Mega Coffee Operator, Korea's Largest Low-Cost Coffee Chain, Fined $1.63 Million USD For Unfair Business Practices – CoffeeTalk

Korea’s Fair Trade Commission (FTC) has fined AnnHouse, the operator of the Mega MGC Coffee chain, 2.29 billion won ($1.63 million) for unfair business practices directed at franchisees. The FTC accused AnnHouse of shifting the burden of gift certificate commissions onto franchisees without their consent, imposing an 11 percent commission on mobile gift certificate sales from August 2016 to July 2020. This resulted in franchisees collectively bearing costs of approximately 276 million won over two years starting in 2018. This fine marks the largest sanction against a food service operator for violations under the Franchise Business Act in South Korea.

Additionally, AnnHouse was found to compel its franchisees to purchase specific equipment, such as ice machines and coffee grinders, through a clause in their contracts that threatened supply suspensions and contract cancellations for non-compliance. Although franchisees consented to promotional campaigns launched starting in May 2022, they were not adequately informed about the associated costs and campaign duration.

According to an FTC official, this sanction highlights a new form of unfair transactions particularly relevant amidst the rise of online markets. The commission has committed to rigorous enforcement against such exploitative practices to ensure fair treatment for franchisees moving forward.

Read More @ The Korea Times