Fair Trade Commission Sends Review Report to bhc... Allegations of 'Gapjil' Against Franchise Stores

Sanctions Initiated Over Allegations of 'Gapjil' Abuse by Franchisee

[Asia Economy Reporter Moon Chaeseok] The Fair Trade Commission (FTC) has begun procedures to sanction bhc for allegations of 'gapjil' abuse of power and is also investigating Kyochon Chicken, accelerating efforts to prevent legal violations by franchises.

According to the FTC on the 3rd, it recently sent a review report, equivalent to a prosecutor's indictment, to bhc, which is accused of violating the Franchise Business Act and other laws.

The FTC plans to hold a subcommittee meeting soon to make a final decision on the level of sanctions, including fines and criminal charges.

The FTC has been investigating since September 2018 the allegations that bhc unfairly imposed advertising costs on franchisees.

It is also reviewing suspicions that bhc unilaterally terminated contracts with franchise owners and stopped supplying key products.

At a national audit, FTC Chairman Cho Sung-wook stated, "If bhc's unfair trade practices are found to violate the law, we will impose strict sanctions."

The reason the FTC is accelerating investigations into major chicken franchise operators is that chicken restaurants are among the most common franchises in Korea, and thus unfair practices are likely to occur frequently.

Amendments to the Franchise Business Act to prevent abuse of power by franchise headquarters are also being pursued.

The FTC will announce a legislative amendment to the Franchise Business Act by the 9th, requiring franchise headquarters to obtain prior consent from a certain percentage of franchise owners before conducting discount promotions.

This measure aims to prevent abuse of power such as conducting discount events without franchise owners' consent and passing the costs onto them.

After gathering opinions from stakeholders and relevant ministries, the FTC plans to submit the amendment bill to the National Assembly following review by the Office for Government Policy Coordination and the Cabinet meeting.

This content was produced with the assistance of AI translation services.