Seoul:South Korea's fair trade watchdog has imposed a 14.8 billion-won (US$10.8 million) fine on Myeong Ryun Dang, the operator of the popular Korean barbecue restaurant chain Myeong Ryun Jinsa Pork Ribs, for providing low-interest loans to 14 affiliated private moneylenders.
According to Yonhap News Agency, the Fair Trade Commission (FTC) reported that Myeong Ryun Dang lent a total of 298.3 billion won to its affiliates at unusually low annual interest rates of 2.3 percent or 4.6 percent between December 2021 and April 2026. This resulted in economic benefits estimated at 21.7 billion won for the private moneylenders.
The affiliates subsequently lent these funds to franchisees at much higher annual interest rates of 12 to 18 percent. The FTC highlighted that the 14 private moneylenders, which would have otherwise faced challenges in entering the market due to funding difficulties, each secured between 10 billion won and 15 billion won in low-interest loans, thereby reducing their operational costs and risks.
Myeong Ryun Dang reportedly withheld crucial information regarding its connections to the moneylenders, the specifics of the loan agreements, and the relationships between franchise and loan contracts, as well as repayment methods. This lack of transparency could have significantly impacted the decisions of prospective franchisees.
The FTC has decided to impose a 10.4 billion-won fine on Myeong Ryun Dang for unlawfully supporting its affiliates and an additional 4.4 billion-won fine for concealing its relationships with the lenders from potential franchisees. It was noted that the 14 moneylenders were effectively owned by Myeong Ryun Dang's owner, which meant that the economic benefits ultimately benefited the owner's family.
The investigation also revealed that the funds Myeong Ryun Dang provided to its affiliates included 79 billion won in low-interest loans from the state-run Korea Development Bank. The FTC has decided to file a complaint against the company and its chairman.