In connection with Mega MGC Coffee operator N House being hit with about 2.3 billion won in a penalty surcharge by the Fair Trade Commission for acts such as restraining transaction counterparts and unfair coercion, the company said it "humbly accepts the FTC's decision," adding that "most of the issues have already been corrected."
On the 1st, the Fair Trade Commission imposed corrective orders and a 2.292 billion won penalty surcharge on Mega MGC Coffee headquarters for: ▲ unilaterally making franchisees bear the full mobile gift certificate fee without consent or prior consultation ▲ forcing purchases of ice makers and grinders only from itself ▲ conducting promotional events without obtaining proper consent.
N House said in a press release that it accepts the FTC's decision. However, it noted: ▲ the mobile gift certificate matter was already corrected in Jul. 2020, about five years ago ▲ the other issues occurred before the current management acquired control in Jul. 2021 and all were corrected after the acquisition. It added, "There were also no disadvantages incurred by franchise owners as a result."
Regarding the controversy over violations involving mandatory items, it said, "Imposing a penalty surcharge of nearly 2 billion won for violations involving two items appears to be because our total sales are large," adding, "We plan to closely examine whether it is truly reasonable to impose a fixed percentage of a penalty surcharge on the company's total sales without considering the number or severity of the violating items, whether they are essential to the business, and the scale of related sales."
It also argued that the controversy claiming that a private equity-owned franchisor shifted various expenses, such as splitting mobile gift certificate fees, onto franchise owners is not true. N House said, "In the past, a private equity fund invested as a financial investor, but currently there is no equity held by a private equity fund."