Lotteria has been sanctioned by the Fair Trade Commission (FTC) for inflating expected sales figures to those who wish to join the franchise. The FTC said on Feb. 7 that it issued a warning to Lotte GRS based on the decision of its judges on charges of violating the franchise law.
Lotte GRS, a subsidiary of Lotte Group, operates Lotteria and Angel-in-us Coffee. Lotte GRS is suspected of providing information disclosure documents to a potential franchise member of Lotteria in November 2017, which did not comply with the methods stipulated in the franchise business act.
According to the law, the headquarters of the franchise company should present the average sales amount of the remaining three stores, excluding the lowest and highest sales, as expected sales, among the five stores closest to the store's planned location.
However, Lotte GRS arbitrarily selected five stores and provided the estimated sales figures to the potential member. As a result, the FTC believes that sales projections were exaggerated.