What are the conditions for terminating a franchise contract under the Franchise Act?

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I recently heard that ESG risk is an important factor in corporate management. I'm not exactly sure what ESG risk is, and I'm wondering where problems actually arise. I run a manufacturing corporation — do I need ESG risk management, and what should I check in advance?

franchise act

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作者: 박동일

Hello.

Under the Franchise Act, when the head office, i.e., the franchisor, intends to terminate a contract with a franchisee, they must give a grace period of 2 months or more and notify the 'specific contract violation facts'.

And they must also notify the 'fact that the contract will be terminated if the contract violation is not corrected'.

Not all contract violations constitute grounds for contract termination, so caution is needed.

▶ Examples where the franchise contract can be terminated without notification

- When the franchisee files for bankruptcy or compulsory execution procedures or rehabilitation procedures are initiated

- When checks issued by the franchisee are stopped due to default, etc.

- When the franchise business can no longer be operated due to natural disasters, serious personal reasons, etc.

- When the franchisee receives administrative dispositions or court judgments for violating laws related to operation, clearly damaging credibility

- When the franchisee suspends business for 7 or more consecutive days without justifiable reason

However, even in such cases, if the franchisor does not notify the franchisee at the appropriate time, the termination of the franchise contract has no effect, so caution is needed.

If you want to know in detail the requirements for franchise contract termination under the Franchise Act, we recommend consulting an attorney with expert knowledge in related legal principles.