 |
| The National Commission for Corporate Partnership Chairman Yoo Jang-hee, center, announces new guidelines to protect small businesses, at the Seoul Palace Hotel, Tuesday. / Yonhap |
By Kim Tae-jong
A presidential committee for partnerships between large and small firms has put the brakes on the expansion of big bakery franchises by banning them from opening new stores within 500 meters of an existing bakery, Tuesday.
The decision immediately drew strong opposition from major bakery franchises. The Korea Franchise Association, a lobby group for franchise stores, even threatened to take a legal action, arguing the decision violates the Fair Trade Law.
The National Commission for Corporate Partnerships announced the new guideline as part of measures to protect mom-and-pop bakeries, whose survival has been allegedly threatened by the expansion of major franchises.
Along with bakeries, the panel also designated 15 other business areas that require small business-friendly restrictions.
Under the new restrictions, franchises will be limited to opening new stores equal to a maximum 2 percent of their outlets and a new store must be located 500 meters from an existing shop of the same brand.
Franchise giants argue that the guidelines not only technically mean no more expansion for them but will also lead to a decline in business.
"The ban on the relocation of a store infringes upon the rights of store owners," an official from SPC, the biggest bakery franchise here, said. "There are also stores reporting closures and therefore new outlets should replace them. But the guidelines prohibit it, and it will result in a contraction in our business."
Currently, there are about 16,000 bakeries nationwide, and of them, market leader SPC Group owns about 3,200 Paris Baguettes while the second-largest player, CJ Foodville, has nearly 1,300 outlets.
CJ Foodville has also complained that bakery franchises will suffer from multiple restrictions.
"We have already sustained losses due to the regulations by the Fair Trade Commission, which forbids bakery franchises from opening new shops within a 500-meter radius of an existing bakery under the same brand," an official from CJ Foodville said. "This will lead to setbacks in our business."
Although franchise brands strongly oppose the regulatory measures, they cannot help but follow them. If they reject them, the commission can request the Small and Medium Business Administration to impose penalties on violators. No industry has refused to accept the guidelines from the commission so far.
The new rules will be effective from March this year until March 2016.
The commission also recommended that food service chains including foreign brands refrain from expanding with more detailed guidelines to be announced at the end of next month.
It also asked big companies that are not in the food business to refrain from entering that market.
The small business-friendly regulations are in line with President-elect Park Geun-hye's pledges to support small- and medium-sized enterprises (SMEs).
She has vowed to become a president for SMEs, emphasizing their importance to the Korean economy and their role in enriching the middle class here.
"Big conglomerates and SMEs together should lead the economy, growing in overseas and domestic markets," she said when meeting with heads of SMEs in December.
To that end, Park also vowed to reform the unfair relationship between conglomerates and SMEs.
"I will root out big conglomerates' abusive practices and their unfair transactions against SMEs," she said.
She also asked chaebol owners to stop competing with mom and pop stores, saying big business should compete with foreign firms in global markets.
![[INTERVIEW] Can art become stable investment source?](https://img.koreatimes.co.kr/upload/thumbnailV2/d9b4b117e5b74f4c931de724ebd2ee68.jpg/dims/resize/178/optimize)
![[INTERVIEW] Choi Min-sik, Lee Dong-hwi on creating Korean-style noir with 'Big Bet'](https://img.koreatimes.co.kr/upload/thumbnailV2/8b795a8f6b42492db4e8fdc47e9abd8d.jpg/dims/resize/178/optimize)
![[INTERVIEW] Ahn Jae-hong on playing underdog basketball coach in 'Rebound'](https://img.koreatimes.co.kr/upload/thumbnailV2/fe381342632c46bfa6d3245cb475676e.jpg/dims/resize/178/optimize)
