Atlas Legal has analyzed the July 2025 corrective order issued by the Korea Fair Trade Commission (KFTC) against Darum Plus, operator of the “Ichadol” beef brisket franchise (Resolution No. 2025-154), identifying four distinct violations of the Franchise Business Act and the legal responses available to franchisees.
Case Overview
On July 18, 2025, the KFTC issued a corrective order against Darum Plus through Resolution No. 2025-154. This case is notable for involving four simultaneous violations of the Franchise Business Act across 251 franchise locations between 2019 and 2022: forced purchase of new menu ingredients, provision of false projected revenue information, restriction to specific suppliers, and imposition of excessive damage compensation obligations. The case illustrates how a franchisor’s abuse of superior bargaining position can take multiple, compounding forms against franchisees.
Forced Purchase of New Menu Ingredients — Violation of Article 12(1)(3)
From July 2020 to June 2022, Darum Plus launched 11 new menu items and bulk-delivered 17 types of ingredients to all franchise stores without franchisee consent or orders, while simultaneously refusing all returns. The KFTC determined this constitutes “forced purchase” (구입강제) under Attached Table 2, Item 3(a) of the Franchise Business Act Enforcement Decree. By making franchisees absorb the full inventory risk of new menu items with unproven consumer demand, Darum Plus unilaterally transferred core business risks of new product launches onto individual store operators without their agreement.
Nationwide Average Sales Provided as Projected Revenue — False Information Under Article 9(1)(1)
Between 2019 and 2022, Darum Plus provided projected revenue figures to 251 prospective franchisees based on the nationwide average sales of all franchise stores — presenting the same range of KRW 5,086 to 8,477 thousand per 1㎡ annually to stores in Seoul Gangnam and rural Chuncheon, Gangwon Province alike. Article 9(4) of the Franchise Business Act Enforcement Decree requires projected revenue to be calculated from the three nearest franchise stores in the same city or province (excluding the highest and lowest performers). Providing a nationwide average without regard for local commercial conditions constitutes false and exaggerated information provision under the Act.
Supplier Restriction — Unfair Restraint on Trading Partners Under Article 12(1)(2)
Darum Plus required franchisees to purchase aluminum insulated bags, tteokbokki containers, and chopstick-spoon sets exclusively from itself. The KFTC found these items were not essential to the beef brisket franchise concept and that comparable products were readily available on the open market, meaning none of the three statutory exceptions under Attached Table 2, Item 2(b) of the Enforcement Decree were met. Notably, even though the chopstick-spoon sets bore the “Ichadol” brand mark, the KFTC clarified that the presence of a trademark alone does not justify mandatory sourcing from a specific supplier.
Triple Damages Clause for Unauthorized Purchasing — Excessive Penalty Under Article 12(1)(5)
Darum Plus included a clause in its franchise agreements requiring franchisees who purchased required goods through unauthorized channels (a practice known as 자점매입, or self-sourcing) to pay three times the purchase amount in damages. The company then actually invoked this clause against two franchisees, retroactively estimating their unauthorized purchases from the store opening date and demanding triple that amount. The KFTC held that such a clause violates Article 12(1)(5) of the Franchise Business Act, which prohibits imposing excessive penalty obligations disproportionate to actual harm. Crucially, the KFTC confirmed that both the contractual clause itself and the act of enforcing it constitute independent violations of the Act.
Corrective Order Outcome and Practical Takeaways
The KFTC issued corrective orders for all four violations and required Darum Plus to notify all current franchisees of the violations in writing. Financial penalties (과징금) for three of the violations were waived in consideration of Darum Plus’s ongoing corporate rehabilitation proceedings. This case underscores that routine franchise practices — including new menu rollouts, projected revenue disclosures, supply chain management, and penalty clauses — carry meaningful legal risk under the Franchise Business Act. Franchisees facing similar conduct should document everything in writing, formally refuse forced deliveries in writing, and seek legal counsel promptly.
Atlas Legal’s Franchise and Competition Law Practice
Atlas Legal advises both franchisees and franchisors on matters arising under the Korean Franchise Business Act and the Fair Trade Act, including KFTC investigations, unfair trade practice claims, franchise agreement drafting and review, and pre-transaction compliance assessments. With extensive experience in Korean antitrust and corporate dispute matters, Atlas Legal provides practical, results-oriented counsel tailored to the specific facts of each engagement. For inquiries: +82-32-864-8300 / taejin.kim@atlaw.kr