---
title: "South Korean franchisors. Obliged to compensate franchisees?"
url: https://burnaze.com/article/1ad9fe53-4fd8-409c-8ea5-c5d9fc2d9eed
source: "Global Franchise"
original_url: https://www.global-franchise.com/news/south-korean-franchisors-obliged-to-compensate-franchisees
author: "Global Franchise Team"
category: "Franchise Industry"
industry: "Franchise Industry"
topics: ["Regulation & legal"]
published: 2017-08-07T09:01:00.000Z
modified: 2026-11-01T22:32:58.457Z
image: https://images.unsplash.com/photo-1450101499163-c8848c66ca85?w=1600&q=80&auto=format&fit=crop
---

# South Korean franchisors. Obliged to compensate franchisees?

**TL;DR:** South Korean franchisors may be required to compensate franchisees for losses caused by mismanagement, following a number of high-profile scandals. The country's Fair Trade Commission has introduced new guidelines to protect franchisees, including requiring franchisors to have compensation plans written into their contracts.

*By Global Franchise Team, originally published in Global Franchise on 2017-08-07. [Read the original](https://www.global-franchise.com/news/south-korean-franchisors-obliged-to-compensate-franchisees).*

## Story

Franchisors in South Korea may soon be required to compensate franchisees for losses caused my mismanagement. This follows a number of high-profile scandals which encouraged consumers to boycott their chains.

South Korea’s Fair Trade Commission has measures to protect franchisees from te effects of such mismanagement. Under the new guidelines, franchisors wille be obliged to have compensation plans written into their contracts. 50 of the country’s biggest franchising companies will be required to disclose the price of all items that it requires to be purchased by the franchisee from food ingredients to paper cups. Franchisors taking any retaliatory action against franchisees will face stiff penalties.

The Commission’s chairman, Kim Sang-jo, said, “The franchise business is an important means of creating jobs. While [the franchise businesses] has exploded externally, internally, there are many issues that are concerning.”

## Entities

- Franchise Industry (sector)
- Global Franchise (publication)
- international expansion (topic)
- James Fell (person)
- regulation (topic)
- South Korea (location)
- franchisee protection (topic)
- Fair Trade Commission (regulator)

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Originally reported by Global Franchise Team, Global Franchise (https://www.global-franchise.com/news/south-korean-franchisors-obliged-to-compensate-franchisees). Summarized by Burnaze (https://burnaze.com/article/1ad9fe53-4fd8-409c-8ea5-c5d9fc2d9eed).