Court: Fair Trade Commission's Sanction on Sulbing for 'Providing False Information Related to Sales' Is Lawful
[Asia Economy Reporter Choi Seok-jin] A court ruling has upheld the Fair Trade Commission's warning against Sulbing, a shaved ice specialty store, for providing false information related to projected sales figures during the recruitment of franchisees.
According to the legal community on the 3rd, the Seoul High Court Administrative Division 7 (Presiding Judge Seo Tae-hwan, Judges Kang Moon-kyung and Jin Sang-hoon) recently ruled against Sulbing in a lawsuit filed by the company seeking to cancel the Fair Trade Commission's warning.
The court stated, "The plaintiff calculated the highest and lowest projected sales figures differently from the method prescribed by the Franchise Business Act, yet filled in the calculation basis section of the projected sales documents with a specific calculation method stipulated by the Franchise Business Act and its enforcement decree, thereby providing prospective franchisees with false information as if the projected sales range was calculated objectively and reasonably according to the Franchise Business Act."
In 2014, Sulbing provided prospective franchisees with documents indicating that the projected sales figures were based on sales data from franchise stores operating for more than six months in the previous year (2013). However, Sulbing was established in August 2013, making such a method of calculating projected sales figures impossible.
Accordingly, the Fair Trade Commission issued a warning in August last year, citing that Sulbing provided false or exaggerated information regarding projected sales to 70 prospective franchisees between July and September 2014.
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During the trial, Sulbing argued that the lowest projected sales figure was calculated based on the previous year's average daily sales of all franchise stores nationwide, and the highest figure was based on the average daily sales during the peak season of the current year, claiming the calculation was not arbitrary. However, this argument was not accepted.
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