The Fair Trade Commission imposes a fine of 80 million KRW on Hanam Dwaeji Jip's headquarters for 'mandatory designation of essential items'

The Fair Trade Commission has decided to impose a corrective order along with a fine of 80 million KRW on Hanam F&B, the headquarters of Hanam Dwaeji Jip, for violating the Franchise Business Act.

Hanam F&B was found to have unilaterally designated essential items in contracts with franchisee A from 2020 to 2022 in a legally unjust manner, and as a result, stopped supplying meat and even terminated the contract.

Illegal designation of essential items… addition of 26 items not included in the contract

The Franchise Business Act stipulates that for an essential item to be designated, it must be necessary for maintaining the identity of the franchise business, and this must be clearly disclosed in the initial information disclosure statement at the franchise contract stage.

However, Hanam F&B designated 26 items, including kimchi, somyeon, broth, and delivery containers, as essential items without any separate agreement or contract renewal, despite them not being specified in the information disclosure statement and the franchise contract.

Furthermore, due to franchisee A not purchasing the specified items from designated suppliers, the supply of essential items for the operation of the meat restaurant, such as meat, myungnamul, and charcoal, was suspended, ultimately leading to the termination of the franchise contract.

Fair Trade Commission: "Termination of the contract without justifiable reasons infringes on the rights of franchisees"

The Fair Trade Commission determined that the suspension of material supply and the termination of the contract based on the initially unlawfully designated essential items could not be justified.

The Commission stated, "We have strictly sanctioned the act of unilaterally designating items not included in the franchise contract as essential items and the unjustified cessation of essential item supply or contract termination based on this."

It also emphasized, "To protect the rights of franchisees, we will continuously monitor the legality of the essential item designation process, unjustified refusals of business support, and undue contract terminations. If violations of the law are confirmed, we will take strict action."

Image sources: Hanam Dwaeji / Online Community, Online Community