Shinjeon Tteokbokki, a popular South Korean tteokbokki chain, has been fined approximately 970 million won (about 9 billion KRW) by the Fair Trade Commission (FTC) for illegally coercing its franchise owners into purchasing certain goods, including utensils and plastic bags. The FTC revealed that Shinjeon Foodsys, the operating company, violated franchise law by not including these items in their disclosure documents yet demanding franchisees comply with unjust purchase requirements under the threat of penalties, including contract termination and damages. Evidence shows that from March 2021 to June 2023, the company sent 70 notices to franchisees across 59 locations regarding these coercive practices.

An investigation further indicated that between March 2021 and December 2023, the company profited an estimated minimum of 630 million won through markups of 12.5% to 34.7% on these items bought from the franchise. The FTC noted that Shinjeon Foodsys had attempted to monitor franchisee purchases through the regional headquarters checks, and even altered their disclosure statements during the commission’s investigation. The company initially listed these items as mandatory purchases but later changed their classification to 'recommended purchases' when faced with scrutiny.

The FTC concluded that the items in question were ordinary goods that did not directly impact the taste or quality of the products offered by the franchise. It deemed the practices of enforcing purchases from Shinjeon Foodsys to maintain brand uniformity inappropriate given that franchisees could produce or procure these items independently without compromising brand identity. The commission's action underscores the significance of fair trading practices within franchise operations and serves as a warning against coercive measures in business dealings.