Mom's Touch "Regret over 300 Million Won Fine... Reviewing Appeal"

Fair Trade Commission Issues Statement on Corrective Order
Momstouch Terminates Contracts of Franchisees Who Formed Franchisee Council
Fair Trade Commission: "Violation of Franchise Business Act... Strict Measures Taken"

Mamstouch, which was fined 300 million won by the Fair Trade Commission, stated that it "respects the results of the review" but also expressed "regret that the explanations were not accepted" and said it would consider follow-up measures such as filing an objection.

Earlier, the Fair Trade Commission had issued a corrective order and imposed a fine of 300 million won on Mamstouch for unilaterally terminating contracts on the grounds that franchisees formed a franchisee council.

On the 31st, Mamstouch said in a statement, "We deeply regret that despite sufficiently explaining and proving during the investigation and review process regarding the 'unfair contract termination' and 'acts that disadvantage franchisees due to the formation, membership, or activities of franchisee organizations,' these were not accepted."

It added, "After receiving the resolution document, we will carefully review it and consider follow-up measures such as filing an objection."

According to the Fair Trade Commission, in March 2021, the owners of 61 Mamstouch franchises, including the Sangdo Station branch, sent a 'Notice of Formation of Franchisee Organization and Encouragement to Participate' by mail to over 1,300 Mamstouch franchisees. This mail included statements such as "At the end of 2019, a private equity fund acquired Haemaro Food, and the headquarters pursued only its own profits, disregarding the interests of franchisees," and "Recently, almost all stores have been suffering from declining sales and profits, with profit margins plummeting due to rising product costs."

In response, two Mamstouch employees visited the Sangdo Station branch, which led the council formation, and pressured the franchisee to resign from the chairman position, stating, "We cannot recognize a council hostile to headquarters." They also filed a police complaint against the Sangdo Station franchisee for defamation and obstruction of business through spreading false information. The police later cleared the case with no charges. Nevertheless, the Mamstouch headquarters notified the Sangdo Station franchisee, the representative of the franchisee council, of contract termination in August citing false information and stopped supplying goods.

The Fair Trade Commission judged that such actions by Mamstouch headquarters violated the Franchise Business Act and imposed corrective orders and fines. The commission stated, "We will continuously monitor acts by headquarters that disadvantage franchisees due to group activities and take strict measures if violations are confirmed."

Meanwhile, in its statement, Mamstouch said it would maintain its franchisee-friendly policies, such as "designating the lowest level of mandatory items in the industry" and "zero fees for interior costs," which it has upheld since its founding, in response to the Fair Trade Commission's recent policy to improve the mandatory item system in franchise businesses.

A Mamstouch official said, "We promise to faithfully fulfill the headquarters' responsible role and to make greater efforts for prevention of recurrence, coexistence, and communication with franchisees so that similar issues do not arise in the future."

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