In South Korea, a business that offers a franchise must comply with the Fair Transactions in Franchise Business Act. A core requirement is that franchisors register an Information Disclosure Statement (often referred to as a franchise disclosure document) with the Korea Fair Trade Commission (KFTC) and provide it to prospective franchisees before any agreement is signed.
On KOBDi, this disclosure information helps you identify which company (and representative) stands behind a brand, what brands are operated under a franchisor, and how the franchise business is described in official disclosure materials.
What is franchisor & brand disclosure information?
Franchise disclosure information is a structured set of disclosures registered by a franchisor and delivered to prospective franchisees. Under the Franchise Act, franchisors must provide prospective franchisees with a disclosure statement that has been registered (or updated and re-registered, where applicable).
The disclosure document typically includes detailed business information about the franchisor and the franchise system—commonly including financial statements and other key franchise-related details (as reflected in legal practice guidance).
Who must register?
In general, any business operating a franchise (i.e., offering franchisees the right to operate under its brand/system) must register the disclosure document and comply with mandatory disclosure rules before contracting and collecting franchise fees.
In addition, Korea introduced a strengthened “directly-managed store” requirement in practice: if a franchisor has no directly-managed store or less than one year of directly-managed store operation, registration of the disclosure document may be refused (subject to certain exceptions and interpretation).
What does the disclosure/registration indicate about the business?
- Regulatory compliance signal: The business is operating within Korea’s franchise regulatory framework and has registered a disclosure statement as required.
- Brand ownership and accountability: The disclosure framework is designed so prospective franchisees can understand which entity and representative stand behind the brand(s) and franchise system.
- Pre-contract transparency: The law requires that the disclosure statement be provided in a verifiable manner and that 14 days pass after delivery before the franchisor can enter into the franchise agreement or receive franchise fees (with a shorter period in certain advisory cases).
- Substance behind the brand: Disclosure materials commonly include meaningful business information (including financial statements, as reflected in standard guidance), which supports due diligence beyond marketing claims.
- Stronger when paired with outcomes: Registration/disclosure shows compliance and intent; the signal becomes materially stronger when combined with measurable outcomes (e.g., brand scale, store counts, disputes, and other track-record indicators available across datasets).
Coverage in KOBDi
Coverage in KOBDi: KOBDi includes franchisor and brand disclosure information for relevant Korean businesses, enabling you to verify franchise operators behind brand names and review disclosed details directly within Business Profiles. Franchise-related records can also be surfaced through the KOBDi Korea Industry Search as part of franchise discovery and due diligence workflows.