The chicken franchises "Puradak" and "60Gye" were caught by the Fair Trade Commission for forcing franchise owners to purchase receipt printing paper, promotional panels, and more.
On the 30th, the Fair Trade Commission issued a corrective order to Idus F&B, the operator of Puradak, and Jang's Food, the operator of 60Gye, for violating the Franchise Business Transaction Act.
According to the Fair Trade Commission, from July 5, 2018, to Feb. 26 last year, Idus F&B forced franchise owners to purchase receipt printing POS paper, chicken box sealing stickers, and food label stickers indicating food expiration and storage methods only from them.
Idus F&B entered into franchise contracts stipulating that if franchise owners purchased the items above from other sources, it would suspend product supply or impose a penalty of 5% of the previous month's sales.
Similarly, from Nov. 22, 2022, to Jul. 31 last year, Jang's Food forced franchise owners to purchase promotional light panels for glass walls only from them.
Jang's Food also signed franchise contracts that either cut off supply of goods and materials or terminated the contract if franchise owners obtained light panels from general market sources.
The Fair Trade Commission considered these actions as forcing the purchase of products not related to maintaining the uniformity or taste and quality of key products, such as chicken, in franchise operations. This is a type of coercive transaction prohibited by the Franchise Business Act. Previously, the Fair Trade Commission also sanctioned companies for forcing purchases of items like dish soap, sink facilities, plastic containers, ladles, and spatulas.
The Fair Trade Commission regarded it as problematic that Idus F&B and Jang's Food had contract provisions allowing them to impose disadvantages on franchise owners, even if they did not actually cut off material supply or terminate contracts.
The Fair Trade Commission stated, "Franchise headquarters must thoroughly review whether the compelled purchase items are essential for franchise business management, referring to existing cases of sanctions," and noted, "It is desirable to designate the compelled purchase items to a minimum."