Mom’s Touch fined W300 mil. for mistreating franchisee
The country’s antitrust agency has fined Mom’s Touch 300 million won ($224,000) for allegedly mistreating a franchisee who led the formation of a council of franchisees, according to the Fair Trade Commission, Wednesday.
The FTC made the decision after it inspected a case in which a franchisee running the brand’s Sangdo Station restaurant in southern Seoul created, in 2021, a movement encouraging other franchisees to join an association to advocate for their rights. To promote the association, the Sangdo franchisee and 61 other franchisees in March that year jointly sent letters to the brand’s other franchisees who didn’t join the association.
Mom’s Touch discovered that the letter contained what it claimed was false information that criticized the company’s management. The letter, according to the FTC, said the company “only cares about management” and “almost all franchisees of the brand are now suffering from dropping sales and profits.”
From March to August that year, the company and the Sangdo franchisee exchanged communications tussling over confirming how the association came to be established and which franchisees had joined it.
During the exchanges, the company refused on multiple occasions to recognize the association.
Mom’s Touch requested the franchisee to step down from the association’s leadership. It further warned him that if he refused and decided to file a complaint against the management, the company would respond to the action until he suffered “tremendous” fiscal harm and the association was eradicated.
In August of that year, the management revoked the Sangdo franchisee’s restaurant business deal and stopped supplying him with ingredients for fried chicken and burgers, the brand’s main food products. The same day, the management posted a statement online condemning the Sangdo franchisee, accusing him of spreading false information, disrupting the “sound” ties between the company and franchisees and denouncing the management despite his restaurant generating “very high sales,” according to the FTC.
The FTC said it found the management’s treatment of the franchisee unjust because the management deemed the association’s activities unhelpful for its business operations and deliberately refused to cooperate with him and his association.
“Our decision reflects our mission to protect local franchisees’ rights and their initiatives to improve their economic conditions,” the FTC said.