Papa John’s Korea Fined 1.5 Billion Won for Unfair Business Practices

Seoul: Papa John's Korea has been fined 1.48 billion won ($1.07 million) by the antitrust regulator for allegedly engaging in unfair business practices against its franchise shops. The decision, announced on Thursday, highlights the company's imposition of mandatory purchases and unfulfilled financial obligations to franchisees. According to Yonhap News Agency, the Fair Trade Commission (FTC) found that Papa John's Korea mandated franchise shop owners to buy 15 specific types of cleaning products, including hand soaps, directly from the headquarters. This requirement was in place from July 2015 until recently, with non-compliance resulting in potential business suspension, a move deemed a violation of the franchise business act by the FTC. The FTC's investigation also revealed that from 2015 through 2022, Papa John's required the renovation of 25 franchise shops but did not compensate shop owners for the associated costs. In response to these findings, the FTC has not only levied a financial penalty but als o ordered the pizza chain to reimburse the renovation expenses and implement corrective measures. The FTC stated that these practices compromised the autonomy and economic interests of the franchise shop owners. It emphasized its commitment to continue monitoring and addressing unfair practices by franchise headquarters to protect franchisees' rights.