Korean Papa John's Imposed Purchase of Taxes and Remodeling Costs Imposed on Penalty KRW 1.5 Billion

Pan Gukpa John's, a pizza franchise headquarters, designated various detergents as essential items that must be purchased only at the headquarters and passed on remodeling costs to store owners, and was subject to a fine of 1.482 billion won from the Fair Trade Commission.

The Fair Trade Commission said Korea Papa John's has limited franchisees' options by designating 15 types of detergents, including hand sanitizers and kitchen detergents, which have nothing to do with the taste or quality of pizza, as essential items in the contract from July 2015.

The Fair Trade Commission said Korea Papa John's cleaning agent sales to franchisees during the law violation were 547 million won, with an average margin ratio of 16%.

He also said that considering similar products are available on the market, the sanctions were decided because it was an act that excessively limited the choice of shop owners.

The Fair Trade Commission also said Papa John's did not pay 200 million won to store owners, even though it demanded 25 merchants remodel their stores from August 2015 to April 2022.

The FTC explained that the fine of 1.482 billion won is the second-largest amount ever imposed for violating the franchise business law.

It also said that the penalty for violating essential items worth 1 billion won is the largest amount ever.