Fair Transactions in Franchise Business Act | Filing a Lawsuit Against a Company That Violated the Franchise Business Act and Recovering 57 Million Won

This is the account of a client who requested the assistance of an attorney, stating that a company's violation of the Fair Transactions in Franchise Business Act had caused significant losses.

The client was operating a clothing retail store using the business mark of the defendant company in this case.

In short, the defendant was the representative of a franchise company, and the client was a person who had entered into a franchise contract with that company to operate a store.

When the client went to consult about the franchise, the defendant provided a disclosure document and demanded immediate payment of the franchise fee and training fee, and after the payment was made, stated that an interior contractor would be introduced.

The interior contractor introduced by the defendant did not even draw up a proper contract and merely pressed the client to pay the construction cost without any basis.

The client, fearing that the construction might be disrupted, had no choice but to comply with the contractor's demand.

The contractor said the construction was complete when it was in a state that could hardly be regarded as complete.

When the client pressed the matter and happened to ask whether the contractor had obtained an 'interior construction business license,' the contractor blocked the client's contact.

In addition, the defendant, as the franchise headquarters, was supposed to supply goods to the client, but when the client requested the supply of goods, supplied clothing that had been produced several years earlier.

The client accordingly stated that the defendant bore responsibility to compensate for the losses and that the client would file a lawsuit.

We reviewed the facts of the case for a client who intended to claim damages from a defendant who had violated the Fair Transactions in Franchise Business Act.

Under the Fair Transactions in Franchise Business Act, a franchise business refers to an arrangement in which a franchisee uses the trademark, trade name, and other business marks of a franchisor to sell goods in accordance with set quality standards and business methods.

The franchisor provides support, training, and oversight for the franchisee's management and business operations, and the franchisee pays a franchise fee to the franchisor in return for the use of the business marks and for the support and training related to management and business operations.

The Fair Transactions in Franchise Business Act is the law governing fair transactions in franchise business, and its purpose is to establish a fair trading order in franchise business and to promote the balanced and mutually complementary development of franchisors and franchisees.

For a client seeking to file suit against a company that violated the Fair Transactions in Franchise Business Act, the attorney provided assistance as follows.

As a result of filing suit against the company that violated the Fair Transactions in Franchise Business Act, the court ruled in the client's favor.

The court issued a judgment ordering the defendant to compensate the client 16 million won in franchise fees and the interior contractor to compensate the client 41 million won in construction costs.

The client had been suffering severe financial and emotional stress because of the unreasonable franchise agreement that violated the Fair Transactions in Franchise Business Act and the poorly performed interior construction.

With the attorney's assistance, the client was able to obtain the desired result in the suit against the defendant who violated the Fair Transactions in Franchise Business Act.

As in this case, resolving a dispute arising from a franchise agreement on one's own can present considerable difficulty.

If needed, consulting an attorney can be helpful in working toward a favorable outcome. 🔗Find an attorney