Dunkin' Donuts' headquarters in South Korea, BR Korea, was fined for forcing franchisees to purchase items from the company that did not affect the taste or quality of donuts or coffee.
On the 13th, the Korea Fair Trade Commission (KFTC) announced that it had imposed a corrective order and a fine of 2.136 billion KRW on BR Korea for violating the Fair Transactions in Franchise Business Act.
BR Korea is accused of designating 38 items, including sinks, donut display cases, sandwich boxes, and wax paper, as "mandatory items" and restricting franchisees from purchasing them from sources other than the headquarters.
According to fair trade laws, items designated as mandatory must be essential for operating the franchise, necessary for trademark protection, or required to maintain product uniformity. Additionally, these items must be disclosed in advance through an information disclosure statement. However, the designated items by BR Korea did not meet these criteria, excessively limiting the franchisees' freedom of choice.
The KFTC pointed out that "even in the same industry, similar items are designated as 'recommended items' rather than mandatory ones," highlighting that BR Korea’s practice deviated from standard industry practices.
Additionally, BR Korea was found to have omitted closer franchise locations while including more distant ones when providing the "Nearby Franchise Status Document" to some franchise applicants. As a result, the company received a warning, as such actions could mislead potential franchisees in their decision-making.
A KFTC official stated, "This measure is significant in preventing franchise headquarters from forcing unnecessary purchases on franchisees and fostering a fair trade environment. It will also help prospective franchisees make more informed decisions based on accurate information."
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Dunkin' Donuts HQ Forces Franchisees to Buy Supplies… KFTC Imposes 2.1 Billion KRW Fine
Dunkin' Donuts' headquarters in South Korea, BR Korea, was fined for forcing franchisees to purchase items from the company that did not affect the taste or qu
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