Fair Trade Commission imposes 420 million KRW fine on sushi buffet 'Kuukuu' for forced sale of ingredients abuse...

[Asia Economy Sejong=Reporter Dongwoo Lee] The Korea Fair Trade Commission announced on the 27th that it has imposed a corrective order along with a fine of 420 million KRW and a penalty of 2.6 million KRW on the sushi buffet franchise 'Kuukuu' for violating the Franchise Business Act.

According to the Fair Trade Commission, from February 2016 to December 2019, Kuukuu forced 97 franchisees to purchase necessary ingredients and consumables from suppliers who paid referral fees to Kuukuu, and provided information while concealing the fact that referral fees were received.

Since January 2015 until now, the suppliers have paid Kuukuu referral fees ranging from 2% to as much as 11% of the supply price of each item purchased by Kuukuu franchisees. Kuukuu forced the suppliers who provided referral fees to sign and comply with agreements that included restrictions on contract renewal and business operations or price reductions to previous levels if they violated the purchase of ingredients and other items.

During this period, Kuukuu received approximately 13.321 billion KRW in referral fees and violated the Franchise Business Act by providing disclosure documents falsely stating that it operated directly managed stores. Furthermore, despite the fact that it was confirmed in a civil lawsuit that Kuukuu infringed on the business areas of its affiliated franchisees, violating the Franchise Business Act, it concealed this and falsely stated that it operated directly managed stores even though it did not.

The Fair Trade Commission judged that as a result, 227 prospective franchisees of Kuukuu were inevitably hindered from making rational decisions about opening franchise stores based on disclosure documents in which facts were concealed or falsely stated as described above.

The Fair Trade Commission ordered Kuukuu to cease the violations of the Franchise Business Act, to prohibit the same violations in the future, and to notify all franchisees that they have received corrective orders from the Fair Trade Commission.

The Fair Trade Commission stated that this measure corrects the act of the franchisor forcing franchisees to purchase goods from suppliers who pay referral fees without reasonable grounds, and expects this action to serve as an opportunity to guarantee franchisees’ rational purchasing choices.

The Fair Trade Commission said, "We will continue to focus on monitoring and correcting franchisors’ false and deceptive information provision and coercive acts toward business partners to ensure that franchisees’ choices in starting businesses and purchasing goods are made rationally."

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