundry, and car center franchisees for the first year do not reach the lower limit of expected sales provided by the head office. An official from the FTC explained, “It is because there were cases of store owners who were unable to cancel the contract due to the penalty burden even though the loss was accumulated due to sluggish sales at the beginning of the franchise contract.”
When the franchise headquarters requested the store owner for renewal, such as store interiors, the necessity of renewal due to aging facilities was self-evident. In addition, if the franchise headquarters changes the brand name, etc., the store owner will be given the authority to choose to terminate the contract. Because of the brand awareness, it is intended to give a choice to the contracted store owner.
For franchisees that have been signed for more than 10 years, the headquarters cannot refuse to renew the contract without special reasons. This is to increase the management stability of store owners who operate stores for a long time. The contract also stipulated the prohibition of retaliation for participating in store owners’ group activities or cooperating with the FTC investigation.
In particular, in the convenience store and laundry industry, when setting up business areas in the contract, the potential for disputes was reduced by dividing apartments and non-apartment areas and establishing standards such as accessibility due to roads and rivers. In the case of laundry, the liability standards were also specified, such as having the merchant bear the cost in case of damage or loss of laundry due to the merchant’s responsibility.
In the workshop industry where customer safety is important, the head office has created a basis for evaluating affiliates. However, franchisees were allowed to use equipment similar to the model presented by the head office as long as the unity of service was not compromised.
Seong-bok Jeon, head of the FTC affiliate transaction manager, said, “We expect that the new standard franchise agreement will help protect the rights and interests of franchisees and improve transaction practices. Plan”.
Sejong = Reporter Seongbin Lim [email protected]