Korean Franchise Operator Myungryundang Faces 14.8 Billion Won in Antitrust Fines

South Korea’s antitrust regulator has imposed provisional fines totaling about 14.8 billion won on Myungryundang, the operator of the Myeongryun Jinsa Galbi restaurant chain, over allegations that it provided preferential financing to lenders controlled by its chairman’s family.

The Korea Fair Trade Commission said Monday that it would issue corrective orders and refer both the company and Chairman Lee Jong-keun for prosecution over alleged unfair support. The regulator imposed a provisional fine of 10.47 billion won for the financing arrangement and another 4.4 billion won over allegedly misleading disclosure to prospective franchisees.

According to the commission, Myungryundang established 14 lending companies over roughly three years from late 2021 and placed them under the control of Lee’s family. Instead of lending startup funds directly to franchise operators, the restaurant company inserted those lenders into the financing structure.

From December 2021 through April this year, Myungryundang extended a cumulative 298.3 billion won to the 14 companies at annual rates of either 2.3 percent or 4.6 percent, which the regulator said were substantially below normal funding costs. The pool included 79 billion won in policy financing that Myungryundang had borrowed from the state-run Korea Development Bank at annual rates of 3 to 4 percent.

The lending companies saved an estimated 21.7 billion won in financing costs, the commission said. It calculated that they would have paid about 31.6 billion won in interest at normal rates but paid only about 9.9 billion won. The affiliated lenders then charged franchisees 12 percent for renovation loans and 15 percent for new-store financing, with rates rising as high as 18 percent after the end of 2024. Myungryundang lowered the rate offered to franchisees to 4.6 percent after the arrangement came under scrutiny late last year.

The regulator also said Myungryundang agreed to repay loans if franchisees defaulted, sharply reducing the lenders’ credit risk. Most of the lenders had no permanent employees and used shared offices of about 3.3 square meters near the company’s headquarters. Their combined loan balance in 2025 was large enough to rank 27th among 8,203 lenders nationwide.

Separately, the commission alleged that Myungryundang falsely stated in franchise disclosure documents that there were no relevant credit arrangements. It said the company failed to disclose the lenders’ related-party status, loan conditions and the links between franchise and lending contracts, limiting prospective operators’ ability to assess financing costs before signing. The fines remain provisional pending final determination.