By Kim Se-jeong
Genesis BBQ has pledged to more actively counter a lawsuit filed by chicken franchiser BHC over a disputed supply contract.
One of Korea’s leading fried chicken franchisers also plans to bolster communication between its headquarters and franchisees to better deal with a range of pending issues.
Yoon Kyung-joo, who became the company CEO last June, recently sent a message to franchisees explaining two major scandals involving the company in an effort to drum up support from them.
Yoon wrote, “I am sure what has recently happened disappointed you. I would like to clear up a couple of things.”
One big scandal is an ongoing legal battle with BHC, a rapidly-emerging fried chicken franchiser and a former Genesis BBQ franchise. The mother company Genesis BBQ owns 12 franchise brands with more than 3,800 stores across the country.
“Bhc stole important information from us. The police investigation is under way, which is necessary to prevent the same thing from happening again,” Yoon said.
In 2013, Genesis BBQ sold BHC to the Rohatyn Group, a U.S.-based investment fund management company. Separately, BBQ signed a contract with BHC in which it would provide logistics services to BBQ for 10 years. However, in April last year, BBQ unilaterally terminated the contract claiming BHC had stolen corporate secrets. BHC filed a compensation suit, demanding 236 billion and BBQ filed for a criminal investigation with the police in return.
While that was happening, no word was given to individual stores in the market from the BBQ headquarters, leaving store owners agitated and worried about the prospect of their businesses.
“Don’t get panicked about the amount claimed by bhc. It is a ridiculous amount and I am telling you everything will be fine. We’re reacting to the suit and we’re doing this because doing nothing can jeopardize the level playing field in the fried chicken market.”
Yoon also mentioned last year’s unsuccessful chicken price hike attempt.
“It wasn’t possible because of communication problems. Although we failed to increase the price, we are aware of dire conditions under which you operate your businesses and we will continue to work to improve conditions for each franchisee,” Yoon said.
Last May and June, BBQ announced a sudden price hike of all 30 items on its menu, drawing a huge backlash from chicken suppliers and consumers. It also prompted the Fair Trade Commission investigation and local franchise stores had to suffer a decline in sales as a result.