Seoul: Frank F and B Corp., operator of the handcrafted burger franchise Frank Burger, has been fined for engaging in unfair practices against its franchisees, as announced by the antitrust regulator.
According to Yonhap News Agency, the Fair Trade Commission (FTC) has imposed a fine of 641 million won (US$448,032) on the company, along with corrective actions, for violations of the Franchise Business Act. The company was found to have distributed franchise brochures containing false or exaggerated projected earnings to potential franchisees for approximately a year starting in January 2021.
The company is also accused of compelling franchisees to purchase 13 items, including forks and knives, exclusively from the headquarters, despite these not being necessary for maintaining product quality. This practice allegedly led to extra franchise fees amounting to around 140 million won.
Furthermore, the FTC discovered that after launching a new menu in May 2023, Frank Burger conducted promotional events offering gifts without obtaining consent from franchisees to cover part of the costs.
"The measures are intended to support reasonable decision-making by prospective franchisees, prevent economic harm, and help establish a fair and transparent franchise market," stated the regulator.