Korean Franchisors’ Obligations in Korea to File Annual Report to Korean FTC

Korea’s Franchise Law imposes an obligation to report to the Fair Trade Commission of Korea, yearly, specific information relating to your franchise business worldwide.  A franchisor’s disclosure document may be de-registered or a fine may be imposed if this Yearly Franchise Report is not accepted by the Korean Fair Trade Commission within 120 days of the closing of the year. The Yearly Franchise Report, in Korea, is intended to notify franchisees and prospective franchisees of changes in the operations of the franchisor.   Don’t forget – file the update yearly. Other articles on Franchise Law that may be of interest: Enforcement

Continue reading »

Damages for Material Omissions in Franchise Disclosure Documents in South Korea

In April of 2015, the Supreme Court of Korea ruled that under Article 4; Article (9)(1); and Article 41(1) of the prior version of the Fair Transactions in Franchise Business Act (“Franchise Act”) damages may be obtained, from a franchisor, for all material omissions (Supreme Court 2014 DA 84824,84831, April 9, 2015) within Korean Franchise Disclosure Documents. Monetary damages may be obtained under Article 37(2) of the Franchise Act of Korea and Article 56(1) of the Monopoly Regulation and Fair Trade Act of Korea for “material omissions” within Franchise Disclosure Documents and other document presented to prospective franchisees. The damages

Continue reading »

English-speaking Korean lawyers and International Lawyers at International Law Firm in Korea discussing issues of Korean Law

IPG Legal is a leading client-focused international law firm with offices in Korea that is, often, selected over the ubiquitous Korean Law Firms when success is essential and success depends on nuanced street-smart advice, proactive  and unconflicted representation. Our attorneys are, intentionally. different from the crowd.  From our retired judge partners to our junior associates, we are all trained with an intense focus on client success, lawyer proactivity, and to understand the nexus between your commercial and legal needs. Our attorneys shall never push to you useless memos, non-nuanced legal advice or get you into litigation without an honest assessment of

Continue reading »

Franchising in South Korea: Practical Law’s Franchising Global Guide Korean Chapter by IPG Legal

This Global Guide Q&A on South Korean Franchise Law provides an overview of the main practical issues concerning Korean franchising, including current market activity; regulation of franchising in Korea; contractual issues relating to franchising agreements in Korea (including pre-contract disclosure requirements, formalities, parties’ rights and obligations, fees and payments, term of agreement and renewal, termination, and choice of law and jurisdiction); Korean Operations Manual; liability issues; intellectual property; real estate; competition law; employment issues; dispute resolution; exchange control and withholding; and proposals for reform in Korea. Korean Franchising Guide by Thomson Reuters This Korean Q&A is part of the Franchising

Continue reading »

Termination of a Franchise Agreement in Korea: Korean Franchise Law Basics

The Fair Franchising Transactions Act of Korea (“Franchise Act”) and its Enforcement/Presidential Decree, the Commercial Law of Korea and the Korea Franchise Promotion Act are the main bodies of law regulating the relationship between franchisors and franchisees in Korea.  The law is enforced by the Korea Fair Trade Commission and the Korean courts. Franchise Termination in Korea Korea’s Franchise Act, facially, limits the power of the franchisor to terminate a franchise.  The Franchise Act notes that: “Article 14 of the Franchise Act of Korea(1) Any franchisor that intends to terminate a franchise agreement shall clearly note the franchisee’s breach of the

Continue reading »

A “Franchise” Defined under Korean Law: Franchise Law Basics

Korea Franchise Law  Korea has a very broad definition for a “franchise.”  The definition of a franchise is noted in Korea’s Franchise Act and has been fairly consistently applied by the courts and Korea’s Fair Trade Commission.   Korea’s Franchise Act defines a franchise as: “a continuous business relationship in which the franchisor allows the franchisee to sell goods or services under certain quality standards and business method using its trademarks, service marks, trade name, signs and other business marks (“Business Marks”) and supports, educates and controls the franchisee with regard to relevant management and operating activities, and in which

Continue reading »

Will McDonald’s Korea Franchise in Korea?

In early April this year, chief executive and president of McDonald’s, Steve Easterbrook, announced that the company was seeking a “strategic partner” in Korea, as part of the company’s implementation of a “global turnaround strategy.”  A report on the announcement can be found at: McDonald’s seeks strategic partner in Korea. At the time, the company did not elaborate as to what exactly was meant by “strategic partner” though McDonald’s did say that the company was “open to all possibilities” including a master franchise or joint ventures with local enterprises.  The company commented that of the 119 countries in which McDonald’s

Continue reading »

Injunctions Against your Former Franchisee for Competing Against your New Franchisee: Korean Franchise Law/Injunction Basics

Under the Fair Franchise Transactions Act of Korea (“Franchise Act”), a franchisee has the right, under Korean Law, to request the renewal of a franchise agreement after ten years of successful operation of a franchise.  The Franchise Act Article 13 (2) stipulates that: “A franchisee’s right to request the renewal of the franchise agreement may be exercised only when the total period of the franchise agreement, including its initial period, does not exceed ten years.” We wrote about termination of a franchise in other articles including: Termination of a Franchise in Korea.  Courts in Korea are becoming increasingly apprehensive to

Continue reading »

Enforcement of Sales Promotions by Franchisors under Korean Franchise Law

Can an international franchisor force a local Korean franchise to cut the prices of a product via a sales event? This issue was addressed by the Korean Supreme Court in 2003Du7484.  In this Supreme Court of Korea case, a franchisor, among other things, mandated via the franchise agreement for a franchisee to hold sales events.  The franchise agreement did not specify the specific details of the sales events. The franchisor elected to utilize the clause in the franchise agreement to force the franchisee to initiate a sales event – the franchisee refused and, thus, the commencement of the dispute. The

Continue reading »

A Franchisor may be Unable to Prosecute a Franchisee for Embezzlement in Korea

Article 355 of Korea’s Criminal Act defines embezzlement as: “a person who, having the custody of another’s property, embezzles or refuses to return the property shall be punished by imprisonment for not more than five years or a fine not exceeding fifteen million won.” In a landmark case in Korea’s Franchise Jurisprudence, the Supreme Court ruled a franchisee may not be held criminally liable for embezzlement for “arbitrary spending of funds” and not paying franchise fees under the franchise agreement, since the Supreme Court deemed that the funds are not funds held, in short, in trust for the franchisor and

Continue reading »

Searching Trademark & Service Marks in Korea: Register your Trademarks/Service Marks Prior to Doing Business in Korea

Prior to marketing products, services or a business in Korea do a thorough search for like trademarks/service marks in Korea, then, have your trademarks/service marks registered in Korea – if you don’t want the added cost of litigating a matter at a Korean court.  If you have patents, don’t forget to, also, register your patents and other intellectual property. Your U.S. and E.U. trademark, service mark and patent filings are not enough. These “international filings” only gives you a grace period to file outside of these jurisdictions.  The Korea Intellectual Property Organization has a website, in English, that has a

Continue reading »

Registration of a Korean Franchise Disclosure Document under Korea’s Revised Franchise Law

We are happy to report that we have, recently, succeeded in registering the disclosure document of franchise in Korea. Our client, a leading U.S. franchise, came to us hoping to take advantage of Korea’s dynamic franchise market.  We have an active franchise and distribution law practice team lead by a retired Korean court judge and little ole me. When Korea’s franchise law was amended in 2014, there were many uncertainties about how the Fair Trade Commission of Korea would react to new applicants and how some standard clauses we utilize in most master franchise agreements in Korea will be considered

Continue reading »

Changes to Korea’s Franchise Law May Lead to an Increased Potential for Criminal Sanctions: Franchise Law Basics

The Fair Transactions in Franchise Business Act of Korea was amended on August 13, 2013 and became effective on August 14, 2014.  The, facial, reason for the change in the Act is noted in an announcement by the Korean government on the reason for the amendment.  The facial reason for the amendment shows the rationale for imposing criminal sanctions for acts that don’t constitute “crimes.” Korean Government’s Stated Reason for the Amendment: “Recently, there is a rapid and growing tendency to engage in franchising because of the growth of the retired population, an unemployment crisis and the easiness in establishing

Continue reading »

Weekly Korean Legal News From International Law Firm – IPG Legal for the Week of July 28, 2014

Weekly Korean Legal News From International Law Firm – IPG Legal for the Week of July 28, 2014Korean Legal News Reported by the Media on the Week of July 28, 2014 IMC may blacklist Korean builders over collusion Prosecutors continue probe into ferry owner’s driver Foreign workers upset by severance pay formula Restructuring urgent for big Korean companies Relocation of USFK Headquarters to Go Ahead Most Recent Posts from the Korean Law Blog This slot is reserved for the new article Korean Franchise Law Basics for Franchisors “Samsung’s First Family Struggles to Keep Grip on Company” Report by Bloomberg Debt

Continue reading »

Korean Franchise Law Basics for Franchisors

Over the next week couple of weeks we will be posting articles on the updated Korean Franchise Law.  The articles will be listed below.  The articles will address the major issues facing franchisors in the Korean market. If you have any topics that interest you or will interest other readers – please advise.  Articles on the Basics of Korean Franchise Law: Distribution Agreements in Korea: Crawl before you Walk Korean Small Business Partnerships/Joint Ventures: Pubs, Distributors, Exporters, Boutiques, Franchises and Basic Manufacturing etc. Dispute Resolution Clauses in Franchise, Joint Venture, Partnership Agreements in Korea Business Opportunities in Korea for Entertainment

Continue reading »

Korean Small Business Partnerships/Joint Ventures: Pubs, Distributors, Exporters, Boutiques, Franchises and Basic Manufacturing etc.

Starting a small business in Korea can be enjoyable and profitable if you get the business on the right track from the start.  Too often we see those with “limited funds” (we all have limited funds -even multinationals have limited funds) choosing to forgo having the deals structured by a professional and just downloading a “partnership” agreement off the internet.  Do not be what my father likes to call President Obama – a knucklehead.  I have learned from my 13 years working in Korea (Can’t believe I have been here for 13 years), that this choice, normally, ends in either

Continue reading »

Status of Interns Under the Korean Labor Standards Act: Employees Entitled to Severance/Minimum Wage?

Interns in Korea may be considered Employees under the Korean Labor Standards Act, thus, entitling the interns to minimum wage, severance and the numerous other protections and benefits under the Act.   The matter is having an impact on franchises, entertainment companies, and other SMEs. The, incredibly vague, Employment & Labor Ministry Guideline 826 (April 7, 2009) notes, in part, that: If a person is considered an employee under the Labor Standards Act shall be determined by considering the subordinate relations with the employer collectively – with regard to the details of job, supervision by the employer, disciplinary actions, capability

Continue reading »

Sean Hayes Attends American Bar Association’s Forum on Franchising

IPG has one of the leading practices in Franchise and Distribution in Asia.  Sean Hayes will attend the American Bar Association’s Forum on Franchising. From the event’s brochure: Welcome to the 36th Annual forum on Franchising at the Rosen Shingle Creek Resort in Orlando, Florida on October 16-18, 2013. Starting on Wednesday, October 16, highly-experienced franchise attorneys will present Fundamentals of Franchising, the finest course available on the basics of franchise law.  Two additional five-hour intensive programs will also be offered: an in-depth program on the theory and practice of mediating a franchise dispute, and Fundamentals of International Franchising, featuring

Continue reading »