2013Nu24688 Revocation of corrective order

A Stock Company

Fair Trade Commission

October 17, 2013

November 21, 2013

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The Defendant’s corrective order listed in attached Form 1, which was issued against the Plaintiff by July 2, 2013, shall be revoked.

1. Details of the disposition;

A. The plaintiff has a franchisee run the relevant food service business using his/her business mark "C", and support, educate, and control the business management and business activities accordingly, and receives franchise fees in return, and is a business entity that grants franchisees a franchise license in relation to a franchise business, and thus constitutes a franchisor under Article 2 (2) of the Fair Transactions in Franchise Business Act (hereinafter "Franchising Business Act").

B. On December 2010, the Plaintiff provided the C Expected business feasibility analysis table (hereinafter referred to as the “C Expected business feasibility analysis table”) stating that the monthly estimated monthly sales of D, a prospective franchisee who intends to operate C in the same new city of B, would be 6,300,000 won, the estimated net profit of each month would be 20,194,000 won, and 30.4% of the estimated net profit of each month, as set forth below.

(unit:,000 won)

A person shall be appointed.

C. The defendant's disposition

On July 22, 2013, the Defendant issued a corrective order (hereinafter referred to as “instant disposition”) to the Plaintiff on the ground that the Plaintiff, a franchisor, violated Article 9(1) of the Franchise Business Act by providing D with false and exaggerated information, such as the anticipated feasibility analysis sheet, to the instant franchise store.

[Ground of recognition] Facts without dispute, Gap 1, 2, 4, Eul evidence 2-11, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) After D’s opening of the instant franchise store, the actual sales amount of the instant franchise store falls short of the estimated sales amount on the estimated business feasibility analysis sheet, but this may vary by the franchise trader’s efforts, sincerity, service, etc., and thus, the Plaintiff cannot be deemed to have provided D with false or exaggerated information.

(2) The Plaintiff, upon D’s request, issued a forecast business feasibility analysis table indicating the monthly estimated sales amounting to 66,300,000 won. However, at the time, there are many main complex or officetels in which the area of the instant franchise store was not located, and the completion of the housing site development, complex cultural center, and two-time factories of the new coal city was scheduled for the two-year period of the new coal city, and notified that the monthly estimated sales amount, etc. was the expected monthly sales, etc. taking into account the demand level when the commercial zone was sufficiently formed after 1-2 years, the Plaintiff cannot be deemed to have provided D with false and exaggerated information.

B. Relevant provisions

Attached Table 2 is as follows.

(c) Fact of recognition;

(1) D wishing to establish C Chain stores and delivered KRW 500,000 as store analysis costs after consulting with the Plaintiff on December 1, 2010.

Then, on December 11, 2010, the Plaintiff printed out the data on business district analysis in the vicinity of the instant franchise store, which was posted on the F homepage, and completed part of the data, and based on this, provided D with the anticipated business feasibility analysis report to police officers during December 2010.

(2) On December 20, 2010, D trusted the anticipated business feasibility analysis table, etc., and leased G building H on December 20, 2010. On December 27, 2010, D entered into a franchise agreement with the Plaintiff on the instant franchise store. Accordingly, D paid KRW 5 million at the Plaintiff’s expense and KRW 7,250,00 to the store construction cost.

(3) After that, D operated the instant franchise store for 28th day from February 2011 to December 2 of the same year (for example, the business feasibility analysis table was averaged on 26th day of each month), but the average monthly sales amount was 23,483,000 won, and the monthly net income was 490,000 won.

(4) On the other hand, the monthly average sales of 12 member stores, which were operated for 12 months from 2010, by the Plaintiff, are the highest point of Incheon, equivalent to KRW 65 million per month (one hundred and sixty million per annum) and the lowest point of Osan, the highest point of Osan, is equivalent to KRW 16.65 million per annum (one hundred and sixty million per annum). The monthly average sales of the above member stores are set at KRW 30 million per month.

[Reasons for Recognition] Class B 1, Nos. 4, Eul evidence 2-5 through 8, 11, 13, and 17, and the purport of the whole pleadings

D. Determination

(1) As to the assertion that it is a difference in sales due to a cause attributable to the franchise trader.

In other words, the following circumstances acknowledged by comprehensively considering the purport of the entire arguments, i.e., (i) the average monthly sales on the expected business feasibility analysis table as a result of comparison with the actual monthly sales on the store of this case, and the monthly net sales on the expected monthly sales on the market feasibility analysis table, 182.3% of the average monthly sales on the expected net profits, 4,021% of the estimated average monthly net profits, and 1,347.6% of the estimated average monthly net profits; (ii) the estimated average monthly sales on the expected business feasibility analysis table of the Plaintiff at the time, are higher than the Incheon, which is the store with the highest monthly average sales on the market of the Plaintiff at the time, 2 times or more of the average monthly sales on the Plaintiff's store; (iii) the anticipated business feasibility analysis table was prepared by taking into account the sales on the Plaintiff's store of this case into account the sales on the market where the Plaintiff issued the store of this case to the Plaintiff's store of this case; (iv) it is evident that the Plaintiff prepared a specific data analysis on the business feasibility analysis.

Therefore, this part of the plaintiff's assertion is without merit.

(2) As to the assertion that the notice was made after the commercial zone was formed

The following circumstances, which are acknowledged as a whole by integrating the aforementioned facts, the aforementioned evidence and the purport of the evidence and evidence set forth in subparagraph 2-16 of the evidence and the entire arguments, i.e., ① if the Plaintiff clearly notified D that monthly sales, etc. on the analysis sheet at the time of issuing the expected feasibility analysis table to D are based on the point at which the business district is formed after 1 to 2 years, it should be entered in the analysis table; ② there is no evidence to acknowledge it; ② there is no evidence to provide D with the business district analysis table at the time of issuing the anticipated business analysis table; ② there is only a fact that there is a large population; ③ there is no statement on the premise that the above data will be formed in the future; ③ there is no ground to believe that the franchise headquarters is the most important information that the franchise headquarters provides to the prospective franchisee at the time of establishing the franchise store; ④ The Plaintiff’s employee did not know that the monthly sales amount was generated within a relatively short period of time after the conclusion of the franchise agreement at the time of conducting an investigation into the business district.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.

Judges of the presiding judge shall be appointed from among judges;

Judges Dominsung

Judges Cho Jong-sung

A person shall be appointed.

A person shall be appointed.