Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Adidas, A Twosome Place, Burger King warned of abusing franchisees
From left are Fair Trade Commission Chairman Han Ki-jeong and Adidas Korea General Manager Peter Kwak. Yonhap
By Lee Min-hyung
Adidas Korea, A Twosome Place and Burger King Korea have come under criticism by lawmakers over their alleged abuse of their franchisees, during an annual audit at the National Assembly, Monday.
Leaders of retail and franchise businesses were summoned for questioning to clarify whether they have exerted their authoritative influence excessively over franchisees.
Adidas Korea has been drawing criticism from its franchise owners, after the local subsidiary of the athletic apparel manufacturer made a unilateral notification to terminate contracts with 80 franchisees here by 2024. The decision was made in January 2022 after the company shared its business restructuring plans focusing on online malls and offline stores managed by its head office.
A group of 76 Adidas franchise owners has since formed a consultative group to step up criticism of the shoe company. They argued the company's notification was too abrupt, which they said was a breach of law of agency here.
A Twosome Place is also facing unceasing conflicts between its headquarters and franchisees after its 2021 sale to Carlyle Group, a U.S.-based private equity firm. The coffee chain’s franchise owners argue they face way too much financial burden, as its head office forces them to purchase goods. Last month, a group of Twosome franchisees reported the case to the Fair Trade Commission (FTC), and urged the watchdog to look into whether the headquarters engaged in undue business practices.
BKR, the operator of Burger King’s Korean unit, was also recently ordered by the FTC to rectify its unhealthy business acts after it was caught using advertising costs in unrelated areas. The ad costs were shouldered by its franchise owners.
FTC Chairman Han Ki-jeong pledged to take stern measures against franchise business operators and platforms when they are caught exerting such unfair and undue influences.
“We will tighten monitoring and surveillance against unfair insider trading acts, and do our best to establish a law enforcement system to guarantee the rights of customers,” Han told lawmakers while attending the Assembly audit in Seoul.
He also promised to revise policies in a way to protect franchisees.