‘MimiChef’ Hides Nearby Branches While Recruiting Franchisees...Administrative Order Issued

Fair Trade Commission Orders Franchise Fee Refund to Meal Kit Specialty Store 'Mimi Chef'

The meal kit specialty store ‘Mimi Chef’ will refund the franchise fees to its franchisees. This is because it failed to provide crucial business information, such as details about nearby franchise locations, to prospective franchisees during the contract signing process.

On the 29th, the Fair Trade Commission (FTC) issued an order for the return of franchise fees and corrective measures (including a prohibition on future actions) to Mimi Chef, a meal kit specialty store that concealed or deceptively provided material facts affecting the contract during the recruitment of franchisees.

According to the FTC, Mimi Chef omitted information about the existence of nearby franchise stores when providing information to prospective franchisees. Although there were two franchise stores operating in the metropolitan local government area where the prospective franchisee’s future store was planned as of September 2021, Mimi Chef only included information about one directly operated store in a different metropolitan local government area in the disclosure documents and the nearby franchise status report.

Mimi Chef also concealed the fact that ‘OO Food Co., Ltd.’s meal kit products could no longer be supplied to franchisees. Since April 2021, the early stage of the business, Mimi Chef had been recruiting franchisees by promoting that ‘all Mimi Chef menus are developed and produced directly by a two-time grand prize winner of a cooking competition.’ However, it failed to notify franchisees of the important fact that the supply contract with OO Food Co., Ltd., a meal kit manufacturer represented by the two-time grand prize winner, would expire on October 31, 2021.

For these reasons, franchisees requested the return of their franchise fees, but Mimi Chef did not refund them. Accordingly, the FTC issued corrective orders and a refund order for the franchise fees regarding the following actions: ▲ omitting the existence of nearby franchise stores in the nearby franchise status report, ▲ providing deceptive information by concealing important facts, ▲ failing to provide disclosure documents to prospective franchisees in accordance with the Franchise Business Act, and ▲ refusing to refund franchise fees despite requests from franchisees for such refunds due to these reasons.

The FTC stated, “We will continue to monitor the franchise sector to prevent violations of laws and regulations and will impose sanctions according to law and principles when violations are detected.”