The COVID-19 pandemic has had a tremendous impact on individual trading activities as well as society as a whole. The franchise business industry also suffered a lot of difficulties as the COVID-19 pandemic occurred. As business performance was not be...
The COVID-19 pandemic has had a tremendous impact on individual trading activities as well as society as a whole. The franchise business industry also suffered a lot of difficulties as the COVID-19 pandemic occurred. As business performance was not being carried out properly due to lockdown, it was discussed whether the corona crisis was a cause of force majeure. Our legal system accepts the concept of force majeure, but our courts rarely recognize force majeure. In the case of swine flu or MERS, there are cases where it was not recognized as force majeure. However, COVID-19 pandemic is a situation that is incomparable to this, and it is difficult to predict and control, so it can be applicable to force majeure.
In the case of long-term contracts such as franchise contracts, the damage caused by non-fulfillment of the contract is great, so force majeure situations must be regulated in advance. Rather than a separate legal regulation through the franchise law, the force majeure clause should be more elaborately structured in the contract. Also, the force majeure clause may not apply equally to franchisors and franchisees. This is because the franchisor and franchisees have different liabilities and different ability to predict and control force majeure. The British court ruled that the practical difficulties faced by franchisees should be considered in applying the force majeure clause at the time of the COVID-19 pandemic. Furthermore, in the process of continuous transactions, the reputation of the brand increases and the profits go back to everyone. Therefore, the system or laws related to franchise business should be designed in the direction of maintaining transactions as much as possible. New Zealand has a system to maintain business relationships by preparing procedures for rent adjustment in the event of a disaster situation and sharing damages.