The Fair Trade Commission yesterday fined convenience store chain Taiwan FamilyMart Co (全家便利商店) NT$3 million (US$94,670), saying that the company did not reveal sufficient information in contracts with franchises.
The company did not fully reveal restrictions on sales and purchases before inking contracts with franchisees in violation of the Fair Trade Act (公平交易法), according to a statement released by the commission.
Given a fixed inventory ratio, FamilyMart requires franchisees to follow the company’s regulations that sales volume not be less than purchase volume, the statement said.
Consequently, the retailer’s rules affect individual store policy on scrapped products, with franchisees having to absorb losses from unsold merchandise, it said.
As inventory rules are one of the most important factors that franchisees need to evaluate costs and operational risks, FamilyMart should fully disclose that information in its contract, the commission said.
Article 25 of the act stipulates that, when recruiting new business partners, franchisers are required to provide important information in writing for franchisees, such as expenses generated before and during operation, intellectual property rights and restrictions during the contract period.
FamilyMart, the nation’s second-largest convenience store chain, said it plans to appeal the ruling.
“The information about commodity supplies and orders has been fully revealed in contracts,” FamilyMart said in a statement.
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