[Background]

Deterioration of Franchisees' Rights and Limits to Bargaining Power: Amid delayed domestic demand recovery due to sustained high interest rates and inflation, factors such as excessive demand for opening franchises have further undermined the rights and interests of franchisees. Under the prior framework, even when franchisee associations requested negotiations on transaction terms, there was no legal ground to penalize franchisors if they refused, often citing a lack of representativeness by the association.

Statutory Amendment and Specification of Delegated Matters: To address the power imbalance between franchisors and franchisees, the Fair Transactions in Franchise Business Act was amended (passed the National Assembly in December 2025; scheduled to enter into force in December 2026) to introduce a mandatory negotiation system for franchisors and a registration system for franchisee associations to prevent their indiscriminate proliferation. Accordingly, this Enforcement Decree aims to specify matters delegated by the Act, including association registration requirements, registration and modification procedures, and criteria for revocation.

[Main Points]

A. Establishment of Registration Requirements for Franchisee Associations

Ratio/Count Requirement: Eligible for registration if comprising at least 10% of the total number of franchisees or at least 1,000 franchisees.

Establishment of a Lower Limit: Sets a minimum threshold of 30 members to reduce burdens on small-scale franchisors.

B. Prescription of Procedures for Registration and Modification Registration

Establishes detailed procedures, such as the submission of registration applications by associations seeking registration.

Prescribes deadlines for reporting modifications by item, taking into account the likelihood of change and the importance of each statutory registration matter.

C. Specification of Grounds for Revocation of Registration

Provides concrete examples for "registration by fraud or other improper means," which is a statutory ground for revocation under the Act, thereby enhancing business predictability and understanding.