Franchising in South Korea: overview

A Q&A guide to franchising in South Korea.

The Q&A provides an overview of the main practical issues concerning franchising, including current market activity; regulation of franchising; contractual issues relating to franchising agreements (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); Operations Manual; liability issues; intellectual property; real estate; competition law; employment issues; dispute resolution; exchange control and withholding; and proposals for reform.

To compare answers across multiple jurisdictions, visit the Franchising: Country Q&A tool.

This Q&A is part of the global guide to franchising law. For a full list of jurisdictional Q&As visit www.practicallaw.com/franchising-guide.

Sean C Hayes, SangJong Kook and Jeongha Lee, SJ Law Firm, Int'l Practice Group (IPG Legal)
Contents

Market

1. What have been the main developments in the franchising market over the past 12 months?

In recent years, the main development in franchising has been the increase in measures taken by the South Korea Fair Trade Commission to enforce franchising laws. Recently, a major Korean coffee franchise was fined KRW1.9 billion for abusing its dominant position in the market and engaging in unfair business practice.

There has also been an increase in second-tier food and beverage franchisees, which have an interest in expanding in South Korea as a way to test the East Asian market.

 
2. What are the most commonly used methods of local and international franchising?

Local franchising

The most successful major local franchises in South Korea are structured as multi-unit and single-store direct franchising. There are many middle-aged retired individuals with limited retirement savings who need to supplement this income. These individuals represent a significant proportion of local single-store direct franchisees.

International franchising

Many of the leading international franchises operate in South Korea through the ownership of controlling interests in local joint venture companies, rather than using franchising structures. This is due to the perception that South Korean franchise jurisprudence is too favourable to franchisees. Some international businesses also set up subsidiaries in South Korea.

However, many international franchises have been successful using master franchise agreements. South Korean law does not distinguish master franchising from other types of franchise relationships. The most successful master franchising structures use master franchisors that are well established in the local market and which are part of the main conglomerates in South Korea.

 
3. Are there any specific reasons for an overseas franchisor to use a separate entity for entering into a franchise agreement with a franchisee in your jurisdiction?

Apart from general reasons for using an affiliate to issue international franchise agreements, for example to insulate the home country franchisor from exposing its domestic assets to risk, there are no additional reasons specific to the laws or practices of South Korea for doing so.

 

Regulation of franchising

4. What is the legal definition of franchising and/or a franchise?

A franchise is defined as a continuous business relationship under which a franchisor allows a franchisee use of its business marks (for example, trade marks, trade names and so on) to sell goods or services in accordance with certain quality standards, business methods, training and control requirements, in exchange for payment of a franchise fee (Fair Transactions in Franchise Business Act (Franchise Act)).

The South Korea Fair Trade Commission and the courts interpret this definition broadly to the benefit of franchisees. Most disputes relating to this definition are related to the franchisor's degree of control over the franchisee.

Business relationships are not covered by the definition of a franchise if either the (Article 3, Franchise Act):

  • Total franchise fees paid to the franchisor do not exceed KRW1 million within a period of six months from the date of the first payment made to the franchisor.

  • Annual sales of the franchisor are less than KRW50 million.

 
5. What are the laws regulating franchising?

The main laws governing the relationship between a franchisor and a franchisee are the:

  • Fair Transactions in Franchise Business Act.

  • Fair Transactions in Large Franchises and Retail Business.

  • Monopoly Regulation and Fair Trade Act.

There are also detailed enforcement decrees and a substantial body of case law interpreting these laws.

Additionally, all business relationships are governed by the general principles set out in the:

  • Civil Act.

  • Commercial Act.

  • South Korean case law.

 
6. What is the regulatory authority responsible for enforcing franchising laws and requirements in your jurisdiction?

The main regulatory body responsible for enforcing South Korean franchising laws is the South Korea Fair Trade Commission (KFTC). The KFTC has broad authority to:

  • Impose fines and corrective orders.

  • Request prosecutors to commence criminal proceedings.

The decisions and actions of the KFTC are reviewable by the courts.

 
7. Must the franchisor be registered with a professional or regulatory body before setting up a franchise system?

All franchisees operating in South Korea must register a disclosure document with the South Korea Fair Trade Commission (KFTC). All franchisees (including sub-franchisees and master franchisees) must be provided with the disclosure document registered with the KFTC.

Failure to register a franchise in South Korea can lead to any of the following:

  • Fines and corrective orders imposed by the KFTC.

  • Invalidation of the franchise agreement.

  • Civil damages.

  • Criminal sanctions.

South Korea is a first-to-file jurisdiction and all trade marks must be registered with the Korean Intellectual Property Office. Generally, trade marks are regulated by the Trade Mark Act.

 
8. Is there a code of ethics or other means of promoting ethical franchising in your jurisdiction?

The Fair Transactions in Franchise Business Act was first adopted in 2002. As franchising law is still relatively recent in South Korea, franchisors have not widely adopted any franchising code of ethics. However, the South Korea Fair Trade Commission has promulgated a Franchising Best Practice Code. The Franchising Best Practice Code is a general code that contains few specific details. This code is not binding on franchisors

 
9. Do franchisees benefit from any laws designed to protect consumers or small businesses?

Franchisees are not considered as consumers under consumer protection laws and regulations.

 
10. Are there any other requirements which must be met before a business can sell a franchise?

A franchise must be registered with the South Korean Fair Trade Commission (KFTC) before the sale of any franchise in South Korea (see Questions 7 and 11). There are no specific pre-sale requirements for non-Korean franchises other than the registration requirements imposed by the KFTC.

 

Franchise agreement

Pre-contract disclosure requirements

11. Is the franchisor subject to any general or formal pre-contract disclosure requirements?

The franchisor must provide a disclosure document to any prospective franchisee and register it with the South Korea Fair Trade Commission (KFTC). The disclosure document must contain, at a minimum, details on (Articles 11(2) and 7, Fair Transactions in Franchise Business Act (Franchise Act); as interpreted by the KFTC):

  • The general and current status of the franchisor, including:

    • business experience of the franchisor's management;

    • litigation history;

    • bankruptcy filings;

    • violation of laws by the franchisor's management;

    • financial statements; and

    • business registration (certificate of incorporation).

  • Trade marks.

  • Projected sales revenues (except for small and medium-sized franchisors).

  • Protected business territory.

  • Procedure and period required to open the franchise.

  • The right to transfer the franchise.

  • Whether the franchisor has consulted with an attorney.

  • Expected costs for operating the franchise.

  • Franchise fees and other fees.

  • Limits on the franchise right.

  • Prohibitions of certain business activities.

  • The training programme, operations manual and education programmes provided by the franchisor.

  • Termination and renewal of the franchise.

  • Other issues (for example, sourcing requirements, build-out requirements and franchisor's control over the franchised business).

After drafting the disclosure document and the franchise agreement, registration of the franchise with the KFTC does not usually take longer than three weeks. The registration process depends on the experience of the franchisor's attorney with the KFTC, the workload of the KFTC and the nature of the franchise agreement and disclosure document.

The KFTC can request amendments to the disclosure document to ensure that it complies with all the applicable requirements. However, the KFTC does not determine whether the franchise agreement violates South Korean law.

Non-compliance with disclosure requirements can have any of the following consequences:

  • Invalidation of the franchise agreement.

  • Reimbursement of the franchise fee.

  • Fine imposed by the KFTC.

  • Lawsuit for damages brought by the franchisee.

  • Criminal sanctions imposed on the franchisor's executives and employees.

An act of fraud that violates the Franchise Act can lead to the imposition of a KRW300 million fine or to five years' imprisonment (Article 41(1), Franchise Act). Failure to comply with an order of the KFTC can lead to the imposition of a KRW100 million fine or to three years' imprisonment (Article 41(2), Franchise Act).

 
12. Must the franchisor disclose fairly and in good faith all facts material to the prospective franchisee's decision to enter into the arrangement, or must the prospective franchisee rely on its own due diligence?

A franchisor must not provide false or exaggerated information in the franchise disclosure document (Article 9, Fair Transactions in Franchise Business Act) (see Question 11). In the event of a breach, the South Korea Fair Trade Commission can fine the franchisor, order corrective measures and request the prosecutor to file a criminal complaint against employees of the franchisor.

If the false or misleading information amounts to fraud, the responsible executive or employee can be liable for a fine of up to KRW300 million or for five years' imprisonment.

Formalities

13. What are the formal contractual requirements to create a valid and binding franchise agreement?

Before engaging in a franchise relationship in South Korea, the franchisor must register a disclosure document with the South Korea Fair Trade Commission. The franchise disclosure document must be filed in the Korean language and must contain specific detailed information (see Question 11).

Parties' rights and obligations

14. Is there a general obligation to behave fairly, reasonably or in good faith to the other party during the term of the franchise agreement?

Obligations of the franchisee

The parties to a franchise agreement have a general obligation to act in good faith (Article 4, Fair Transactions in Franchise Business Act (Franchise Act)). More specifically, the franchisee must (Article 6, Franchise Act):

  • Make sincere efforts to maintain the integrity of the franchise business and reputation of the franchisor.

  • Maintain proper inventory levels.

  • Meet appropriate quality standards, as required by the franchisor.

  • Use commodities provided by the franchisor, if alternatives of the same quality do not exist.

  • Meet appropriate facilities, outdoors and transportation requirements imposed by the franchisor.

  • Consult in advance with the franchisor when it is considering a change of suppliers, services or business activities.

  • Maintain and provide data necessary for the franchisor to assist the franchisee.

  • Allow the entry of the franchisor to its business premises to inspect books and records, among other things.

  • Refrain from relocating its place of business without the consent of the franchisor.

  • Refrain from transferring the franchise to a third party without the consent of the franchisor.

  • Notify the franchisor of any infringements of trade marks or other IP rights (IPRs).

  • Notify the franchisor of any know-how or trade secret that may have been revealed to a third party.

  • Co-operate with the franchisor in protecting its IPRs.

These obligations cannot be waived by contract.

Obligations of the franchisor

The parties to a franchise have a general obligation to act in good faith (Article 4, Franchise Act). More specifically, the franchisor must (Article 5, Franchise Act):

  • Devise business plans.

  • Make concerted efforts to continue to develop the quality, products and sale management functions of the franchise.

  • Provide franchisees with commodities or services at reasonable prices.

  • Provide training to franchisees.

  • Provide ongoing advice to franchisees.

  • Refrain from establishing directly-managed stores in competition with the franchisee.

  • Make sincere efforts to resolve disputes arising with the franchisee.

These obligations cannot be waived by contract.

Additionally, a franchisor must not (Monopoly Regulation and Fair Trade Act):

  • Unfairly deal with a franchisee.

  • Impose unfair restraints of trade.

  • Abuse its bargaining power.

  • Unfairly limit the products that can be sold by the franchisee.

  • Unfairly modify the franchise business relationship.

  • Infringe on the business territory of the franchisee.

  • Engage in other acts that may unfairly restrain trade.

An overseas franchisor, in most cases, cannot be held liable for the actions of its sub-franchisors. Vicarious liability is typically only possible when there is an agency or joint venture relationship with the sub-franchisor.

 
15. Does local law require that particular provisions must be expressly included in a franchise agreement?

All franchise agreements must, at a minimum, contain specific details on (Article 11(2), Fair Transactions in Franchise Business Act (Franchise Act)):

  • The licensing of business marks.

  • The terms and conditions of the franchisee's business activities.

  • Training and business guidance provided to the franchisee.

  • The payment of franchisee fees and other fees.

  • The determination of the franchisee's business territory.

  • The term of the agreement.

  • Transfer of the business.

  • The grounds for termination of the agreement.

  • The fact that a franchise deposit must be deposited in trust for two months from the date on which the franchisee enters into the franchise agreement (or until the date of commencement of the franchise business, where the franchisee commences the franchise business before the expiration of this two-month period). 

  • Any damage compensation insurance policy taken by the franchisor for its franchisees under Article 15-2 of the Franchise Act.

  • Whether the prospective franchisee has consulted an attorney or a franchise agent under Article 27 of the Franchise Act.

  • Other matters specified by presidential decrees on the rights and obligations of the parties to a franchise agreement.

 
16. Are exclusion and entire agreement clauses enforceable in your jurisdiction? If so, are they effective to protect the franchisor?

Exclusion and entire agreement clauses are not effective to protect overseas franchisors against actions of master franchisors. However, in most cases, a franchisor will not be liable for the obligations of a master franchisor under South Korean franchising legislation unless there is specific evidence of collusion between the master franchisee and the franchisor.

 
17. Can the franchisor impose product tying or other purchasing restrictions and non-compete obligations on the franchisee during the term of the agreement?

Restrictions on purchasing and product tying

Product tying is prohibited (Article 19, Monopoly Regulation and Fair Trade Act). However, a franchisor can require a franchisee to buy certain products from a specific supplier if certain requirements are met. These requirements broadly relate to the fairness of the price and the reason for imposing a specific supplier.

Non-compete obligations and transfer restrictions

South Korean courts are reluctant to enforce non-compete clauses in franchise agreements if the fault at the origin of the termination of the agreement, failure of the franchisee's franchise or non-renewal of the franchise can be attributed to the franchisor's action or inaction. Many courts have interpreted "fault" broadly in favour of the franchisee.

Non-compete obligations are generally enforceable during the term of the franchise agreement.

A franchisee cannot transfer a franchise to a third party without the consent of the franchisor (Article 6(9), Fair Transactions in Franchise Business Act).

Fees and payments

18. What fees are usually payable by the franchisee? Are there any restrictions on the parties' freedom to set the fees and payments, or any other payment requirements?

There are many types of franchise fee and non-royalty payment models used in South Korea. Most international franchisors usually operate under a royalty model that involves the payment of:

  • An initial franchise fee.

  • Ongoing royalties.

  • A marketing fee.

Most franchisors also charge franchisees for ongoing training and support.

Interest can be charged on late royalties and other fee payments owed by the franchisee, subject to the general prohibition on charging excessive interest.

Term of agreement and renewal

19. Are parties free to agree on the term of the franchise agreement? What is the typical term of a franchise agreement in your jurisdiction?

The typical term of a franchise agreement in South Korea is ten years.

If a franchisee requests the renewal of a franchise between 180 days and 90 days before the expiration of the franchise agreement, the franchisor must renew it, unless it proves that there are justifiable reasons for non-renewal (Article 13(1), Fair Transactions in Franchise Business Act). Therefore, local law imposes a minimum term that is based on the ability of the franchisor to establish justifiable reasons for termination. See Question 20 for further information.

 
20. What rights of renewal are usually included in the franchise agreement? Are fees paid on renewal?

Commercial practice

Many international franchisors grant ten-year franchises without an option for renewal. The commercial practice follows strictly the requirements of local law (see below, Local law).

Local law

If a franchisee requests the renewal of a franchise between 180 days and 90 days before the expiration of the franchise agreement, the franchisor must renew it unless it shows that there are justifiable reasons for non-renewal (Article 13(1), Fair Transactions in Franchise Business Act (Franchise Act)). This right of renewal can only be exercised when the term of the franchise agreement does not exceed ten years.

Justifiable reasons are defined as a failure of the franchisee to do any of the following (Article 13, Franchise Act):

  • Pay franchise fees or other fees.

  • Accept terms and conditions or business policies that the franchisor applies to all its franchisees.

  • Comply with business policies that are necessary for the successful maintenance of the franchise business and that relate to:

    • the security of business premises and facilities;

    • the acquisition of the necessary licences, qualifications and permits under relevant laws and regulations; and

    • compliance with manufacturing processes and service techniques that are necessary for maintaining the quality of the products or services.

If the franchisor terminates a franchise without justifiable reasons, a franchisee can either:

  • Sue the franchisor for damages.

  • Request the South Korea Fair Trade Commission (KFTC) to fine the franchisor.

Courts or the KFTC can also deem that the franchise agreement is renewed and compel the franchisor to perform the contract. Non-compliance with an order of the KFTC can result in the imposition of civil and criminal sanctions.

Typically, renewal fees are paid by the franchisee to the franchisor on renewal of the franchise.

Termination

21. Are there any limitations on the right of a franchisor to terminate the agreement?

A franchisor can terminate a franchise agreement provided that it (Article 14, Fair Transactions in Franchise Business Act (Franchise Act)):

  • Clearly indicates to the franchisee that the franchisee breached the agreement.

  • Gives the franchisee a period of at least two months to remedy that breach.

  • Provides at least two written notices to the franchisee that the agreement will be terminated unless the breach is corrected within the above period.

Under South Korean case law, a breach must be more than trivial in order to justify termination.

The franchisor need not pay compensation to the franchisee if it complies with the above requirements, unless the franchise agreement provides otherwise.

 
22. Are post-term restrictive covenants enforceable?

Generally, post-term confidentiality restrictive covenants are enforceable in South Korea.

Post-restrictive non-compete covenants are more likely to be enforced if both:

  • Their geographical scope and duration are limited.

  • Compensation is paid to the franchisee.

In recent years, South Korean courts have been increasingly reluctant to enforce non-compete clauses if any fault at the origin of the termination of the agreement, the failure of the franchisee's franchise or non-renewal of the franchise can be attributed to the franchisor's action or inaction. Many courts have interpreted "fault" broadly in favour of the franchisee.

 
23. Can the franchisor or a replacement franchisee continue to sell to the former franchisee's customers?

A franchisor or a replacement franchisee can continue business with the former franchisee's customers in most cases. Compensation is not required. This general rule that no compensation must be provided is often negated when a franchisor is deemed to have violated Korean franchise laws related to termination or is abusing its superior bargaining power.

Choice of law and jurisdiction

24. Will local courts recognise a choice of foreign law in a franchise agreement for a business operating in your jurisdiction?

Local courts will not recognise a choice of foreign law in a franchise agreement for a business operating in South Korea.

 
25. Will local courts recognise a choice of foreign jurisdiction in a franchise agreement for a business operating in your jurisdiction?

Local courts will not recognise a choice of foreign jurisdiction in a franchise agreement for a business operating in South Korea.

 

Operations manual

26. How does the franchisor ensure that the franchisee complies with the business standards, systems and requirements?

A franchisor can ensure compliance with the business standards, systems and requirements through notification to the franchisee of any breach of the franchise agreement and termination of the franchise agreement in the case of non-compliance (see Question 21).

The franchisee has a broad obligation to deal with the franchisor in good faith and courts are willing to uphold fair orders of the franchisor.

 
27. Can the franchisor change the Operations Manual unilaterally, as is usually required?

There are no legal restrictions on the right of the franchisor to change the Operations Manual, or other aspects of the franchise business related to the successful operation of the franchise, if both the:

  • Changes are applicable to all franchisees.

  • Amendments do not unfairly frustrate the rights of the franchisee, or cause significant undue hardship to the franchisee.

 

Liability issues

28. What are the franchisee's remedies against the franchisor for deceptive or fraudulent selling practices?

The franchisee's remedies against the franchisor for deceptive or fraudulent business practices include:

  • Filing a civil suit for damages.

  • Requesting the South Korea Fair Trade Commission (KFTC), Chairman of the Board of Audit and Inspection and/or Small and Medium Business Administration to request the Prosecutor's Office to file a criminal complaint.

  • Requesting the KFTC to issue a corrective order or a fine against the franchisor.

An act of fraud that violates the Franchise Act can lead to the imposition of a KRW300 million fine or to five years' imprisonment (Article 41(1), Franchise Act). Failure to comply with an order of the KFTC can lead to the imposition of a KRW100 million fine or to three years' imprisonment (Article 41(2), Franchise Act).

Additionally, non-compliance with South Korean franchising legislation can lead to any of the following:

  • Invalidation of the franchise agreement.

  • Reimbursement of the franchise fee.

  • Fine imposed by the KFTC.

  • Lawsuit for damages brought by the franchisee.

  • Criminal sanctions imposed on the franchisor's executives and employees.

 
29. How can third-party claims against the franchisee be brought successfully against the franchisor?

Indemnity

The franchisor and franchisee can bring indemnity claims against each other.

Courts have been willing to entertain indemnity claims even when they are specifically excluded by contract, mainly where the action of the defendant is considered a crime.

Precautions

Franchisors are advised to have a franchise agreement drafted locally, and which addresses the unique features of South Korean franchising legislation and enforcement bodies. Specifically, franchisors are advised to structure the deal so that the relationship is not considered a mere agency or joint venture.

 

Intellectual property

30. What provisions are usually made in relation to intellectual property rights (IPRs), including know-how?

There are no specific restrictions on the ability of the franchisor to restrict the use of its IPRs to the scope and purpose of the franchise agreement.

 
31. What are the registration requirements for licensing IPRs?

All exclusive trade mark licences must be registered with the Korean Intellectual Property Office. Typically, a short licensing agreement will be filed with the Office, which only reveals the essential aspects of the agreement. Non-exclusive licences need not be registered.

It is common to use a separate licence agreement if an exclusive licence is granted. This is because exclusive licences must be registered to be valid and enforceable and most franchisors prefer to only reveal the basic aspects of their agreement.

 

Real estate

32. Are consents from landlords difficult to obtain when transferring leases or granting subleases from a franchisor to a franchisee?

Typically, consents from landlords are not difficult to obtain when transferring leases or granting subleases from a franchisor to a franchisee.

Whether a landlord will require payment for consent depends on the specific agreement with the landlord. The main formality that must be performed when transferring a lease is the registration of a security deposit. Security deposits in South Korea are typically large sums of money. A security interest can be registered on these sums with the property registry office of the local city office.

 
33. How can a franchisor prevent the franchisee from occupying the premises after the franchise agreement has ended?

It is very difficult to prevent a franchisee from occupying the premises after the expiration of the franchise agreement if the franchisee is not "unreasonably" competing against the franchisor.

Some franchisors require a lease to terminate on termination of the franchise agreement.

 
34. How can the franchisor effectively acquire the franchisee's premises at the end of the franchise relationship?

In most cases, a franchisor wishing to acquire the franchisee's premises after the expiration of the franchise agreement will pay an element of goodwill to the franchisee.

 
35. If the franchisor leases or subleases its own site to its franchisee, can it pass on all related costs to the franchisee? Can the franchisor charge its franchisee tenant a rent expressed as a percentage of the franchisee's sales?

A franchisor can pass on its costs to a lessee or sub-lessee. Franchisors can charge a rent expressed as a percentage of sales. These systems are not widely used in South Korea and matters related to this issue are therefore not adequately resolved by South Korean franchise jurisprudence.

 

Competition law

36. What is the effect of competition law rules on franchising agreements? Are there any available exemptions?

Competition law

A franchisor must not (Monopoly Regulation and Fair Trade Act):

  • Unfairly deal with a franchisee, including when deciding to terminate/not renew a franchise agreement.

  • Impose unfair restraints of trade.

  • Abuse its bargaining power.

  • Unfairly limit the products that can be sold by the franchisee.

  • Unfairly modify the franchise business relationship.

  • Infringe on the business territory of the franchisee.

  • Engage in other acts that may unfairly restrain trade.

Exemptions

There are no exemptions applicable to franchise relationships under South Korean competition legislation.

Online/e-commerce restrictions

A franchisor can generally prohibit a franchisee from operating its own website and selling products online.

 

Employment issues

37. Can a franchisee be regarded as an employee of the franchisor?

Generally, a franchisee will not be regarded as an employee of the franchisor.

In some cases, a franchise relationship may however be deemed a scam to avoid the application of South Korean labour law, for example, where the franchisor controls all means of production or the complete schedule of the franchisee, or otherwise has overall control over the franchisee.

 

Dispute resolution

38. How are franchising disputes typically dealt with? What provisions for handling disputes are usually included in domestic franchise agreements?

Most franchising disputes in South Korea are resolved in courts, because of the broad powers of the South Korea Fair Trade Commission to impose fines, order corrective measures and request the Prosecutor's office to commence criminal proceedings.

Additionally, a Dispute Resolution Board was set up under the Fair Transactions in Franchise Business Act, and has successfully resolved some franchising disputes. Many franchise agreements provide for the resolution of a dispute by arbitration.

 
39. How are foreign judgments or foreign arbitral awards enforced locally?

Most foreign arbitral awards are enforceable in South Korea, subject to a few exceptions.

To enforce a foreign judgment in South Korea, the following conditions must be met:

  • The foreign judgment must have been properly served on the South Korean defendant. Typically, this means that service is completed in accordance with the formalities of the HCCH Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters 1965.

  • The foreign judgment is final and conclusive.

  • The defendant had the opportunity to be heard.

  • The foreign judgment is from a country that recognises South Korean judgments.

  • The foreign judgment does not conflict with public policy.

  • The foreign court is a court that is considered by South Korean courts as having a transparent legal system.

 

Exchange control and withholding

40. Are any exchange control or currency regulations applicable to payments to an overseas franchisor?

Foreign currency transactions are governed by the Foreign Exchange Transactions Act. The origin of the funds must be determined when transferring currency abroad.

 
41. Is there a withholding obligation on payments made to an overseas franchisor?

Withholding obligations can be imposed based on any relevant treaty between South Korea and the country of residence of the recipient.

 

Reform

42. Are there any proposals to reform the laws affecting franchising?

Major amendments to franchising legislation were promulgated on 13 August 2013 in order to address the concerns of the South Korea Fair Trade Commission.

There are currently no proposals to reform the laws affecting franchising.

 

Online resources

Korean Legislative Research Institute

W www.klri.re.kr

Description. The Korean Legislative Research Institute has delegated authority to translate Korean law into the English language. The translations are not considered as an authoritative translation of South Korean law. The translations contain errors and omissions.

The Korean Law Blog

W www.thekoreanlawblog.com

Description. This blog provides access to numerous articles on franchising law and other business law topics.



Contributor profiles

Sean C Hayes

SJ Law Firm, Int'l Practice Group (IPG Legal)

T +82 70 7847 9050
F +82 2 596 0054
E SeanHayes@ipglegal.com
W www.ipglegal.com

Professional qualifications. New York Attorney-at-Law

Areas of practice. Franchising; international arbitration; litigation; general corporate.

Languages. English, Korean

SangJong Kook

SJ Law Firm, Int'l Practice Group (IPG Legal)

T +82 70 7847 9050
F +82 2 596 0054
E info@ipglegal.com
W www.ipglegal.com

Professional qualifications. Korea Attorney-at-Law

Areas of practice. Litigation and arbitration; government relations; fair trade law; corporate compliance.

Languages. English, Korean

Jeongha Lee

SJ Law Firm, Int'l Practice Group (IPG Legal)

T +82 70 7847 9050
F +82 2 596 0054
E info@ipglegal.com
W www.ipglegal.com

Professional qualifications. Korea Attorney-at-Law

Areas of practice. Corporate law and compliance; tax; international business transactions.

Languages. English, Korean


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