2019Da211324 Cancellation of the right to collateral security

Plaintiff 1 and one other

Attorney Kim-sik, Counsel for the plaintiff-appellant

Non-Bladago et al.

Law Firm Bululul, Counsel for the plaintiff-appellant

Attorney Park Young-man

Daegu District Court Decision 2018Na303729 Decided January 23, 2019

November 26, 2020

The judgment below is reversed, and the case is remanded to the Daegu District Court.

The grounds of appeal are examined.

1. A. The legislative purpose of the former Fair Transactions in Franchise Business Act (amended by Act No. 12094, Aug. 13, 2013; hereinafter “Franchising Business Act”) is to establish a fair trading order for franchise business and to ensure complementary and balanced development between franchisers and franchisees on an equal footing (Article 1). A franchisor requires franchisees to use a franchisor’s business mark to sell goods, etc., and also provide franchisees with support for and training on business management, business activities, etc. and controls such activities (Article 2 subparag. 1); franchisees shall pay consideration to franchisers in order to receive the aforementioned continuous support and training (Article 2 subparag. 1 and 6). A franchisor is obligated to provide franchisees with information on the quality management and supply of goods, etc., including business plans for the success of franchise business, and to provide franchisees with or to provide them with information on the management and business activities in a complementary manner (Article 5). A franchisor is not obligated to provide franchisees or to provide prospective franchisees with false information in violation of Article 16(1)5).

B. Comprehensively taking into account such contents of the Franchise Business Act, the term “in cases of omitting an important matter under Article 9(1) of the Franchise Business Act” means cases where a prospective franchisee was unable to establish and operate a franchise store due to a lack of significant influence on the decision-making of the prospective franchisee, including the conclusion and maintenance of the franchise agreement, or where it is evident in light of empirical rule that the prospective franchisee would have not entered into the franchise agreement if he/she was notified of certain circumstances, he/she was consulted or consulted in order to enter into the franchise agreement. If the franchisor commits such act, the franchisor breached the obligation to provide information or the obligation to notify under Article 9(1) of the Franchise Business Act and the franchisor is liable to compensate prospective franchisees for damages under Article 56(1) of the Monopoly Regulation and Fair Trade Act applied mutatis mutandis under Article 37(3) of the Franchise Business Act (see, e.g., Supreme Court Decision 2014Da84824, 84831, Apr. 9, 2015).

2. We examine this case.

A. Review of the reasoning of the lower judgment and the record reveals the following facts.

1) On June 2012, Plaintiff 2 entered into the instant contract with the Defendant, the franchisor, and the Defendant, which entered into a franchise agreement with respect to the instant store. At that time, Plaintiff 2 completed the instant collateral security registration as to the land owned by Plaintiff 1, the husband, in order to secure the performance of obligations under the instant contract, and commenced convenience store business for the general public at the instant store.

2) However, in principle, the store of this case can not be operated as a convenience store for the general public. Under the Industrial Cluster Development and Factory Establishment Act (hereinafter "Industrial Cluster Act"), the store of this case is located under the Cdong of a newly constructed factory by the non-party company under the Industrial Cluster Development and Factory Establishment Act. According to Article 12 subparagraph 2 and subparagraph 3 of the new industrial complex occupancy contract entered into between the non-party company and the Ulsan Metropolitan City Mayor, the non-party company shall not change the purpose of use or make profits from the sale site without the consent of the Ulsan Metropolitan City Mayor, and Article 13 (1) of the Industrial Cluster Development Act provides that the non-party company may take measures or take profits from the sale site without the consent of the Ulsan Metropolitan City Mayor. Article 2 subparagraph 1 of the Industrial Cluster Development and Factory Establishment Act (hereinafter "Industrial Cluster Development Act"), "factory" or structures, machinery and equipment forming manufacturing processes, and ancillary facilities prescribed by Presidential Decree, but it does not include facilities for manufacturing business prescribed by Presidential Decree, such as manufacturing business.

3) On July 2012, Ulsan Metropolitan City notified the Defendant of the corrective order on the grounds that it was unable to operate convenience stores for the general public at the instant store, and issued a warning of removal, etc. In the end, Plaintiff 2 suspended business on or around December 2013 (the location where the instant store exists is located is only 30 residents), and around January 2014, notified the Defendant of the termination of the instant contract, asserting that it is attributable to the Defendant, insofar as there is no legal problem regarding the establishment of member shops.”

4) The defendant asserts that the court below also held that the store of this case is for the internal employees of the factory, it is possible to operate within the scope of the cafeteria, and that there are a number of cases of operating convenience stores at the same location as the store of this case in fact as the store of this case, and that there are many cases of operating convenience stores within the industrial complex during the process of concluding the contract of this case, it seems that the defendant only asked whether there is a franchise store in operation and did not notify the above legal restrictions.

B. Examining these facts in light of the aforementioned legal principles, the circumstance that the location of the store of this case is the same as that of the store of this case, but the general convenience store business for the general public cannot be operated, and the type of limited store store business for the factory employees is inevitable to be operated only in the form of a store store, such as the conclusion and maintenance of a franchise agreement, or that if a prospective franchisee was notified of such circumstances, he would have not entered into a franchise agreement if he was notified of the fact. If the defendant did not notify the defendant of such circumstance in the course of consultation or consultation for concluding a franchise agreement, such act constitutes an omission of important matters under Article 9(1) of the Franchise Business Act, i.e., the duty to provide information or the duty to notify., the existence of liability for damages caused by such breach, the extent of recognition of liability for damages, and the obligation to be compensated for the collateral security registration of this case, etc., should be determined again in accordance with the above legal principles.

The lower court rejected all Plaintiff 2’s claim for damages and Plaintiff 1’s claim for the cancellation of the instant mortgage registration on the ground that the cause attributable to the termination of the instant contract was not the Defendant, without examining whether the Defendant breached the duty to provide information or notify under Article 9(1) of the Franchise Business Act, and without examining whether the Defendant is liable for damages against Plaintiff 2. In so doing, the lower court erred by misapprehending the legal doctrine on the duty to provide information or the duty to notify under Article 9(1) of the Franchise Business Act, thereby adversely affecting the conclusion of the judgment. The allegation contained in

3. The judgment of the court below is reversed without examining the remaining grounds of appeal, and the case is remanded to the court below for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Supreme Court Decision 201

Justices Kim Jae-in

Justices Min Il-young in charge

Justices Lee Jae-hwan