Some franchisees have suffered in recent years after owners of franchise headquarters stirred social controversies. In 2017, Chung Woo-hyun, the founder of Mr. Pizza, a major South Korean pizza franchise, was at the center of a public uproar over suspicions that he ripped off contractors and embezzled company funds. (image: Yonhap)
SEJONG, Jan. 24 (Korea Bizwire) – South Korea’s antitrust watchdog said Thursday that franchisees can file a suit against their franchise headquarters to seek compensation for damages brought on by bad management.
The Fair Trade Commission included the mandatory measure in a revised standard franchisee deal that covers convenience stores, food service outlets and retail and wholesale, as well as education sectors.
The move could prevent illegal acts by franchise headquarters, the commission said.
South Korea has been trying to level the playing field for small and medium-sized companies in a country where family-controlled conglomerates have dominated the economy for decades.
Some franchisees have suffered in recent years after owners of franchise headquarters stirred social controversies.
In 2017, Chung Woo-hyun, the founder of Mr. Pizza, a major South Korean pizza franchise, was at the center of a public uproar over suspicions that he ripped off contractors and embezzled company funds.
Chung was indicted on charges of embezzlement and breach of trust in July 2017. He was sentenced to three years in prison in January 2018, but the sentence was suspended for four years.
Mr. Pizza is an indigenous brand launched by Chung in 1990. It has grown into one of the top three pizza chains in the country, currently running over 300 stores nationwide and 140 in China.
(Yonhap)
