[Consultation] Review of franchise agreement for registration of information disclosure documents under the Franchise Business Act.
Article posted in 2022-04-11 09:34:13 | VEAT
Law firm Veat received a referral from A, a company operating a franchise business, and conducted a legal review of the franchise agreement.
Prior to finalizing the franchise agreement, A requested a legal review of the franchise agreement in order to proceed with the registration of the disclosure document. Law firm Veat, in accordance with the Franchise Business Act (hereinafter referred to as the Franchise Business Act), added essential items that must be included in the franchise agreement and amended contractual provisions potentially violating the Franchise Business Act.
Items to Prepare Before Finalizing a Franchise Agreement
Companies intending to operate a franchise business must prepare a disclosure document registered with the Fair Trade Commission and a franchise agreement before finalizing the agreement. The Franchise Business Act stipulates items that must be included in the franchise agreement and the obligation to provide preliminary information, and the obligation to retain records for 3 years from the date the franchise business transaction is terminated. This highlights the importance of preparing a proper franchise agreement.
Penalties for Violations of the Franchise Business Act
If a company violates the major obligations set by the Fair Trade Commission to promote fair trade in franchise business transactions, it may receive a corrective action order from the Fair Trade Commission and be required to disclose this fact. In addition, it may be subject to a fine exceeding 50 million won, a penalty of up to 10 million won, or criminal prosecution.
Law firm Veat provides legal advice to numerous franchise companies and offers advice on the drafting of franchise agreements and other matters related to the Franchise Business Act. Please contact Law firm Veat if you need legal advice on the Franchise Business Act or the drafting of franchise agreements.
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Law firm Veat