The Fair Trade Commission announced on the 27th that it would issue a corrective order to LY Entertainment, which is accused of violating the Franchise Business Act, and file a complaint against the corporation, the CEO, and the executive director.
As a result of the Fair Trade Commission investigation, the company, which provides massager use and beverage sales services, provided monthly sales of 161,000 won at Nonsan △△ stores and 2,115 won at Ansan △ △ stores through Kakao Talk to those who want to open a franchise in 2018. It gave 15,624,000 won for the Mokpo △△ point.
However, the average monthly sales of these stores were between 6.68 million and 11,456,000 won, and the above information was significantly different from the actual sales.
According to the Fair Trade Commission, when the company signed a franchise contract in September 2017, it did not even inform that there was a dispute over trademark ownership related to the brand it operates.
As a result of the FTC investigation, the company violated its obligation to provide information disclosure in advance, and did not provide necessary support for franchise operation, such as not completing interior work for franchisees and not supplying equipment.
As long as they paid for the construction and equipment, but did not finish the interior design, a prospective franchisee could not even open a store in the end and even canceled the rental agreement of the commercial space.
The company also forced the company to purchase items unrelated to franchise operation, such as shampoo, conditioner, detergent, and fabric oil, the FTC said.
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