Mom's Touch Slapped With ₩300M for Alleged Abuse on Franchisee

Mom's Touch is in hot water after it was accused of abusing one of its franchisees, who is operating a branch in Sangdo Station. On Wednesday, Jan. 31, South Korea's Fair Trade Commission sided with the "victim" after imposing a hefty KRW300 million fine, or around $224,000, against the popular Korean chicken burger chain.

Formation of Franchisees' Association

According to The Korea Times, the local antitrust watchdog said it made the decision to penalize Mom's Touch after thoroughly reviewing the case. The agency said that the franchisee involved led the creation of an association of franchisees in 2021. The aim of the group is to have a committee where the operators of Mom's Touch can protect and fight for their rights as franchisees.

The group also encouraged others to join so they can advocate for their business rights together. Moreover, to promote the organization, the Sangdo franchisee, along with 61 other members, jointly sent out letters to other Mom's Touch franchisees who have not yet joined.

The Alleged Abuse of Mom's Touch

The company found out about the letter, which it claimed to have false information about, which mostly criticized the brand's management. For several months in 2021, Mom's Touch and the franchisee were said to have communicated, and at one point, the chain reportedly refused to recognize the franchisees' association and asked the franchisee to step down from his leadership post in the group.

He was also warned by the company, saying that if he did not do as asked and file a complaint against Mom's Touch, the firm would take harsh action until he suffered tremendously. The FTC revealed it found the company's treatment of the Sangdo franchisee to be wrong and uncalled for as the management saw the association's activities as not beneficial for its business and refused to cooperate with the group.

"Our decision reflects our mission to protect local franchisees' rights and their initiatives to improve their economic conditions," the FTC said.

Mom's Touch to File an Appeal

Sports Seoul reported that the FTC fined Mom's Touch for violating the Franchise Business Act. However, although the company said it regrets the events, it is planning to file an appeal.

"Since the company's establishment, we have been carrying out franchisee-friendly policies by requiring them only a minimum level of mandatory supply items and charging zero fees for their restaurant interior renovations. If necessary, we will pursue making an appeal," the company stated.

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