The Fair Trade Commission (FTC) said on June 25 that it imposed 52 million won in fines on McDonald's Korea along with a correction order as it did not entrust the franchise deposit to designated financial institutions and did not provide advance information disclosure letters to franchise hopefuls.
McDonald's signed contracts with prospective start-ups hoping for the fast-food franchise and received the franchise money directly through its corporate accounts, rather than depositing it in designated financial institutions.
From September 2013 to November 2016, McDonald's directly received 544 million won from 22 franchisees. According to the franchise business law, the franchiser's headquarters should not directly receive the merchant's membership money but leave it to banks and other designated financial institutions.
In addition, McDonald's did not provide information disclosure and current status documents of nearby franchises to those who wish to become a franchise from May 2014 to November 2015.
Under the franchise business law, the franchise headquarters shall provide information disclosure document explaining the status of the franchise, details of the franchise's burden, and detailed procedures for starting operations, and the franchise's status document, 14 days prior to the date of receipt of the signing of the contract.
This is to ensure that the hopeful can make reasonable judgments over time based on sufficient information.