Gyeonggi-do Reports Franchise A to Fair Trade Commission for Creating a Manual to Destroy Franchise Owners

[Asia Economy (Suwon) = Reporter Lee Young-gyu] Gyeonggi Province reported unfair practices of a well-known franchise A headquarters to the Fair Trade Commission on the 3rd, including terminating franchise contracts due to the store owners' collective activities and creating and partially implementing a 'manual to destroy store owner organizations.'

This is the second time Gyeonggi Province has reported unfair practices of a specific company to the Fair Trade Commission, following the BBQ Chicken franchise headquarters in May last year.

Kim Ji-ye, Director of the Fair Trade Bureau of the province, explained, "We reported to the Fair Trade Commission because we judged that the repeated and systematic unfair practices of franchise headquarters A could cause significant damage not only to the affected store owners but also to the entire franchise business." She added, "This public interest report is an external declaration that we will not tolerate acts by the franchise headquarters to dismantle store owner organizations or disadvantage their members."

According to the province, B and others, who are store owners of franchise headquarters A, formed a franchisee council and submitted a dispute mediation application to the province in April, claiming they suffered disadvantages from franchise headquarters A.

The province tried to facilitate an amicable agreement between franchise headquarters A and the store owners, but when franchise headquarters A refused mediation by Gyeonggi Province in September, the province judged that there was a possibility of violating the Franchise Business Act by terminating franchise contracts, stopping supply of goods, and disadvantaging store owners' group activities, leading to this public interest report.

In particular, during the dispute mediation process, the province confirmed that franchise headquarters A created and partially implemented a kind of 'manual to destroy store owner organizations.'

The manual contained specific countermeasures against store owners' provisional injunction lawsuits, claims for damages, reports to the Fair Trade Commission, media leaks, and franchisee council activities.

It was reported that franchise headquarters A mentioned the existence of this manual and pressured store owners to give up collective activities.

Specifically, the manual stated that if the franchise headquarters terminates the franchise contract and suspends operations, prompting the store owner to file provisional injunctions and damage claims, the headquarters would drag out the case for more than two years up to the Supreme Court regardless of the outcome or costs, pressuring the store owner's psychology and exhausting their financial resources through litigation costs, ultimately causing the store owners to give up. It also included issuing rebuttal articles to the media and creating a pro-headquarters organization to ultimately dismantle the store owner organization.

The province recognized the seriousness of this 'manual to destroy store owner organizations' and made the final decision to file this public interest report to prevent recurrence of similar cases.

Previously, the province has been conducting a 'Group Support Project' to provide necessary support for the establishment and operation of franchisee organizations and a 'Legal Support Project' to offer legal consultations and responses related to group activities to protect franchisee organizations' activities.

Meanwhile, in May last year, the province reported unfair practices such as interference with group activities and unfair termination targeting franchisees in the province by the BBQ Chicken franchise headquarters to the Fair Trade Commission, which in May this year decided to issue corrective orders and impose a fine of 1.532 billion KRW.

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