Required Elements of Korean Franchise Disclosure Statement
by Brendon Carr
The Franchise Act was amended August 4, 2007, to be effective from February 4, 2008. Under the amendments to the Franchise Act, disclosure will be mandatory and must be registered with the Korea Fair Trade Commission in a form yet to be promulgated. Schedule 1 to the Enforcement Decree of the Franchise Act from 2002 may be expected to be the base for the form required by KFTC, but some details may change. I prepared the translation to Schedule 1 which turned up in the CCH Business Franchise Guide in 2003 (with my permission, of course), and gladly distribute it to anyone who wants it.
This information may be subject to change once the detailed rules are amended; right now we have a copy of the Act but the Enforcement Decree and the Schedule have not yet been amended. But for now, this is what a franchisor must disclose to a franchisee in Korea, and probably will comprise most of what will be required in the future. Watch this space for developments.
UPDATE 4/23/2008—English translation of the revised list of required disclosure elements is now available for download (69Kb Adobe Acrobat PDF). This is something we’ve put together in the last three days; hopefully the language is clear and artful, but we may need to revise later. If you have any suggestions or comments please let us have them.
Comments
3 Responses to This Entry
Comments Policy: Comments to Korea Law Blog are moderated. This means abusive, or just plain stupid comments will be deleted. So don't be a jerk. It also means there may be some delay from the time you post a comment to the time it shows up here. If your comment wasn't against the policy, it will show up in a little bit.
-
About Korea Law Blog
Korea Law Blog is brought to you by Brendon Carr, an American lawyer working as a foreign legal consultant for more than 10 years in Seoul. (Brendon is not admitted as an attorney in Korea. But you knew that.) -
Contact Details
-
Tel. +82 (0)2 772 2734
Fax +82 (0)2 772 2800
Mobile +82 (0)10 8788 0750 -
Download My FREE Korea Employment Law FAQ
-
Korean Media
-
Blogroll
-
Questions:
1. will the disclosure follow a specified format similar to that of the new U.S. disclosure document and of the Malaysian disclosure document?
2. Do you know why the Korean legislature has elected to become a registration jurisdiction? To me, registration is not a great idea for the development of franchising. What is your opinion?
There is currently a “recommended” form promulgated by KFTC but it’s not mandatory. We expect that the forthcoming Enforcement Decree to the Franchise Act will make the recommended form mandatory.
The legislature rarely proposes legislation here; the bureaucracy writes its own legislation and pushes it forward to the National Assembly for approval or rejection. While it’s in committee, the bill is treated as a state secret—public and professional comment are not welcome. After it gets out of the committee and to the floor for an up-or-down vote, the bill’s approval is basically a done deal. But I don’t know necessarily that the legislature really thinks about technical aspects of a bill such as the registration requirement being introduced. That’s the regulator’s desire. As to why the KFTC wants registration, I have no idea—perhaps just because it increases power.
“perhaps just because it increases power” sums it nicely for so many regulations in so many places…