FTC imposes W2 bil. penalty on BHC, BBQ for bullying franchisees

Genesis BBQ Chairman Yoon Hong-geun speaks during the company's 25th anniversary held at its research and development institute, Chicken University, in Icheon, Gyeonggi Province, in August 2020. Courtesy of Genesis BBQ

By Kim Jae-heun

The Fair Trade Commission has decided to punish BHC and BBQ for canceling their franchise contracts with restaurant owners who joined hands to deal with coercive and unfair demands made by the fried-chicken chains.

The top watchdog said it will impose a 15.3 billion won penalty on Genesis BBQ and a 500 million won penalties on BHC and ordered the companies to comply.

Fried chicken restaurant owners have established a council to negotiate with BHC and BBQ on even ground But the move irked the fried-chicken franchisers.

A BBQ restaurant owner in Saeteomaeul town in Yongin, Gyeonggi Province, took the lead in forming the group together with six other restaurant franchisees in November 2018. They have been holding talks with Genesis BBQ, which was accused of forcing restaurant owners to comply with demands by headquarters.

From May 2018 until April this year, Genesis BBQ made it mandatory for its franchisees to purchase at least 16,000 advertorial leaflets to be passed out on the streets.

Those who did not follow the order from headquarters or failed to buy the exact amount of leaflets had their franchise contracts revoked instantly.

People walk by a BHC restaurant in Samseong-dong, Seoul, in September 2020. Korea Times file

One BHC restaurant owner in Ok-dong in Ulsan, who heads the council of BHC franchisees, was forced to cancel his franchise license without being given a concrete reason. Six other franchisees experienced similar abuses after they led the council.

BHC restaurant owners have been complaining about the quality and price of chicken and oil supplied by headquarters since August 2018. The council revealed their issue to the press upon which BHC canceled franchise contracts with seven restaurant owners for allegedly spreading false information and degrading the company's reputation.

The FTC said it did not find evidence supporting both Genesis BBQ and BHC's allegations that the moves by the franchisees hurt business or defamed their corporate image.