[Legal Issue Check] Why Did Cheogajip Franchise Owners Report the Headquarters and Baedal Minjok Operator to the Fair Trade Commission?

'Baemin Only' promotion harms only franchise owners
Violations of the Fair Trade Act and the Franchise Business Act... "Unfair trade"

Franchise owners of Cheogajip Yangnyeom Chicken have appointed Law Firm YK (co-representative attorneys Kang Kyunghoon and Kim Beomhan) to pursue legal action, claiming that a promotion carried out by the franchisor Cheogajip Yangnyeom Chicken headquarters (Hangukil-osam) together with Woowa Brothers, the operator of Baedal Minjok, violates the Monopoly Regulation and Fair Trade Act and the Fair Franchise Transactions Act.

The franchise owners argue that they were induced to sign up for the promotion, under which they would receive a significant reduction in intermediary commission fees on the condition that they did not use other delivery apps and traded exclusively with Baedal Minjok. They claim that exaggerated information was provided about the frequency and effectiveness of the promotion, and that they were not properly informed of the risk of sales decline resulting from not being able to use competing platforms, which caused them harm.

On July 15, 2024, in front of the Woowa Brothers headquarters in Songpa-gu, Seoul, representatives from Rider Union, the Meeting of Bosses for a Fair Platform, and the Service Federation's Delivery Platform Union are holding a press conference condemning Baedal Minjok's fee increase and calling for its withdrawal. Yonhap News

They further argue that, although the franchisor and Woowa Brothers claim that participation in the promotion is left to the discretion of each franchise owner, in reality participation is effectively mandatory from the perspective of owners who must fear disadvantages such as reduced exposure in the app.

'Baemin Only' promotion is illegal... YK files complaint with Fair Trade Commission

On the 20th, YK announced that, representing the Cheogajip Yangnyeom Chicken Franchise Owners Council (hereinafter the Council), it had filed a complaint with the Korea Fair Trade Commission against Woowa Brothers, the operator of the Baedal Minjok delivery platform, and the franchisor Hangukil-osam.

YK reported to the Korea Fair Trade Commission that the 'Baemin Only' promotion conducted by Woowa Brothers and Hangukil-osam violates the Monopoly Regulation and Fair Trade Act (hereinafter the Fair Trade Act) and the Fair Franchise Transactions Act.

Woowa Brothers, the operator of Baedal Minjok, signed a strategic partnership memorandum of understanding (MOU) with Cheogajip Yangnyeom Chicken operator Hangukil-osam on January 27, 2026, and from February 9, 2026, implemented the 'Baemin Only' program, which offers commission discounts to franchisees that list exclusively on Baedal Minjok.

According to YK, when Woowa Brothers signed the MOU with the franchisor, it promised commission reductions and discount support benefits on the condition that franchise owners would not use other delivery apps and would trade exclusively with Baedal Minjok. Specifically, Woowa Brothers proposed lowering the intermediary commission rate from the existing 7.8% to 3.5% as a way to induce exclusive dealing.

YK pointed out, "While the actual economic benefit provided to store owners by this promotion is minimal, it completely deprives them of business opportunities through other delivery apps and can inflict serious sales losses on the franchises." In practice, stores participating in the promotion were unable to use other delivery apps such as Coupang Eats and Yogiyo.

In particular, the Council argues that the chicken franchise sector is one in which brand competition is extremely intense, yet the real sales decline resulting from relying on a single delivery platform must be borne entirely by the franchise owners, and there is no commitment from Woowa Brothers or the franchisor to share responsibility for damages caused by such sales declines.

In fact, under the MOU signed by Woowa Brothers and the franchisor, more than 90% of the 1,254 franchises as of the end of 2024 were effectively forced to participate in the promotion, and as a result, exposure of Cheogajip Yangnyeom Chicken on other delivery apps is known to have dropped significantly.

Abuse of market-dominant position and unfair trade under the Fair Trade Act... False, exaggerated, and deceptive information and unfair trade under the Fair Franchise Transactions Act

According to reporting by The Asia Business Daily, YK concluded that the act of Woowa Brothers and the franchisor entering into an exclusive-conditions transaction agreement that prevented Cheogajip Yangnyeom Chicken franchisees from listing on delivery apps other than Baedal Minjok constitutes a "tie-in transaction" type of unfair trade practice under the Fair Trade Act.

Article 45(1) of the Fair Trade Act lists business practices that may undermine fair trade, and subparagraph 7 designates as a prohibited act "trading on terms that unduly restrict the business activities of the other party to the transaction."

YK also viewed the act of exaggerating to franchise owners the frequency and other aspects of the promotions that Woowa Brothers would provide, in order to induce them to sign agreements to participate in the promotion, as falling under "unfair customer inducement," a type of unfair trade practice under the Fair Trade Act.

On March 22, 2021, delivery riders of Baedal Minjok affiliated with the Baemin Riders branch of the Service General Labor Union of the Korean Confederation of Trade Unions held a rally in front of the Woowa Brothers headquarters in Bangi-dong, Songpa-gu, Seoul, demanding improved working conditions for riders. Photo by Kim Hyunmin

Article 45(1)4 of the Fair Trade Act prohibits "unfairly inducing a competitor's customers to trade with oneself." Violation of this provision may result in corrective measures and surcharges, and under Article 125(4) (Penal Provisions) of the same Act, is subject to criminal punishment of "imprisonment for not more than two years or a fine not exceeding 150 million won."

YK further reported that, in the case of Woowa Brothers, the act of entering into an exclusive-conditions transaction agreement with the Cheogajip Yangnyeom Chicken franchisor to ensure that Cheogajip Yangnyeom Chicken franchise business operators (franchise owners) list only on Baedal Minjok also constitutes "exclusion of competitors through exclusive dealing," an abuse of market-dominant position prohibited for market-dominant enterprises under the Fair Trade Act.

Article 5(1)5 of the Fair Trade Act prohibits "conduct which has the potential to significantly harm consumer interests by unfairly excluding competitors." Violation of this provision is punishable under Article 124(1)1 (Penal Provisions) of the Fair Trade Act by "imprisonment for not more than three years or a fine not exceeding 200 million won."

Meanwhile, YK reported that when the franchisor Hangukil-osam recommended participation in the promotion to franchise owners, it failed to disclose matters that would have a significant impact on the franchisees' decision-making, such as the real effect of the commission reduction, the risk of sales decline from discontinuing the use of competing platforms, and the legal risks arising from the exclusive-conditions structure. YK contends that this violates Article 9(1) and Article 12(1)2 of the Fair Franchise Transactions Act.

Article 9(1) (Prohibition of Providing False or Exaggerated Information) of the Fair Franchise Transactions Act prohibits franchisors, when providing information to franchise business operators, from "providing information that differs from the facts or inflating facts when providing information" (provision of false or exaggerated information) and from "providing information by concealing or understating facts that have a significant impact on the conclusion or maintenance of the contract" (provision of deceptive information).

If a franchisor violates this provision by providing false or exaggerated information or deceptive information, it is subject under Article 41(1) (Penal Provisions) of the Fair Franchise Transactions Act to punishment of "imprisonment for not more than five years or a fine not exceeding 300 million won."

Article 12(2) of the Fair Franchise Transactions Act lists as a type of unfair trade practice that may impede fair transactions in franchise business "acts that unduly restrict or limit the prices of goods or services handled by the franchise business operator, the parties to transactions, transaction areas, or the business activities of the franchise business operator."

In addition, Article 48 (Prohibition of Retaliatory Measures) of the Fair Trade Act prohibits a business operator from suspending transactions, reducing quantities, or otherwise imposing disadvantages on another business operator on the grounds that the latter has reported an unfair trade practice under Article 45(1) to the Korea Fair Trade Commission or has cooperated with a Korea Fair Trade Commission investigation.

"Effectively forced choice"... Discount-sharing ratio inflated

The Franchise Owners Council criticizes Woowa Brothers for leveraging its status as the No. 1 player in the market to induce exclusive dealing that is "formally optional but in substance close to coercive." From the standpoint of franchise owners, the risk of disadvantages such as reduced exposure within the app if they do not participate in the promotion is so great that, in reality, it is difficult to refuse to participate.

A Council representative said, "The Korea Fair Trade Commission must verify whether, in a structure where the delivery platform and headquarters unilaterally enter into an MOU, individual store owners were in fact unable to refuse participation in the promotion."

The Council also criticized the franchisor, stating that it "emphasized only the favorable conditions and failed to accurately explain the complex settlement structure and the real nature of Baedal Minjok's subsidies, thereby tying store owners to a specific platform."

Korea Fair Trade Commission Sejong Government Complex. Korea Fair Trade Commission

YK analyzed that there are also serious pitfalls in the settlement method for the discount promotion pursued by Woowa Brothers and the franchisor.

For example, when selling chicken priced at 30,000 won at a discount of 8,000 won for 22,000 won, Woowa Brothers informs owners that it will support 4,000 won of the 8,000 won discount. At first glance, this may appear as if 50% of the discount is being covered.

In reality, however, while the franchise owner must bear a fixed discount amount of 4,000 won, Woowa Brothers can unilaterally adjust the total discount amount and set its own burden at a lower level than that of the owner, at around 1,000 to 3,000 won. In fact, in February 2026, Woowa Brothers set the total discount amount at 6,000 won, leaving the franchise owner to bear 4,000 won in full, while Woowa Brothers bore only 2,000 won.

Furthermore, the coupons actually issued to Baedal Minjok app users are generally in the range of 3,000 to 4,000 won, and it is rare for high-value coupons of 8,000 won or more to be issued. As a result, the entire discount amount is borne by the franchise owner or the franchisor, and the compensation benefit provided by Woowa Brothers is not substantial, according to the Council.

As sales increase, Woowa Brothers' total commission revenue rises, but franchise owners are left to shoulder the excessive discount amounts entirely. YK stated, "This is far from sufficient to cover the sales decline caused by cutting off access to other delivery apps."

YK also judged that while the promotion materials indicated that the franchisor, regional headquarters, and franchise stores would share the discount burden at a certain ratio, from a legal standpoint the contractual party to the delivery app is not the franchisor but each individual franchise store, so the cost of the discount coupons can be assessed as an amount borne by the franchise owners.

YK stated, "We hope that through the Korea Fair Trade Commission's investigation, unfair practices in which a monopolistic business operator exclusively dominates the market while all the damage is borne by franchise owners will be eradicated."

Meanwhile, on January 12, 2026, YK filed a lawsuit with the Seoul Eastern District Court on behalf of approximately 360 franchise owners of large nationwide franchises such as BBQ and Baskin Robbins, seeking restitution of unjust enrichment from Woowa Brothers, the operator of Baedal Minjok, criticizing its practice of charging around 10% commission based on the "pre-discount amount" rather than the actual payment amount.