Banolim Pizza Headquarters Fined 176 Million Won for Forcing Franchisees to Buy Forks and Tripods

Banolim Pizza forced franchisees to purchase supplies exclusively
Fair Trade Commission imposes corrective order and fine on Pizza & Company

The franchise headquarters of the brand "Banolim Pizza" has been sanctioned by the Fair Trade Commission for forcing franchisees to purchase pizza stabilizer tripods and disposable forks exclusively from itself.

On September 7, the Fair Trade Commission announced that it would issue a corrective order and impose a fine of 176 million won on Pizza & Company for violating the Franchise Business Act.

Banolim Pizza logo. Banolim Pizza

Pizza & Company is accused of designating pizza stabilizer tripods and disposable forks, which prevent delivery pizzas from shifting, as mandatory items between April 2019 and April 2023, and forcing franchisees to purchase them only from itself or a designated logistics company, thereby obtaining an unfair profit of 86 million won.

The company included a clause in the contract stating that if franchisees purchased these items from other suppliers, they would have to pay 50 million won to the headquarters, and it was found to have actually monitored their purchasing behavior.

However, the Fair Trade Commission determined that there is no need for stabilizer tripods and disposable forks to be purchased exclusively from a specific supplier to ensure a unified brand image or maintain product quality. Other major franchise headquarters treat these items as recommended rather than mandatory, so Pizza & Company's practices do not align with industry norms.

It was also found that Pizza & Company directly received over 52 million won in franchise and training fees from eight prospective and current franchisees between April 2020 and December 2021. The Franchise Business Act requires franchise headquarters to deposit franchise fees in a bank or similar institution for a certain period to prevent damage in case the headquarters collects money and then closes down, but Pizza & Company failed to comply with this obligation.

The Fair Trade Commission stated, "By sanctioning excessive designation of mandatory items, we aim to reduce unnecessary burdens and help create a fairer business environment," adding, "It is also significant that we have ensured the stability of franchise fees."