GS Retail faced criticism during a national audit for allegedly involving unnecessary intermediaries in its product supply process, raising concerns about profit-sharing. Lawmakers also pointed out that the company failed to adequately disclose economic benefits, such as sales incentives, to franchise owners.
During the National Assembly's audit of the Fair Trade Commission on October 12, Han Min-soo, a member of the Democratic Party, questioned Oh Jin-seok, the vice president of GS Retail, about the suspicious transactions linked to unnecessary vendor involvement.
According to Han, one of GS Retail's major suppliers, Hanbyeol, began discussions with the company in October 2020, before its official incorporation, and was registered as a partner in February 2021. Over the past five years, Hanbyeol has generated approximately 17 billion won in sales from GS Retail, despite having only three employees and no recorded inventory on its financial statements.
Notably, while competitors like CU purchase batteries directly from manufacturers, GS Retail's reliance on intermediaries has resulted in supply prices for GS25 being 120% higher than those of CU.
Han criticized, "It appears that GS Retail is facilitating unnecessary vendor involvement, benefiting former employees and their associated companies while collecting a 'toll.' This kind of vendor interference leads to increased consumer prices, reduced profits for franchise owners, and worsened profitability for small manufacturers." He also noted that more than two weeks after the allegations were raised, there has been no update on the investigation, indicating a breakdown in internal controls.
In response, Oh Jin-seok stated, "We are reviewing potential conflicts of interest in transactions with companies linked to former employees and will conduct a thorough internal assessment to identify any structural issues."
Additionally, the audit raised concerns that GS Retail did not properly disclose large sales incentives received from suppliers to franchise owners. Democratic Party lawmaker Min Byeong-deok pointed out that while GS Retail reported receiving 54 million won in supplier benefits in its 2025 supermarket franchise disclosure, the actual amount was 57.2 billion won. He warned that the total incentives received from convenience store and supermarket suppliers from 2016 to 2024 reached 3.9 trillion won, yet franchise owners have never been adequately informed, raising potential violations of franchise law.
In reply, Oh assured, "We will clarify the details and provide further information."
* This article has been translated by AI.
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