KFTC Initiates Action Against Myungryun Dang Over High-Interest Franchisee Loans

The Fair Trade Commission (KFTC) has taken a significant step by initiating disciplinary proceedings against Myungryun Dang, the operator of the well-known 'Myungryun Jinsagalbi' franchise. This action stems from allegations that the company exploited low-interest policy funds to offer high-interest loans to its franchisees. Furthermore, franchisees were reportedly compelled to use specific interior companies, raising concerns about unfair trade practices. The KFTC's investigation revealed that Myungryun Dang channeled approximately 89.9 billion won from policy lenders like the Korea Development Bank, which offered annual interest rates of 3-6%, to its affiliated loan businesses. These businesses then lent the money to franchisees at exorbitant annual interest rates of 12-18%, primarily for interior renovation costs. This practice not only burdened franchisees but also allowed the franchise headquarters to profit from interior construction while mitigating risks. The KFTC's move, alongside proposed systemic reforms, aims to curb such exploitative practices and ensure a fairer business environment for franchisees across the country. The commission's findings also point to potential 'fragmented registrations' of loan businesses to circumvent financial regulations, adding another layer of concern to this case.

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Myungryun Dang provided loans at high interest rates to franchisees without considering their financial situation, using low-interest policy funds.