'Group Food Poisoning' Gimbap Restaurant Did Not Register Franchise Business... "Thought It Was a Directly Managed Store"

The headquarters of A Gimbap Specialty Store, which recently experienced a mass food poisoning incident, was found to have operated stores without registering franchise locations.
/Photo by (left) Official Instagram of Manyeo Gimbap, (right) Getty Images Bank

[Asia Economy Reporter Kim Seohyun] The headquarters of A Gimbap, a gimbap specialty store in Bundang-gu, Seongnam-si, Gyeonggi Province, which recently experienced a mass food poisoning incident, has been investigated for violating the Fair Trade Commission's information disclosure regulations.

According to Gyeonggi Province, A Gimbap headquarters was conducting franchise business without fulfilling the obligation to register the 'Franchise Business Information Disclosure Statement' with the province. The franchise business information disclosure statement contains the status of the franchisor and the burdens on franchisees, and must be registered with administrative authorities before recruiting franchisees.

If franchisees are recruited without registering the information disclosure statement, franchisees may suffer damages due to unclear compensation responsibilities. To prevent this, the Fair Trade Commission enforces mandatory registration of the information disclosure statement.

A Gimbap claimed that the reason for not registering the information disclosure statement was "because the stores are operated as directly managed stores, not franchises." However, only 7 out of 44 nationwide stores were directly managed under the representative's name.

Furthermore, A Gimbap's stores were found to meet the five conditions of franchise business as stipulated in Article 2, Clause 2 of the Franchise Business Act.

After on-site inspections of eight stores in the province and interviews with headquarters executives and employees, it was revealed that ▲ the headquarters and each store use identical or very similar business signs ▲ signature menu items, product prices, packaging, and store exterior and interior are identical or very similar ▲ headquarters executives and employees conduct regular visits for service training and hygiene inspections ▲ the headquarters supplies 4 to 5 essential food ingredient items to stores and receives differential franchise fees (10-20%) ▲ continuous transactions have been maintained from the opening to the present, not just temporary dealings.

This relationship has been continuously maintained from the opening to the present. The province explained that this operational form appears to effectively constitute a franchise business.

Kim Gang-rip, Commissioner of the Ministry of Food and Drug Safety, visited a franchise gimbap restaurant located in Gwacheon, Gyeonggi Province, on the morning of the 13th to inspect the cooking conditions. [Image source=Yonhap News]

A Gimbap explained that they were unaware that their current business form constituted a franchise business because the first store was established mainly by acquaintances and family. Therefore, they proceeded with the business in an unregistered state of the information disclosure statement, believing the stores were simply cooperatives for food ingredient supply.

Gyeonggi Province plans to provide various education programs, including on-site administrative guidance for A Gimbap and consulting for executives and employees of other franchisors to improve franchise business law compliance and store operations.

A provincial official said, "The province is monitoring the registration status of franchise business information disclosure statements and strengthening continuous monitoring of new franchise companies. When unregistered companies are detected, we will provide administrative guidance to ensure new registration and actively respond by strengthening management and supervision of the relevant companies."

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