Franchisee Association Registration: Preparing for Consultation Ahead of 31 December Launch

With South Korea preparing to introduce a registration scheme for franchisee associations, procedures for consultation on trading terms have become an important priority for the country’s franchise sector. The amended Fair Transactions in Franchise Business Act takes effect on 31 December 2026. Although the deadline for comments on the draft amendments to its Enforcement Decree closed on 14 September, the proposed registration requirements and detailed consultation procedures should not be treated as final. Both franchisors and franchisees need to distinguish between the Act’s commencement date, the status of the supporting regulations and the practical preparations needed for consultation.

Consultation on the draft decree closes, but registration requirements remain provisional

According to an explainer published by Buja Biz on 28 September, the comment period has closed for draft amendments to the Enforcement Decree of the Fair Transactions in Franchise Business Act, which the Korea Fair Trade Commission published for consultation on 3 August. The draft sets out details including which franchisee associations would be eligible to register. The close of the consultation period is one stage in preparing to implement the scheme; it does not, in itself, mean that every detail of the draft has been finalised.

The draft would allow an association to register if its membership represents at least 10% of all franchisees operating under the same brand. To register through this route, the association must also have at least 30 members. It is important to note that both a percentage threshold and a minimum membership requirement apply. Checking only whether an association represents a given proportion of franchisees would not capture the proposed requirements in full.

A separate route would allow associations with at least 1,000 franchisee members to register. Readers should therefore distinguish between the requirement for ‘at least 10% of all franchisees and a minimum of 30 members’ and the separate threshold of ‘at least 1,000 members’. These two routes should not be combined into a single condition, nor should eligibility be assessed using just one figure in isolation.

However, the Enforcement Decree and official notices governing registration requirements and consultation procedures may change in response to comments submitted during the legislative and administrative consultation processes. The confirmed commencement date of the Act is distinct from the detailed rules that still require verification. Franchisors preparing internal guidance and franchisee associations discussing registration should preserve that distinction.

Stronger procedures for registered associations, rather than a new right

Franchisee associations already have the right to request consultation on trading terms under the existing Act, and franchisors already have a duty to engage in good faith. It would therefore be inaccurate to describe the changes as giving franchisee associations the right to request consultation for the first time. The central change is to grant official ‘registered association’ status to groups that meet specified requirements and strengthen the procedures for responding to their consultation requests.

Under the amended Act, when a registered franchisee association requests consultation on trading terms, the franchisor must engage in accordance with the standards and procedures set out in the Presidential Decree and other relevant rules. The registration scheme and prescribed procedures therefore build on an existing consultation framework. The franchise sector should focus not only on whether an association is registered, but also on how the franchisor participates in and manages consultation after receiving a request.

The Buja Biz explainer noted that franchisors will find it harder to respond to a registered association’s consultation request simply by announcing changes. Systems for explaining the reasons and supporting evidence for those changes, and for recording the consultation process and its outcome, will become more important. The practical implication is that franchisors should distinguish between issuing a notice and handling a consultation request through explanation, discussion and record-keeping.

Franchisors should standardise supporting evidence and records

The explainer recommends that franchisors standardise their procedures for handling consultation on trading terms. This means establishing a consistent framework for deciding which documents to review when a request arrives, what evidence to use in explanations and how to record discussions. Reviewing current document management and consultation workflows is a useful preparatory step, even while the detailed rules remain to be finalised.

One suggested tool is a ‘report on changes to trading terms’. Proposed contents include evidence of cost movements, the results of reviews of alternative products, the expected impact on franchisees’ profits and losses, the franchisor’s reasoning, and the discussions and their outcomes. The aim is not merely to record why a change is proposed, but also to document the alternatives considered and the potential effect on franchisees.

This report is a practical preparation method suggested by the explainer. The published proposals alone do not establish that every franchisor must use an identical mandatory form. Franchisors should distinguish between legal requirements and internal management measures. Even when moving quickly to prepare, they should avoid presenting the suggested report contents as a final statutory list of documents to be submitted.

Review the consultation process from receipt to follow-up

The suggested review areas for franchisors include policies for dealing with franchisee associations, procedures for receiving consultation requests, management of meeting minutes, profit-and-loss modelling when trading terms change, management of consultation outcomes and responsibility for resolving disputes. Rather than a list of separate documents, these are best understood as checkpoints across a workflow extending from receipt of a request to follow-up after consultation. They can help identify gaps in existing arrangements.

Franchisee associations should likewise separate the task of checking the proposed registration requirements from that of preparing for substantive consultation on trading terms. When assessing eligibility, they need to understand the percentage and membership thresholds accurately and verify the final detailed rules. When preparing for consultation, a practical approach is to specify the trading terms they wish to discuss and the issues on which they want an explanation from the franchisor.

These changes make the process through which franchisors and franchisees discuss trading terms an operational priority for the franchise sector. In the run-up to implementation, organisations should look beyond the numerical registration thresholds and assess whether they can respond effectively when a consultation request actually arrives. Preparing for the Act’s commencement and checking the final supporting regulations are tasks to pursue in parallel.

In practical terms, the priority is to check the final Enforcement Decree and official notices while reviewing systems for receiving consultation requests, organising supporting evidence, taking meeting minutes and managing outcomes. Unconfirmed requirements should not be presented as settled, but there is no need to postpone preparing the explanations and records that effective consultation requires.