Franchise restaurant owner Sauer in the brand in the middle of scandals and collect profits

Franchise companies may lose their charm for business owners, especially for restaurants and cafés.
On Tuesday evening, a branch of the Saemaul restaurant was noticeably empty in the Gangnam district, Southern Seoul, despite a busy dinner.
“Last year we benefited from Paik Jong-Won's popularity, but I hadn't expected things to develop like this,” said the franchise owner, pointing out that they had taken Paik's photo from the restaurant wall.
The franchise industry in Korea is once seen as a lifeline for independent people, since an economic break-in further undermines profitability.
Out of Hero to zero
The tensions between franchisers and franchisees are escalating, with Thorn Korea – the 22 dining brands such as Paik's Coffee, Hong Kong Banjeom and Saemaul Restaurant – at the center of the latest disputes.

A restaurant in Hong Kong Banjeom, which is operated by Celebrity Chef Paik Jong-Won Thorn Korea, offers discounts on May 13th in Seoul. [YONHAP]

The franchisee of Yeondon Ball Katsu, one of the brands of Thorn Korea, submitted a complaint to the Fair Trade Commission in June last June and accused the company of violating Franchise laws. They claimed that the headquarters had never promised sales of 30 million WON ($ 21,500) and a profit margin of 20 to 25 percent, which they said. Thorn Korea denied to enable such guarantees.
The situation has deteriorated according to a number of public controversy in which Paik was involved. The latest scandals include under -reported pork content in the brand's “Paik Ham” delusions, the misunderstanding of the origin of the ingredients and the allegations of abusive behavior in television programs. The resulting counter -reaction of the consumer has reached all connected brands, which meant that Thorn Korea's share price at the time of November 2024 will fall to 27,850 Won -Won -Won -Won -Won -Won course from Wednesday.
“Franchise owners to help in this difficult time has a top priority,” said Paik on Tuesday at a press conference. “We will invest 30 billion in marketing and support programs over three months.”
He added: “Our goal is to increase visits to the shop, and franchisee are on board with this strategy.”
Disillusionation about the “brand advantage”
Franchiseers often enter the business to believe in the power of brand awareness, only to be conflict with the headquarters about problems such as product prices, marketing costs and forecast income.
In addition to Yeondon Ball Katsu, brands such as Sulbing and Yogerpresso were also exposed to non -fulfilled sales expectations.

Mega MGC Coffee advertising with football son Heung-Min as a model [MEGA MGC COFFEE]

Inexpensive coffee franchise companies such as MEGA MGC coffee and Comes coffee have drawn criticism of the transfer of celebrity confirmation costs to franchisee. Mega MGC, which was operated by Ann House, recorded the marketing costs of 3.7 billion in 2022 to 12.5 billion Won in 2023 after gaining football star, son Heung-Min. Franchisee had to cover 50 percent of these expenses.
The coffee coffee followed a similar path and reports on a 60 billion campaign with BTS member V to Franchise owner.
Legal reform on the horizon
Against this background, a planned change in the franchise Business Act was in the National Assembly last month. The revision would require the registration of franchisee organizations and allow administrative penalties if the franchisors refuse to negotiate with them. Industry observers expect the invoice to come into force in the first quarter of next year.
Franchisen representatives have welcomed the legislation.
“When the headquarters ignored the negotiating inquiries, there was no legal recourse, except as a dispute with the Fair Trade Commission – a discouraging process,” said the Korea franchisee Union.
However, the franchisors are concerned. “Most franchise companies in Korea run less than 10 branches,” said an official from the Korea Franchise Association. “This could end up, like the Development Act of the Sales industry, that violates large supermarkets and at the same time does not strengthen the traditional markets.”
The operators of Convenience Store are also anxious.
“We are concerned that the spread of franchise groups could lead to contradictory requirements,” said a representative of the Korea Association of Convenience Store. “The draft law must be checked again, with the necessary revisions to avoid unintentional consequences.”

Translated from the Joongang Ilbo with generative AI and edited by Korea Joongang Daily Staff.
By Kim Kyung-Mi [[email protected]]