The Korea Fair Trade Commission ordered on the 26th that Deokeun, the operator of the food court "Deokeun Siktak," provide prospective franchisees with sufficient information related to franchise contracts.
According to an investigation by the Korea Fair Trade Commission (FTC), Deokeun did not provide a disclosure document when it signed an entrusted operation management contract with a prospective franchisee in 2023. A disclosure document is a paper that contains the headquarters' financial condition, the number of franchise stores, average sales by store, and other information. Deokeun also provided a franchise contract that omitted required entries, including matters such as setting business hours.
Under the current Franchise Business Act, to ensure that a prospective franchisee fully understands information related to the business before entering into a contract, a franchise contract may be signed only after 14 days have passed since the receipt of the disclosure document and a franchise agreement that includes the required entries. The Korea Fair Trade Commission (FTC) applied allegations of violating Article 7 of the Franchise Business Act, which imposes the obligation to provide disclosure documents, and Article 11 of the same act, which specifies the required entries in the franchise agreement, to Deokeun.
The Korea Fair Trade Commission (FTC) said, "We will continue to monitor unfair practices by franchisors to robustly protect the rights and interests of franchisees, who are small business owners."