Myeong Ryun Dang lent a total of 298.3 billion won to 14 affiliated private moneylenders at annual rates of 2.3% or 4.6% between December 2021 and April 2026. The Fair Trade Commission estimated the lenders’ economic benefit at 21.7 billion won. The affiliates then lent the money to franchisees at annual rates ranging from 12% to 18%.
The watchdog said the lenders, which were effectively owned by Myeong Ryun Dang’s owner, would have struggled to raise funds independently. Each received between 10 billion and 15 billion won in low-interest financing, reducing their costs and risks.
The penalty comprises 10.4 billion won for illegally supporting affiliates and 4.4 billion won for hiding the relationships from prospective franchisees. The commission said the company withheld information about its ties to the lenders, loan terms, links between lending and franchise contracts, and repayment methods—details that could have influenced franchise applicants’ decisions.
The regulator said the financial benefits ultimately flowed to the owner’s family. The funds supplied to affiliates also included 79 billion won in low-interest loans from state-run Korea Development Bank. The commission decided to file a complaint against the company and its chairman.