Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Burger King penalized for forced sales of cleaning products, tomatoes
The Burger King logo / Courtesy of Burger King
By Lee Min-hyung
BKR, the operator of Burger King’s Korean business, was slapped with 300 million won ($220,000) fine for forcing its franchisees to purchase specific cleaning products and tomatoes from designated suppliers, the Fair Trade Commission (FTC) said Wednesday.
The company had ordered its franchisees to buy 15 types of cleaners and tomatoes from its headquarters-designated suppliers since 2013. BKR did not properly inform franchise owners that using “unapproved” items could result in penalties, according to the latest investigation from the antitrust watchdog.
The cleaning products and tomatoes were introduced as “recommended” items that franchise owners could independently purchase from other suppliers as long as they met the firm’s internal standards.
However, BKR ultimately forced them to use cleaning products from a specific U.S. brand and tomatoes from its internally approved domestic suppliers. The items were only available through BKR’s internal purchasing system, the investigation found.
BKR conducted inspections to monitor whether each franchisee used the designated products. Those who failed to comply faced point deductions in evaluations, warning letters and even temporary delivery service suspension from the Burger King operator.
BRK gave a score of zero in its evaluation of stores that used unapproved tomato products. The score could lead to the store's closure or contract termination, regardless of their sales performance. Franchisees were compelled to abide by the order from BKR to avoid such penalties, according to the investigation.
It found that BRK listed the items as optional in its documentation and did not notify franchisees that noncompliance could lead to punitive measures.
“The latest sanction will help reduce the burden on franchisees by allowing them to use domestic alternatives,” an FTC official said. “We will continue building an environment by encouraging franchise business operators to sign fair and transparent contracts with franchisees.”