"Signed Thinking It Was a Big Success"... Caught Pocketing Billions in Kickbacks and Inflating Store Numbers

Deceptive Information Disclosure and False or Exaggerated Advertising Uncovered
Corrective Order and Fine Imposed

The franchise headquarters operating the well-known jokbal (braised pig’s trotters) and bossam (boiled pork) brand “Gwi Han Jokbal” was discovered by the authorities to have concealed billions of won in financial gains received from suppliers, and to have exaggerated the number of new store openings in false advertisements.

False advertising by Precious People. They advertised having 16 open stores from May to June 2022, but in reality, there was only one. Fair Trade Commission.

The Fair Trade Commission announced on May 31 that it has decided to impose a corrective order and a fine of 201 million won on Precious People for its deceptive provision of information and false or exaggerated advertising practices.

Billions Received from Suppliers, Hidden in Disclosure Documents

According to the Fair Trade Commission, Precious People received rebates from suppliers of jokbal and bossam meat and sauces in exchange for facilitating transactions with franchisees, but failed to properly disclose these payments in the information disclosure documents reviewed by prospective franchisees.

In 2020, the company omitted a total of 141.14 million won received from nine suppliers from its disclosure documents. In 2021, it received a total of 613.01 million won from 16 suppliers, but in one case, it received 174.85 million won from a sauce supplier—accounting for 22% of the supplier’s annual transaction amount of 792.1 million won—yet only reported having received 87.13 million won (11%) in the disclosure documents, significantly understating the actual amount.

Such financial benefits received by the franchise headquarters from suppliers are ultimately passed on to franchise owners as increases in supply prices, making this a critical piece of information for deciding whether or not to sign contracts. The Fair Trade Commission found that 97 franchise owners were misled by the incomplete disclosure documents and signed contracts with the headquarters between April 2021 and October 2023. The Commission determined this to be a deceptive act of providing information by concealing and understating facts that have a significant impact on contract formation and maintenance.

Advertisement Claimed “16 Stores Opened in May–June”—Only One Store Actually Opened

There was also false advertising intended to deceive prospective franchisees. From April to July 2022, Precious People ran prominent pop-up ads on its franchise consultation website, claiming “16 stores opened in May–June.”

However, the Fair Trade Commission’s investigation revealed that only one store, the Yeoksam branch, actually opened during that period. Of the remaining 15 stores, seven were opened at different times, not in May–June, and the other eight were phantom stores that had not opened even by December 2023, more than a year after the advertisements.

The number of franchise stores opened within a specific period is a key indicator for assessing a brand’s performance and recognition. The authorities classified the misrepresentation or significant exaggeration of this figure as false or exaggerated advertising, which obstructed rational purchasing decisions of potential franchisees.

As of 2025, Gwi Han Jokbal’s sales amounted to approximately 17.5 billion won, with 133 franchise stores. The Fair Trade Commission emphasized that this action was significant in strictly sanctioning the headquarters for failing to transparently disclose unjust profits and for luring prospective franchisees by fraudulently inflating the number of store openings.

The Fair Trade Commission stated, “Our goal is to create an environment where prospective franchisees and owners can engage in fair transactions with the headquarters on equal footing,” adding, “We will continue to closely monitor and take strict action against franchise headquarters that violate information provision obligations or engage in unfair labeling and advertising practices.”

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