New Government Regulations on Franchise Restaurants [Arirang News]



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제과협회 가맹빵집 극한대립

With continued government focus on boosting the nation’s small businesses bakeries and restaurants may be classified

as small and medium-sized enterprises to qualify for support measures.
But the aim to protect mom and pop businesses from larger ones, is not only facing criticism from big companies but

also franchise owners.

Kim Hyun-bin reports.

A list of new government restrictions is stirring up franchise restaurants and bakeries around the nation.

Early this week, the National Commission for Corporate Partnership classified bakeries as businesses reserved for small-

and medium-sized enterprises, which means that companies exceeding a certain size are barred from entering into

certain fields and markets.

Franchise bakeries are banned from opening stores within a 500 meter radius of a mom and pop shop, and are limited

to two percent growth per year.

Franchises restaurants are prohibited from opening new stores under other names and will not be able to extend their

power by mergers and acquisitions.

The National Commission for Corporate Partnership says that this policy is intended to help struggling mom and pop

businesses.

“The mom and pop stores are struggling these days and big corporate franchises are putting pressure on them.

Eventually, that forces most independent owners to close their doors. So we wanted a policy that protects them.”

Independent store owners were pleased to hear the news, saying that they have struggled to compete with franchise

firms.

“I am for the policy. Franchises were increasing at a rapid rate, so we suffered some losses. Now since we don’t have

to worry about corporate franchises. I think we will benefit greatly.”

Meanwhile an emergency board of franchise owners on Wednesday filed a motion to have the duties of the Korea

Bakery Association suspended.

According to the board, there are around 4-thousand members of the Korea Bakery Association, and only 15-hundred

are franchise bakeries.

The board also said that the Korea Bakery Association has had problems of its own, rejecting memberships to start up

businesses, and it requested that the Ministry of Health and Welfare conduct an investigation into the association’s practices.

“The government tried implementing the ban during the Roh Moo-hyun administration, but it was scrapped because it proved ineffective.

Not much has changed since then and the fight over the current ban is expected to go on for some time.

Kim Hyun-bin, Arirang News.”

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