The franchise headquarters of 'Cheongnyeon Pizza' has been found to have enforced a '0 won' delivery tip policy on its franchisees while imposing excessive penalties.
The Fair Trade Commission announced on August 5 that it has decided to impose a fine of 197 million won on BSB Food for violating franchise business laws, along with an order to remove the contract clause. BSB Food operates the restaurant franchises Cheongnyeon Pizza and Chicken Humanity, among others.
Since March 2021, BSB Food included a clause in its franchise agreements mandating that all delivery orders have a delivery tip of '0 won.' The company maintained this policy until January of last year, altering the terms to include a base distance of 0 won and additional charges per distance.
During this period, BSB Food monitored compliance among franchise owners and sent notifications indicating that violations could lead to contract termination or renewal refusal, effectively enforcing the clause.
The Fair Trade Commission determined that such a clause does not reflect normal business practices, which typically involve charging consumers a reasonable delivery fee. It also concluded that the policy does not contribute to increasing franchisee profits, labeling it an unjust price-fixing practice without legitimate justification.
Additionally, BSB Food was found to have imposed excessive penalties on franchisees. Since 2018, the company has continuously raised the penalty amounts for franchisees who purchase designated essential items through alternative channels or terminate contracts early, with fines ranging from 10 million to 50 million won.
From July 2021 to November 2024, BSB Food imposed a total of 1.11 billion won in penalties on franchisees for 26 instances of purchasing essential items through alternative channels. Franchisees faced pressure through supply interruptions or civil lawsuits for unpaid fines. The Fair Trade Commission noted that while the amounts involved in these violations were relatively small, the penalties imposed were excessive.
Furthermore, BSB Food was found to have violated procedural obligations by failing to provide a disclosure statement to prospective franchisees after the legal grace period of 14 days and omitting required handwritten details in the confirmation of disclosure statement provision.
In response, the Fair Trade Commission has issued orders for prevention of recurrence, notification, and modification or removal of contract clauses, along with the imposed fines.
A Fair Trade Commission official stated, "This action is expected to contribute to the effective protection of franchisee rights and ensure that franchisees can engage in fair business transactions with the headquarters on an equal footing. We plan to continuously monitor and actively rectify unfair practices."
The Fair Trade Commission announced on August 5 that it has decided to impose a fine of 197 million won on BSB Food for violating franchise business laws, along with an order to remove the contract clause. BSB Food operates the restaurant franchises Cheongnyeon Pizza and Chicken Humanity, among others.
Since March 2021, BSB Food included a clause in its franchise agreements mandating that all delivery orders have a delivery tip of '0 won.' The company maintained this policy until January of last year, altering the terms to include a base distance of 0 won and additional charges per distance.
During this period, BSB Food monitored compliance among franchise owners and sent notifications indicating that violations could lead to contract termination or renewal refusal, effectively enforcing the clause.
The Fair Trade Commission determined that such a clause does not reflect normal business practices, which typically involve charging consumers a reasonable delivery fee. It also concluded that the policy does not contribute to increasing franchisee profits, labeling it an unjust price-fixing practice without legitimate justification.
Additionally, BSB Food was found to have imposed excessive penalties on franchisees. Since 2018, the company has continuously raised the penalty amounts for franchisees who purchase designated essential items through alternative channels or terminate contracts early, with fines ranging from 10 million to 50 million won.
From July 2021 to November 2024, BSB Food imposed a total of 1.11 billion won in penalties on franchisees for 26 instances of purchasing essential items through alternative channels. Franchisees faced pressure through supply interruptions or civil lawsuits for unpaid fines. The Fair Trade Commission noted that while the amounts involved in these violations were relatively small, the penalties imposed were excessive.
Furthermore, BSB Food was found to have violated procedural obligations by failing to provide a disclosure statement to prospective franchisees after the legal grace period of 14 days and omitting required handwritten details in the confirmation of disclosure statement provision.
In response, the Fair Trade Commission has issued orders for prevention of recurrence, notification, and modification or removal of contract clauses, along with the imposed fines.
A Fair Trade Commission official stated, "This action is expected to contribute to the effective protection of franchisee rights and ensure that franchisees can engage in fair business transactions with the headquarters on an equal footing. We plan to continuously monitor and actively rectify unfair practices."
* This article has been translated by AI.
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