"Use Only Designated Kiosks or Face Contract Termination"... Dongdaemun Yeopgi Tteokbokki Headquarters Sanctioned for Unfair Franchise Practices

Franchisees Forced to Buy POS and Kiosk Equipment from Designated Suppliers
Freedom of Choice Blocked through Threats of Contract Termination

The headquarters of the famous tteokbokki franchise "Buldakbalttaengchodongdaemunyeopgitteokbokki," known as Hotseasoner, has been sanctioned by the Fair Trade Commission for forcing franchisees to purchase expensive electronic equipment such as POS (Point of Sale) systems and kiosks exclusively from a designated supplier. The commission determined that compelling franchisees to buy products unrelated to the taste of the tteokbokki or the brand image constitutes an unfair restriction.

Hotseasoner's flagship franchise 'Buldakbalttaengchodongdaemun Yeopgi Tteokbokki'. Hotseasoner official website.

On March 8, the Fair Trade Commission announced its decision to issue a corrective order to Hotseasoner for requiring franchisees to purchase three types of electronic equipment—POS (Point of Sale) systems, kiosks (unmanned terminals), and DIDs (Digital Information Displays)—exclusively from the company or a designated supplier. As of last year, Hotseasoner operated 650 franchise stores and recorded sales of 123 billion won, making it a mid-sized franchise.

According to the commission’s investigation, Hotseasoner required franchisees to purchase POS systems exclusively from April 2013 to August of last year, and from September 2024 to August of last year, also designated kiosks and DIDs as mandatory purchases. In particular, the franchise agreement included clauses that allowed the headquarters to restrict food ingredient supply, terminate the franchise contract, or impose penalties if franchisees used equipment from suppliers not designated by the headquarters, effectively eliminating the franchisees’ freedom of choice.

However, the Fair Trade Commission judged that these devices are general commercial products with similar performance readily available in the market, and there is no justifiable reason to insist on a specific supplier. In fact, at the end of August last year, during the course of the investigation and without any significant change in business conditions, Hotseasoner quietly changed the status of these items from "mandatory" to "recommended." This was an implicit acknowledgment that franchisees could operate without issue as long as the headquarters’ software was compatible with equipment purchased on the open market.

The Fair Trade Commission stated, "With this measure, franchisees will now be able to freely choose high-priced electronic equipment, which should help reduce costs," adding, "We will continue to monitor practices that unfairly restrict franchisees’ choice of suppliers for goods readily available in the market and impose unnecessary burdens on them."

This content was produced with the assistance of AI translation services.