Fair Trade Commission "Maru F&C and MK Company failed to provide disclosure documents in advance to franchise applicants... Corrective order issued"

[Sejong=Asia Economy Reporter Joo Sang-don] The Fair Trade Commission announced on the 17th that it has decided to issue corrective orders against Maru F&C Co., Ltd. and MK Company Co., Ltd., franchise headquarters based in Daejeon, for violations of the Franchise Business Act.

According to the Fair Trade Commission, Maru F&C provided prospective franchisees with estimated sales information indicating a daily sales amount of 1 million KRW and a monthly sales amount of 30 million KRW based solely on the sales figures immediately after opening stores directly operated by itself during the period from June 29 to July 11, 2019. However, the estimated sales information provided by Maru F&C to prospective franchisees was false and exaggerated without objective grounds.

Additionally, Maru F&C did not deposit the franchise fees received from prospective franchisees or franchise business operators during the contract process into designated financial institutions but directly received them into its corporate account from July 11 to 31, 2019. MK Company also did the same from November 2018 to February 2019. This violates the Franchise Business Act, which requires franchise fees to be deposited to prevent damages such as the franchise headquarters receiving fees from prospective franchisees without commencing the franchise business or providing operational support.

Furthermore, Maru F&C did not provide the disclosure document when signing a franchise contract with a prospective franchisee on July 11, 2019. MK Company received franchise fees (68.75 million KRW) from prospective franchisees before 14 days had passed since providing the disclosure document in September 2019. Both franchise headquarters also violated the obligation to provide the franchise contract in advance.

A Fair Trade Commission official stated, "This action is significant in correcting acts where franchise headquarters provided important sales information without objective grounds during the franchise recruitment and opening stages, or concluded franchise contracts without providing disclosure documents and franchise contracts in advance, thereby obstructing the reasonable judgment of prospective franchisees." The official added, "The Fair Trade Commission will continue to monitor unfair trade practices by franchise headquarters and impose strict sanctions if violations are detected."

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