[비즈한국] Companies sometimes make decisions that are difficult to explain based solely on money. Understanding the laws and systems hidden within helps one grasp the deeper context. 'Useful Business Tips (Al-Ssul-Bi-Beop)' introduces clues that help in understanding business flows.
It is often said that 'the greatest success model created by humanity is the franchise.' While this may sound strange or uncomfortable given the reality of increasing conflicts between franchisors and franchisees, it is partly true. Franchises are not merely a way of doing business, but one of the most efficient expansion mechanisms created by modern capitalism, as they are replicable business models based on standardized operating systems and brand assets.
Franchises utilize products and service models that have already been verified in the market. For the franchisor, they can expand rapidly and realize economies of scale by combining the capital and on-site capabilities of franchisees. Conversely, franchisees can begin operating on a relatively stable business foundation by utilizing brand trust, operational manuals, logistics/marketing systems, and training frameworks while reducing the risks of an independent startup. Ultimately, franchises are closer to interdependent economic partnership models in that they grow while distributing capital, know-how, and risk.
In fact, looking around, a significant portion of newly opened stores are franchises, and the proportion of franchises is also high among stores that survive for a long period. This is because consumers gain predictability regarding quality and service through the brand, and franchisors maintain consistency through standardized operations and supply chain management.
In particular, franchises in the food service and beverage sectors are becoming targets for intensive investment by private equity funds. The background to this includes the fact that they have numerous customer touchpoints, making brand expansion easy, cash flow is relatively stable, and there are many success stories where profitability was boosted in a short period through operational efficiency and management improvement.
The proportion of franchises in the startup market will continue to increase. Perhaps that is why, unlike in the past, legal issues in the franchise sector are being extensively reported by the media. The most widely known issue among such reports recently is the so-called 'difference-in-franchise-fees' (purchase margin) dispute. Looking at the legal precedents, in the case of pizza franchise Company A, the Supreme Court ruled on January 15, 2026, to uphold the franchisee's claim for the return of unjust enrichment on the grounds that there was no contractual basis for the franchisor to receive the difference-in-franchise-fees, and no implied agreement was recognized.
Meanwhile, the Supreme Court's ruling on January 29, 2026, concerned hamburger franchise Company B. According to the franchise agreement, if a price change is necessary, it can be changed through consultation between the franchisee and the franchisor. Although there was no written presentation or consultation, the court dismissed the franchisee's claim for the return of unjust enrichment, stating that it could be seen as having subsequent/implied consent, and therefore the franchisor's receipt of the increased product prices was justified. While the two previous rulings may appear to have contradictory conclusions on the surface, they are closer to applying the same criteria to different factual contexts.
Let's look at the business structure of domestic franchises. The 'difference-in-franchise-fees' refers to the amount that exceeds a reasonable wholesale price among the consideration paid by the franchisee to the franchisor for items designated as essential by the franchisor. Simply put, it is the margin the franchisor receives while supplying raw materials and subsidiary materials to the store. Domestic franchises tended to secure funding through these raw material distribution margins and logistics. Academia and civic groups have pointed out, citing overseas cases, that it is desirable for franchisors to secure income through royalties and for franchisees to lower costs through cooperatives.
The Fair Trade Commission has also strengthened regulations, such as by judging the franchisor's designation of essential items as a violation of the Franchise Business Act and imposing sanctions if it is not directly related to maintaining the identity and quality management of the franchise stores. Furthermore, the amended Enforcement Decree of the Franchise Business Act on April 3, 2018, allowed the difference-in-franchise-fees to be included in the information disclosure statement, establishing a basis for franchisees to assert legal rights regarding them.
The theme that runs through the amended legislation, the Fair Trade Commission's regulations, and the Supreme Court's rulings is simple: they will not allow excessive securing of funds through the supply of goods. In particular, the Supreme Court's ruling on Company A specified that an implied agreement that can justify the receipt of difference-in-franchise-fees is recognized only to a limited extent by ruling as follows:
○ In the case of a franchise agreement, the franchisor is often in a significant position of superiority over the franchisee in terms of information or bargaining power, the franchise agreement is usually concluded through a standard contract form, and the Franchise Business Act requires the franchisor to provide the franchise applicant with a franchise contract document containing the main contents of the contract before concluding the agreement.
○ Taking these points into account, in order to acknowledge that there was an implied agreement disadvantageous to the franchisee between the franchisor and the franchisee during the franchise contract process, one must carefully judge by comprehensively considering the socio-economic status of the franchisor and franchisee, the circumstances and overall content of the franchise contract, whether sufficient information was provided to the franchisee to express an intention to enter into such an implied agreement, special circumstances where the franchisor had to omit the agreement contents from the contract document despite legal uncertainty or the risk of fines, the degree of disadvantage suffered by the franchisee as a result, and trade practices.
If so, should the franchisor's receipt of distribution margins be completely denied? Is there no way to secure concrete validity? In the case of hamburger franchise Company B, the Supreme Court ruling recognized the franchisor's receipt of the increased prices with this sense of the issue in mind. The reason is that it acknowledged that the franchisees had subsequently/impliedly agreed to the price increase.
Although the previous Company A ruling presented very strict criteria for implied agreements, the Company B case recognized subsequent/implied consent. In the case of Company B, this was the result of considering that the franchisor had consulted with franchisees about the factors and amounts for the product price increase, that the franchisees did not raise any particular issues during the consultation process, and that there were indeed reasons for the price increase, such as rising costs.
In conclusion, the trend of strictly judging a franchisor's receipt of distribution and logistics margins will continue. However, if there is an objective unit price calculation standard and sufficient and serious consultation with franchisees took place during the process, there is room for it to be recognized as legally justified. The key is not the profit structure itself, but the fairness and transparency of the process that forms that structure.
Such work is an area that can only be achieved by going beyond simple legal interpretation and accumulating experience in understanding franchise business structures and dealing with actual field conflicts. As the franchise industry becomes more sophisticated, regulations and disputes will also become more complex, and eventually, the gap in expertise will lead to a gap in the market.