- Corrective orders and fines imposed on the franchise headquarters Jokbal Night Market (㈜All F&B) -
The Korea Fair Trade Commission (Chairman Han Ki-jeong, hereinafter referred to as the "KFTC") has imposed corrective orders and a fine of KRW 94 million on All F&B Co., Ltd. (㈜올에프엔비) for forcing franchisees to purchase packaging container products exclusively from designated suppliers.
As of the end of 2023, All F&B recorded an annual revenue of KRW 22.4 billion and operated 231 Jokbal Night Market franchise locations.
From November 29, 2023, to January 8, 2025, All F&B required franchisees to purchase 13 types of packaging containers—easily available in the market—exclusively from suppliers designated by the company.
In the franchise agreements, All F&B included a clause stipulating that if franchisees purchased designated products from alternative suppliers, the company could suspend product supply or even terminate the franchise agreement.
In accordance with this clause, All F&B monitored franchisees to ensure they did not purchase these products from other suppliers. If violations were detected, the company pressured franchisees to buy exclusively from the designated supplier.
The KFTC determined that All F&B violated Article 12(1)(2) of the Franchise Business Act by imposing trading restrictions on franchisees without their consent. The commission noted that these packaging products had easily accessible alternatives in the market and were not essential for maintaining franchise operations, making the forced purchase requirement an unfair trading practice.
This action is significant as it exposes and penalizes an unfair practice where franchise headquarters designate excessive "mandatory purchase items," worsening the business environment for franchisees. Such practices allow headquarters to easily increase their revenue and profits while reducing franchisees' profitability.
Meanwhile, following amendments to the Franchise Business Act and its enforcement decree, franchise agreements are now required to specify mandatory purchase items and the criteria for determining supply prices. Additionally, any changes to the terms of mandatory purchase transactions must be discussed with franchisees. Since February, the KFTC has been inspecting whether these revised requirements are being properly reflected in franchise agreements.