Korea's Fair Trade Commission (FTC) has issued a corrective order against Nexcube Corporation, the franchisor behind the tutoring brands Eduplex and Educoach, for violating franchise advertising fee consent procedures. It's the first enforcement case since Korea introduced its prior-consent-for-advertising system in 2022 — a decision with implications across the franchise industry.
Nexcube switched from a flat advertising cost-sharing model to a performance-proportional structure and surveyed its entire franchise network in November 2022 to get consent. The FTC's investigation found that Nexcube failed to adequately disclose essential information — including advertising content and the basis for cost calculations — that franchisees needed to make an informed decision.
The bigger issue was how the consent rate was calculated. Franchisees were asked to vote on different proposals — one charging 110,000 won per student, another 220,000 won — and Nexcube combined the "yes" votes across both proposals into a single, arbitrary consent rate. That blurred exactly what franchisees had actually agreed to.
The FTC made clear that when franchisors run advertising or promotional campaigns, they must provide sufficient information on ad content, cost scale, and calculation basis so franchisees can reasonably judge their financial burden. No fine was imposed in this case, but the FTC signaled it will enforce the rule more strictly going forward.
Franchise marketing and advertising teams should take three lessons from this case. First, when changing a cost-sharing model, clearly separate and disclose the actual amount each franchisee will bear — and never combine consent votes across different proposals into one rate. Second, provide documented ad content, execution plans, and cost-calculation rationale before the consent process, matching the intent of the prior-consent system. Third, retain records of how the consent rate was calculated and its supporting evidence in case of future disputes.
For broader context on franchise cost structures and marketing strategy, explore Best Partner's services or get in touch to discuss franchise marketing compliance.
It requires franchisors to obtain franchisee consent before running advertising or promotional campaigns, ensuring franchisees can reasonably judge their cost burden in advance.
When switching to a performance-proportional advertising cost model, it failed to disclose sufficient information on ad content and cost calculation, and it combined "yes" votes across different fee proposals to arbitrarily calculate a consent rate.
No. As the first enforcement case since the prior-consent system was introduced, the FTC issued a corrective order but no fine — while stating it will enforce the rule more strictly going forward.
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