BSB Food, the franchisor of "Cheongnyeon Pizza," has been slapped with a fine and corrective orders for forcing its franchisees to set the consumer delivery fee to 0 won.

The Fair Trade Commission (FTC) announced that it has issued a corrective order, a notification order, and an order to delete or modify contract clauses against BSB Food, along with a fine of 197 million won, for violating the Act on Fairness in Franchise Transactions.

Starting in March 2021, BSB Food included a special clause in its franchise agreements requiring franchisees to set the delivery tip (delivery fee) borne by consumers to 0 won for all delivery orders placed through delivery platforms and other channels.

This special clause was maintained until January 2025.

BSB Food monitored whether franchisees complied with the 0 won delivery tip rule and even sent official certified mail warning that non-compliant business owners could face disadvantages such as contract termination or refusal to renew.

The FTC determined that there was no justifiable reason for establishing the 0 won delivery tip special clause.

It pointed out that the practice did not align with normal transaction customs of charging consumers a certain amount for delivery fees, nor did it help increase the profitability of franchisees.

Additionally, the investigation revealed that since starting its franchise business in 2018, BSB Food had excessively set and actually imposed penalties on franchisees for early contract termination and independent ingredient purchases (the act of franchisees purchasing ingredients separately from external suppliers rather than those designated by the headquarters).

The penalty amounts continuously increased by reason, reaching 10 million won in 2018, 20 million won in 2020, and 50 million won in 2021.

From July 2021 to November 2024, BSB Food imposed a total of 1.11 billion won in such penalties across 26 instances.

When franchisees failed to pay after being notified of the penalties, the company coerced payment by suspending product supplies, imposing additional special clauses, and filing civil lawsuits.

The FTC pointed out that BSB Food's penalty amounts were excessively heavy compared to the company's operating profit losses.

In reality, while the scale of independent ingredient purchases per violation by franchisees ranged from 5,100 won to 114,000 won, the actual penalties collected reached 3 million won to 20 million won, which is hundreds of times higher.

Furthermore, it was revealed that BSB Food concluded franchise agreements with six prospective franchisees before the mandatory 14-day waiting period had passed after providing them with the information disclosure document.

Under relevant laws and regulations, franchise agreements can only be signed after 14 days have passed since the delivery of the information disclosure document.

An FTC official stated, "We will continuously monitor unfair practices so that franchisees can engage in fair franchise transactions on an equal footing with franchisors."

(Photo: Capture from Cheongnyeon Pizza website, Yonhap News)