'Late-night Operation' Power Abuse at Emart24... 145 Million Won Fine

No Approval for Reduced Business Hours at Stores Affected by Pandemic Recession

Emart24 has been sanctioned by the Fair Trade Commission for abusing its power by forcing stores that were operating at a loss due to the COVID-19 pandemic recession to operate late at night.

On the 21st, the Fair Trade Commission decided to impose a fine of 145 million won on the franchisor Emart24 for ▲forcing late-night operations ▲collecting the full franchise fee for simple name changes ▲failing to notify the execution details of promotional events.

According to the Fair Trade Commission, Emart24 did not allow two franchise stores, which experienced significant sales declines for three consecutive months during the pandemic recession and incurred operating losses during late-night hours, to shorten their business hours in September and November 2020, respectively.

According to Article 12-3 of the "Act on the Fairness of Franchise Transactions," if a franchisee incurs operating losses during late-night hours for the previous three months, they can request the franchisor to shorten business hours.

From June 2018 to May 2020, during the transfer of 16 stores, Emart24 collected franchise fees in the same manner as a general transfer, despite the fact that the actual operators of the stores were the same and the transfers were simple name changes without accompanying education, store operation support, or inventory checks for the franchisees.

Furthermore, from 2018 to 2021, Emart24 conducted promotional events such as Shinsegae Point partnerships and SSG Pay accumulation, which imposed costs on franchisees, but failed to notify the franchisees of the execution details within three months after the end of each business year.

The Fair Trade Commission stated, "This action confirms that forcing convenience stores operating at a loss during late-night hours to operate 24 hours is a violation of the law, marking the first case of its kind," and evaluated that "it will serve as an opportunity to protect the rights and interests of many franchisees in the future."

It added, "We will continue to monitor unfair practices by franchisors, take strict measures when violations are confirmed, and share related information with the industry to prevent repeated violations of the same kind."