Convenience store franchise headquarters receive high scores on ‘evaluation of fair trade agreement’ if they execute voluntary regulations well when they sign contracts with owners of franchise stores.
Fair Trade Commission (FTC) announced that it drastically revised standards for evaluation of fair trade agreement.
FTC applied information on voluntary regulations that were established last December to evaluation standards for agreement. It decided to evaluate franchise headquarters on whether it provides enough information on trade area when a franchise store is about to open (2 points), whether it actively allows owners of franchise stores to reduce their business hours in case of emergency (2 points), and whether it reduces or exempts cancellation fee when owners cancel contracts due to irresponsible reasons.
It decided to allot ten points from three points previously when headquarters use standard contract forms (dine-out, wholesale and retail, education service, convenience store). However, depending on ratio of selection of each item of a standard contract form, it is going to allot anywhere between one to eight points.
Three points will be allotted on whether a franchise headquarters received franchise deposits through royalty. FTC established a new assessment (2 points) that will evaluate on whether a franchise headquarters reduced amount of items of forced purchase compared to previous year. It also decided to give between zero and three points based on amount of sales of essential items out of entire sales.
It established a new assessment on ‘establishment and operation of internal ombudsman’ to minimize any conflict between a headquarters and an owner by resolving it internally when there is one. It will also evaluate franchise headquarters on whether they execute renewal of long-term contracts so that owners who have contributed to pioneer of trade area and increase in brand value for long-term do not face cancellation of contracts unfairly.
“Revision of evaluation standards will protect rights of owners even more and create coexistence between owners and headquarters.”
Staff Reporter Yoo, Seonil | ysi@etnews.com