Last year, Lee Byungwook (alias, 39), who ran an all-you-can-eat barbecue franchise, said this after receiving three settlement reports from the headquarters. The settlement reports Lee received were filled with detailed records of the store's sales, expenses, and profit figures as calculated by the headquarters.

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According to the settlement reports, the restaurant operated by Lee recorded monthly sales of approximately 102.5 million won last year. The headquarters calculated the store's profit by deducting fixed expenses from sales and adding the headquarters loan amount. The profit for Lee's store, as calculated by headquarters, was about 25 million won, with a profit margin of 24.6%.

The headquarters loan was money Lee borrowed from a savings bank arranged by the headquarters under the pretext of interior renovation costs. The loan amounted to about 260 million won, with an interest rate of 9.5% and a two-year repayment term. Out of the 102.5 million won in sales Lee achieved, after deducting 88.3 million won in fixed expenses, adding 8.6 million won in loan repayments to the headquarters, and 2.4 million won for a blog review group, the store's profit was set at 25 million won. While the settlement report showed a profit of about 25 million won, in reality, after accounting for additional costs Lee had to pay while running the store, there was no money left over.

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The following month, Lee again achieved nearly 100 million won in sales and recorded a profit margin of about 20% according to the settlement report, but for the same reasons, he did not actually make any money. The headquarters reported sales of 98 million won and expenses of 93 million won in the settlement report, resulting in a profit of about 5 million won. When oven rental fees (1.3 million won) and headquarters loan repayments (12 million won) were added, the store's profit margin was calculated at 19.4%.

Lee said, "After repaying the interior renovation loan of over 10 million won, even with 100 million won in sales, there was nothing left in my account," adding, "With sales declining every month and losses widening, I realized I could not continue the business."

The franchise headquarters reportedly demanded additional contributions from franchisees who had taken out loans. Headquarters explained that these funds were accumulated like a reserve and used when a franchisee was unable to repay the loan. The additional contributions were calculated by adding a certain amount to the meat ordering costs.

For example, when ordering a box of 15 kg pork belly, an extra 60,000 won would be charged. The headquarters specified in the franchise disclosure document that if a franchisee procured meat elsewhere instead of ordering from headquarters, a penalty of 50 million won would be imposed. As a result, for franchisees, paying the additional 60,000 won per meat order was effectively a mandatory requirement. Meat orders accounted for over 40% of fixed expenses, making it the largest single cost item.

Regarding this, the headquarters explained, "The savings bank loan product is a high-value loan that is difficult to secure based solely on the franchisee's credit rating, so funds are pooled and deposited under the headquarters' name," adding, "It is a product structured on the condition that the franchisee makes additional contributions (at the time of meat orders) to cover any shortfall in principal and interest." They further explained, "In practice, repeated failures by franchisees to make deposits meant the headquarters had to cover the shortfall on their behalf."