How much should a Korean franchisor contribute to a store renovation?
When a franchisor asks a chicken restaurant, cafe, convenience store or other franchise to replace its signs and interior, the owner needs to review both the construction budget and the franchisor contribution.
This calculator connects eligible costs, expansion or relocation, construction and claim dates, and an optional termination date to estimate the statutory contribution and payment-date references.
Owners considering a transfer after renovation can also compare the portion of support potentially subject to reduction or recovery.
Korea-specific rules checked in 2026; all amounts are KRW
The statutory rate is 20% of eligible costs without expansion or relocation and 40% when expansion or relocation accompanies the work.
Equipment, furnishings and additional work unrelated to franchise uniformity are separated from the eligible basis.
A claim amount remains pending when applicability or the circumstances of the renovation are unconfirmed; the output is a conditional review amount to reconcile with evidence.
Confirm that the franchise relationship is within the Act
A shared brand sign does not establish that every contract falls under the same cost-sharing provision.
Review the actual franchise relationship and the small-franchisor exclusions in Article 3 of the Fair Transactions in Franchise Business Act.
The calculator does not independently assess the franchisor revenue, franchise-fee or store-count tests; use the contract and franchisor records to confirm applicability.
Applicability confirmed
Select this only after confirming that Article 12-2 applies to this franchise transaction.
Then distinguish a franchisor recommendation or request from voluntary work and owner-attributable problems.
A business describing itself as a franchise is insufficient evidence by itself.
Unknown or outside scope
Keep the selection unknown if the small-franchisor exclusion has not been resolved.
Directly operated stores and ordinary dealership relationships fall outside this statutory calculation.
A pending output does not determine that no right exists; separately review any contractual promise of support.
Separate the request, voluntary work and justification
Work recommended or requested by the franchisor
Check notices, messages and renewal discussions to identify who initiated the renovation.
Article 12-2(1) prohibits forcing store-environment improvements without a justifiable reason.
Decree Article 13-2(1) identifies objectively recognized deterioration, or hygiene and safety defects that impair franchise uniformity or materially disrupt normal operations, as relevant reasons.
The selection records facts for review; it does not adjudicate lawful compulsion or a violation.
Statutory contribution exceptions
Article 12-2(2) contains exceptions for work voluntarily undertaken without a franchisor recommendation or request, and unavoidable improvements arising from hygiene, safety or similar problems attributable to the owner.
These selections produce a zero statutory contribution in this model.
A separate contractual promise of support does not automatically disappear, so review its terms independently.
Selecting another reason does not automatically make the cost contribution zero.
Whether the request lacked justification and whether the franchisor must contribute to completed work are separate questions.
Keep uncertain initiation or responsibility facts unconfirmed while gathering evidence.
Enter four non-overlapping cost categories
Sign replacement
Enter the documented sign-replacement cost for this renovation.
If a combined interior quote includes signage, separate it and count it once.
Do not combine unrelated promotional expenses with signage.
Net interior construction
Enter interior construction after excluding equipment, furnishings and additional work unrelated to franchise uniformity.
Reconcile walls, flooring, ceilings and other work with the contractor and supporting records.
Entering a gross quote here and repeating its excluded items elsewhere would overstate the total.
Equipment and furnishings
Decree Article 13-2(2) excludes equipment and furnishing replacements from interior construction costs.
Their separate input explains the excluded amount and overall project budget.
It is not deducted again from the already-net interior input.
Unrelated additional work
Enter additional work chosen by the owner that is unrelated to franchise uniformity.
Separate required brand-renovation work from optional additions and preserve change orders.
Do not repeat an item already entered as equipment or furnishings.
Eligible costs E = signage + net interior; excluded costs X = equipment and furnishings + unrelated additions; total project budget T = E + X.
The calculator does not automatically add or remove VAT.
Use one consistent documented amount basis across all four inputs, and separately review disputed tax treatment or cost eligibility.
The 20% and 40% rates and more favorable contractual support
Without expansion or relocation: 20%
Eligible costs of 60,000,000 KRW produce a 12,000,000 KRW statutory contribution.
The example combines 10,000,000 KRW signage and 50,000,000 KRW net interior work; separate equipment of 20,000,000 KRW and additions of 10,000,000 KRW do not increase the eligible basis.
The total project budget is 90,000,000 KRW and excluded costs are 30,000,000 KRW.
With expansion or relocation: 40%
The same 60,000,000 KRW eligible basis produces a 24,000,000 KRW statutory contribution when expansion or relocation accompanies the work.
Do not automatically classify a change in interior layout as expansion or relocation; confirm the work and actual move.
If the project scope also changes, enter each scenario using its own quote.
For a more favorable agreed rate, the comparison uses the higher of the statutory and contractual rates.
A 30% agreement in the non-expansion example gives 18,000,000 KRW total support, split into 12,000,000 KRW statutory support and a 6,000,000 KRW contractual addition.
A 10% contractual input does not lower the 20% statutory reference in this model.
Recovery of the contractual addition requires the actual terms and is not automatically included in statutory recapture.
The contractor determines the 90-day payment reference
Owner-arranged construction
The baseline is the date the owner requests payment with a construction contract or other evidence of costs attached; payment is due within 90 days under the provision.
Distinguish an informal inquiry from the documented payment request.
Completion on 2026-01-01 and a documented request on 2026-01-10 produce a nominal 90-day reference of 2026-04-10.
Franchisor or designated contractor
When work is arranged through the franchisor or its designated contractor, the 90-day baseline is construction completion.
The same 2026-01-01 completion produces a nominal reference of 2026-04-01.
A later claim-date input does not move this baseline back.
Review the period rules in Civil Act Articles 157, 159, 160 and 161; displayed dates and elapsed days are nominal references before Saturday and public-holiday adjustments.
The date itself gives zero elapsed days and the next day gives one, without determining legally established delay.
For example, 90 days after 2026-11-09 is 2027-02-07, a Sunday, so the actual legal end date requires review.
If the contribution has been fully paid, distinguish a date reference from an outstanding payment balance.
Installments within one year require a separate agreement
The proviso in Decree Article 13-2(5) permits installment payment within one year when the parties separately agree.
It does not mandate three installments or a universal 30% / 30% / 40% schedule.
When installments are selected, enter the actual agreed final date and reconcile each installment amount and starting point with the original agreement.
The one-year outer reference is not the agreement
The date one calendar year after the ordinary payment baseline is an outer comparison reference.
The provision does not separately specify the precise starting point for that one-year range, so this date alone cannot determine the agreement validity.
Recheck an agreed final date beyond the reference, and separately review missed earlier installments even before the final date.
The separate-agreement conditions also need review for franchisor or designated-contractor work.
Review termination within three years together with franchisor responsibility
Decree Article 13-2(7) addresses a contract ending within three years after construction completion for reasons not attributable to the franchisor.
Termination and business transfer are included; the portion proportional to the remaining period may be withheld or recovered if already paid.
A transfer alone does not prove the absence of franchisor responsibility, and an unresolved responsibility selection keeps the recapture amount pending.
When franchisor responsibility is confirmed, this provision produces a zero recapture reference in the selected scenario.
The nominal three-year end date and the following day
For completion on 2026-01-01, the nominal end date is 2029-01-01 and the day outside that nominal window is 2029-01-02.
Adding three years to 2024-02-29 uses 2027-02-28 when no corresponding date exists; the following day is 2027-03-01.
A zero daily arithmetic result on the anniversary is not a determination of the legal period expiry.
Confirm holidays, first-day exceptions and the agreement before treating a transfer date as free of recapture risk.
Daily and monthly recapture are disclosed comparison assumptions
The law sets a remaining-period proportionality principle without prescribing one fixed daily or monthly formula or fractional-won rule.
This model compares daily proration over the actual calendar days in three years with monthly proration over 36 completed months.
It does not fix the denominator at 1,095 days when a leap year intervenes, and fractional KRW results are rounded to whole won.
Daily comparison
Total recapture and unpaid-reduction budget = statutory contribution × remaining actual days ÷ actual days in the three-year period.
The remaining ratio is limited to zero once the nominal end date has passed.
A termination date before completion is invalid input.
Monthly comparison
Total recapture and unpaid-reduction budget = statutory contribution × (36 − completed elapsed months) ÷ 36.
The remaining ratio is limited to 0–100%, and a partial month may differ from daily proration.
Review any difference against the agreement and settlement practice rather than automatically selecting the smaller amount.
In the hypothetical example completed on 2026-01-01 and ending on 2027-07-03, 548 of the 1,096 days have elapsed and 548 remain.
Daily proration of the 12,000,000 KRW statutory contribution gives 6,000,000 KRW, and the completed-month comparison also gives 6,000,000 KRW after 18 months.
Future termination examples assume the rules verified in 2026 continue unchanged.
Do not count unpaid reduction and cash recovery twice
For support of 12,000,000 KRW and a 6,000,000 KRW reduction budget, subtracting 6,000,000 KRW from unpaid support and demanding another 6,000,000 KRW back would double count the same budget.
Determine the total reduction first, then reconcile amounts already paid and still unpaid.
The displayed settlement applies the reduction to unpaid support first; this is a disclosed scenario, not a statutory allocation order.
Already paid: 0 KRW
Unpaid reduction: 6,000,000 KRW.
Cash return: 0 KRW.
Further support payable: 6,000,000 KRW.
Already paid: 8,000,000 KRW
Unpaid reduction: 4,000,000 KRW.
Cash return: 2,000,000 KRW.
Further support payable: 0 KRW.
Fully paid: 12,000,000 KRW
Unpaid reduction: 0 KRW.
Cash return: 6,000,000 KRW.
Further support payable: 0 KRW.
For total support A, already paid P and statutory reduction budget R, retained support is A − R.
Cash return is max(0, P − (A − R)); further payment is max(0, (A − R) − P).
Any contractual addition still needs its own recovery terms reviewed, so the displayed cash return is not a final settlement agreement.
How to use the calculator before work, after completion and before a transfer
- Confirm statutory applicability, the franchisor request and the reason using the contract and notices.
- Separate the quote into four categories and enter expansion or relocation and any more favorable agreed rate.
- Record completion, contractor type, the documented claim date and payments already received.
- For agreed installments, enter the actual final date and reconcile individual installments with the agreement.
- Enter an optional transfer or termination date and responsibility to compare daily, monthly and partial-payment scenarios.
- Save the TXT review sheet with supporting records before requesting payment or negotiating settlement.
Use each result at the relevant decision point
Before construction, distinguish the whole funding requirement from eligible costs when comparing quotes.
After construction, preserve delivery evidence and reconcile the claim date, receipts and unpaid balance.
Before a transfer, review date scenarios and separate contractual additions, then discuss who bears any settlement adjustment.
Consider operating profit and contract conditions alongside the model before postponing a transfer or changing its price.
Evidence checklist and practical limits
- Franchise contract, disclosure document and support agreement: applicability, rate, installments and recovery terms for additional support.
- Franchisor requests, construction contract and itemized quote: initiation, reasons and the four non-overlapping cost categories.
- Completion records and claim delivery evidence: the payment baseline and documented request date.
- Payment receipts and transfer or termination records: payments against this contribution, the actual contract end and responsibility.
Input caps are interface calculation limits, not statutory construction-cost ceilings.
The tool does not calculate limitation periods, late interest, damages, fines or litigation outcomes.
Review franchise-fee, training-fee and deposit returns under the separate Franchise Fee Refund Calculator, and do not double count those amounts with renovation contributions.
For historical events or later amendments, recheck the law applicable to the event.
Frequently asked questions
Does every franchisor-requested renovation receive 40% of all costs?
The rate is 20% without expansion or relocation and 40% with it.
Both rates apply only to eligible costs, excluding equipment, furnishings and unrelated additions.
Confirm applicability and statutory exceptions first.
Are separately entered equipment costs deducted from interior costs again?
The interior input is already net of those costs.
Separate equipment inputs explain exclusions and add to the total project budget; they are not deducted from net interior a second time.
Split a combined quote before entering it.
Can voluntary work still receive contractual support?
Work voluntarily undertaken without a franchisor recommendation or request is an exception to this statutory contribution.
A separate support agreement is not automatically extinguished and needs independent review.
The model zero does not determine that contractual support amount.
Does a lack of justification make the contribution zero?
Review compulsion and contribution separately.
Another-reason selection calls for justification review without automatically setting the contribution to zero.
A violation or responsibility finding requires evidence and case-specific assessment.
What if the contract states a lower rate?
For confirmed statutory applicability, the model keeps 20% or 40% as the statutory comparison floor.
A higher agreement is separated as an addition whose recovery needs its own terms.
The calculator does not conclusively interpret the contract or determine clause validity.
Is passing the 90-day date conclusive proof of legal delay?
The displayed date is nominal and precedes holiday adjustments.
Check the documented claim, contractor, installment agreement, Saturdays, public holidays and payment records.
Elapsed reference days do not establish interest or sanctions.
Must installments use three legally prescribed payments?
The provision permits a separate agreement within one year without fixing three payments or a 30% / 30% / 40% split.
Review the agreed final date and every installment in the original agreement.
The outer one-year reference alone does not establish validity.
Can I transfer the store on the third anniversary with no recapture risk?
Distinguish the nominal end date from the following day.
A zero daily calculation does not determine legal expiry time, holiday treatment or the original terms.
Confirm the actual contract end and responsibility before settling.
If support was only partly paid, must the entire reduction be returned in cash?
Separate unpaid reduction from paid-money recovery within one total budget.
For 12,000,000 KRW statutory support, 6,000,000 KRW reduction and 8,000,000 KRW already paid, the example cash return is 2,000,000 KRW and unpaid reduction is 4,000,000 KRW.
This assumes reduction of unpaid support first and should be reconciled with any separate agreement.
How does pending differ from a zero result?
Pending means applicability or relevant facts are insufficient to determine the amount.
Zero is an arithmetic result under the selected conditions for statutory support or recapture.
Neither resolves every separate support promise or other possible claim.
Official sources and rule dates
The current provisions were directly checked through the National Law Information OPEN API on 2026-11-09.
Act MST 288583 was promulgated on 2026-08-04 and effective on 2026-10-02; Decree MST 288453 was promulgated and effective on 2026-08-04.
The period rules use Civil Act MST 284415, effective on 2026-03-17.
The source-check date does not replace the effective date relevant to a particular construction event or contract.
- Fair Transactions in Franchise Business Act, Article 12-2: compulsion, contribution and voluntary-work or owner-responsibility exceptions
- Enforcement Decree, Article 13-2: eligible costs, 20% / 40%, 90 days, one-year installments and three-year remaining-period proration
- Act Article 3 and Decree Article 5: small-franchisor applicability exclusions
- Civil Act Articles 157, 159, 160 and 161: first and last days, calendar periods, Saturdays and public holidays
Future maintenance must recheck applicability, eligible costs, rates, payment baselines, installments and recapture conditions together.
Daily and monthly proration, whole-won rounding and unpaid-first settlement remain disclosed model assumptions.
Use the review sheet with evidence for a payment request or settlement
After confirming costs and rates, save the TXT review sheet with the construction contract, itemized quote and completion records.
Preserve attachments and delivery evidence when requesting payment; if the reviewed payment period has passed without payment, prepare those records for consultation about franchise dispute mediation at the Korea Fair Trade Mediation Agency.
Before a transfer, reconcile statutory and contractual recovery terms, actual payments and who bears the adjustment in the settlement clauses.
Saving the TXT file does not submit a claim or confirm payment.
Organize the notice using the Certified Letter Guide, and review separate franchise-fee claims with the Franchise Fee Refund Calculator.