"Give Us COVID Disaster Relief Funds"... Toz Study Franchisee Abused Power, Fair Trade Commission Sanctions

P2P Systems, which operates franchise businesses such as Toz Study Center and Toz Study Lab, was sanctioned by the Fair Trade Commission for coercing franchisees to share the 'COVID-19 disaster relief funds.'

On the 7th, the Fair Trade Commission announced that it decided to impose corrective orders on P2P Systems for violating the Franchise Business Act by forcing 39 franchisees in January 2021 to distribute the support funds, gaining a total benefit of 10.95 million KRW.

Since January 2021, the government has provided a total of 2 million KRW in support funds to small business owners experiencing sales declines due to COVID-19 social distancing restrictions on study rooms and similar businesses: 1 million KRW for business damage support and 1 million KRW for reducing fixed costs such as rent. It was investigated that P2P Systems required jointly invested franchise stores to deposit the 1 million KRW fixed cost reduction support fund into a joint operating account. The intention was to use the support funds as joint expenses. Despite opposition from franchise owners, this policy was maintained.

The Fair Trade Commission viewed the coercion to distribute the support funds as an act where the franchisor unfairly obtained benefits from franchisees by exploiting its superior power. The Commission also imposed corrective orders on P2P Systems for failing to comply with the cooling-off period (minimum 14 days) when contracting with 57 franchise owners from 2013 to October 2019, and for not notifying franchise owners about promotional events partially funded by the franchisees from 2018 to 2020.