Fair Trade Commission "World Cleaning did not provide key information to franchise applicants... Correction order issued"

[Sejong=Asia Economy Reporter Joo Sang-don] The Fair Trade Commission announced on the 2nd that it imposed corrective orders on World Cleaning for failing to provide prospective franchisees with the disclosure document and franchise agreement before signing the franchise contract, and for directly receiving franchise fees without depositing them in the designated financial institution.

According to the Fair Trade Commission, World Cleaning did not provide the disclosure document or the nearby franchise status document to 54 prospective franchisees before signing franchise contracts from July 2014 to March 2017. Under the Franchise Business Act, the franchisor must provide the disclosure document registered with the Fair Trade Commission and the nearby franchise status document at least 14 days before signing the contract or receiving the franchise fee.

During the same period, World Cleaning did not provide the franchise agreement to 62 prospective franchisees before signing the franchise contracts. The franchisor must provide the franchise agreement on the contract signing date or before the first receipt of the franchise fee.

Additionally, from July 2014 to April 2018, World Cleaning signed franchise contracts with 197 prospective franchisees and directly received 803 million KRW into its own account without depositing the franchise fees in the designated financial institution. Except in cases where the franchisor has entered into a franchisee damage compensation insurance contract, the franchisor must require franchisees (including prospective franchisees) to deposit franchise fees such as membership fees, entrance fees, training fees, and deposits in a bank or other deposit institution. This is to prevent damages such as the franchisor receiving franchise fees from prospective franchisees without commencing the franchise business or providing operational support.

A Fair Trade Commission official stated, "It is significant that we sanctioned the franchisor for obstructing the rational judgment of prospective franchisees by not providing important information during the franchise contract process and for the unfair practice of directly receiving franchise fees," adding, "By providing accurate information to prospective laundry business franchisees, we expect to establish a fair trade order in the laundry market."

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