- Orders imposed for the following practices: ▲Forcing franchisees to purchase ingredients for new menus, ▲Providing false or exaggerated information on expected sales, ▲Restricting franchisees to designated suppliers for essential items, ▲Imposing excessive liability for damages -
The Korea Fair Trade Commission (KFTC, Chairperson Han Ki-jeong, hereinafter “KFTC”) has issued corrective orders against Dareum Plus Co., Ltd. (hereinafter “Dareum Plus”), which operates the franchise brand “Ichadol,” specializing in beef brisket dishes, for violating the Fair Transactions in Franchise Business Act through the following four unfair practices:
① Forcing franchisees to purchase ingredients for new menu items,
② Providing false or exaggerated expected sales information,
③ Restricting franchisees to specific suppliers for essential items, and
④ Imposing excessive liability for damages.
Meanwhile, the KFTC judged that three of these violations (① to ③) constituted acts that significantly hinder fair trade practices, thereby making them subject to surcharge penalties. However, considering that Dareum Plus is currently undergoing corporate rehabilitation procedures, the Commission decided to waive the surcharge.
This measure by the KFTC is expected to enable franchisees to make better-informed decisions on whether to join a franchise based on reasonable revenue estimates, while reducing the burdens of new menu sales and inventory, mandatory purchases of essential items, and unfair risk of damages.
The KFTC stated that it will continue to monitor unfair practices by franchisors and will take strict measures against violations to protect the rights and interests of franchisees.