South Korea’s Fair Trade Commission (FTC) embarked on an investigation on Genesis BBQ, leading fried chicken franchise group, on charges of violating the local franchise business act, the first probe since chaebol reform advocate Kim Sang-jo was appointed as the new head of the antitrust watchdog.
According to sources from the related authority and industry on Friday, the FTC initiated the investigation on Thursday to find out whether BBQ that raised menu prices twice over the last two months has illegally translated its advertising costs onto the franchised stores.
The chicken supplier was under fire last month when it raised prices amid the worst-ever avian flu outbreak. Right after the initial price hike, BBQ notified to its stores that it would collect 500 won for every chicken they sell to share increased advertisement costs. The head office said it didn’t force the stores to pay the advertising costs and it was their voluntary decision, but some stores have complained that the head office is exploiting them, according to sources. BBQ also raised prices on 20 menu items this month again.
An official from BBQ said the campaign is temporary to raise 10 billion won ($8.8 million) in extra ad cost. It claims that its family of franchised stores agreed to the plan and vows to be transparent in the ad spending.
The FTC’s new chief Kim Sang-jo is known to advocate for the interests of smaller companies and merchants. He pledged to take measures to protect the nation’s mom and pop stores through strong crackdown on illegal practices by franchise headquarters.
By Na Hyun-joon
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]