Davichi Optical, a chain of eyewear stores, has been penalized by the Fair Trade Commission for compelling its franchisees to meet specific sales targets. This marks the first case of its kind under franchise law regarding 'forced sales targets.'
On August 17, the Fair Trade Commission announced it would impose a fine of 1.477 billion won (approximately $1.1 million) on Davichi Optical for violating franchise business laws, along with orders to prevent recurrence, notification orders, and payment orders.
According to the commission's investigation, Davichi Optical mandated its franchisees to achieve sales targets based on the sales ratio of specific products. Specifically, franchisees were required to sell a certain percentage of eyewear frames priced over 100,000 won, specific products, and astigmatism correction lenses.
Franchisees were monitored monthly for compliance, and those who failed to meet the targets were required to attend workshops and submit recovery plans. If they fell short for three consecutive months, they received notices threatening termination of their franchise agreements, indicating an abuse of their trading position.
The investigation also uncovered violations related to the obligation to share costs for store environment improvements. Davichi Optical failed to meet the legal cost-sharing ratio for 15 franchisees who undertook store improvements at the company's request, and it did not cover 20% of the costs for new signage that it mandated.
Additionally, the commission found that Davichi Optical conducted 652 advertising campaigns and 87 promotional events without the consent of all franchise owners, relying only on the approval of a few representatives.
As a result, the Fair Trade Commission has issued a prohibition order, notification order, and imposed a fine of 1.477 billion won.
A commission official stated, 'This action is the first case where setting sales ratios for specific products is considered a forced sales target. We will continue to monitor unfair practices that deprive franchise owners of their management freedom and shift costs onto them.'
* This article has been translated by AI.
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