By Jane Han
Staff Reporter
Rotiboy and PappaRoti, the top two bread chains selling the popular coffee-flavored sweet bun, are tangled up in a bitter mix of lawsuits with their disgruntled local franchise operators.
The foreign brands have been running businesses here for nearly two years now and while sales are climbing up, relations with their Korean partners are turning sour over similar problems.
Hong Kong-based PappaRoti, which currently operates almost 100 domestic franchises, is in a legal battle with two dozen of its former franchise owners who claim that the parent firm provided them with sub-quality ingredients.
According to industry sources, they filed a joint lawsuit demanding PappaRoti repay the initial costs totaling nearly 500 million won to set up their businesses.
However, the bread company fired right back, denying there was any problem with the ingredients, claiming that the franchise operators are only trying to find a justification for prematurely breaking the original contract period.
A group of former PappaRoti franchise owners have launched a new brand called Bun & Fun.
``The legal battle with our previous partners is taking a hit on our brand image, but the court ruling will hopefully untangle the problem,'' said a PappaRoti spokeswoman. The court is set to issue a ruling on Thursday.
Facing similar problems regarding contracts, PappaRoti's competitor Rotiboy is currently dealing with five lawsuits.
The Malaysia-based firm has filed three charges against its former franchise operators, while the other two have been filed against the parent company.
The biggest problem is the overuse of Rotiboy's trademark.
A group of Rotiboy's previous franchise partners have started up a new brand called ``Caf? Roti,'' while using the interior concept and supplies that were provided by Rotiboy.
Company officials say that such action is an infringement of intellectual property rights.
``It is wrong for the former owners to use Rotiboy's concept if they are running their business under a completely different name,'' said a company spokeswoman, who stressed that consumers can be easily confused.
The firm's ex-partners, however, are arguing that Rotiboy's misled management guidelines forced them to cancel their contracts with the parent company.
``It is feared that the ongoing legal mess may scare away prospective franchise operators,'' said a Rotiboy official, who added that the court is expected to issue a ruling sometime soon.
jhan@koreatimes.co.kr
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