KFTC Reviews Unfair Support by Myeongryundang... Fines Could Reach Up to 34.7 Billion Won
Accused of Supporting Affiliated Lenders with Low-Interest Policy Funds
Franchisees Charged High-Interest Loans at 12% to 18% Annually
Myeongryundang, which operates the dining franchise Myeongryun Jinsa Galbi, is set to be reviewed by the Korea Fair Trade Commission (KFTC) on charges of unfairly supporting its affiliated lending companies using policy funds.
On July 6, the KFTC announced that it has sent an examination report concerning suspected unfair support practices under the Fair Trade Act to Myeongryundang and 14 affiliated lending companies, and has begun the process for deliberation at a full committee meeting. The examination report includes recommendations for corrective orders, imposition of fines, and criminal complaints against both the corporations and individuals involved.
According to the KFTC, from December 2021 to April this year, Myeongryundang provided funds to 14 affiliated lending companies at interest rates lower than the normal market rate, granting them economic benefits totaling approximately 21.7 billion won.
Between 2021 and 2024, Myeongryundang sequentially established lending companies and raised policy funds from the Korea Development Bank and other sources, lending up to 10 billion won per company at an annual interest rate of around 4.6%. The KFTC determined that these newly established lending companies, which faced difficulties securing independent financing, received unfair support through this arrangement.
It is reported that these lending companies then provided loans to franchisees of Myeongryun Jinsa Galbi and others at annual interest rates ranging from 12% to 18%, under the pretext of covering costs such as interior renovations.
The KFTC considers this case to involve serious legal violations and explained that if the maximum penalty rate of 160% is applied, the fine could reach up to 34.7 billion won. However, the final level of sanctions will be determined through deliberation at the full committee meeting.
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Meanwhile, the KFTC also referred Myeongryundang to a subcommittee in May for review of alleged violations of the Franchise Business Act, and the deliberation process is currently underway.
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