Gov`t to help reduce opening time of convenience stores

The owner of a franchise convenience store in Yongin, Gyeonggi Province closes its store at 3 a.m. and reopens it at 5 or 6 a.m. every day. Although the owner can hire a part-timer at night, he does so to save money to make up for a loss.

“Few people come around in this neighborhood at night and I have only a couple of visitors in the wee hour,” the owner said. “But the franchiser took a photo when I happened to close the store and sent me a warning letter that I should open the store 24/7 as the contract says.”

The government is planning to come up with measures to handle the mandatory 24/7 operation of franchise convenience stores due to the controversy over the so-called “slavery contract” with franchisees. “We’re closely looking into any problem in the current business practice that mandates 24/7 operation of convenience stores in remote residential areas," a source from the Fair Trade Commission said Monday, “We’re considering options that can help franchisers and franchisees agree on cutting down business hours in regions where revenue sharply falls at night as an exception.”

According to the contract signed by franchisers and franchisees, business hours are 24/7 in principle but franchisees can cut business hours under the approval of the franchiser in a special case. Franchisers rarely approve shorter business hours except for extremely clear-cut cases, such as for stores in subway stations, in college campuses, and on the beach during the winter.

“The Fair Trade Commission is considering an option that advises franchisers to cover some of labor costs for night-shift part-timers. We are seeking to add a case in which a franchisee has a serious personal problem such as a severe illness to the causes of shorter business hours,” another commission source said.

It is the first time that the government has announced that it will prepare for measures of convenience stores’ mandatory 24/7 operation. The Korea Convenience Store Association strongly opposed the bill that bans mandatory overnight business hours, which was proposed by Democratic United Party Rep. Min Byeong-doo last month. The association claimed, “It will cause inconvenience to customers.”

According to the trade watchdog, it has agreed with five convenience store franchisers including GS Retail that penalties by up to 40 percent will be lowered when franchisees cancel their contract in the middle of the contract period. As of now, penalties amount to 10 months of royalties (35 percent of total revenue) in case the remaining contract years exceed three years under a five-year contract. But under the revision, franchisees can pay only six months of royalties. To avoid fierce competition among new convenience stores, the watchdog has forced franchisers from opening a new store within 250 meters from existing franchisees.

jarrett@donga.com