Burger King meets friction with franchisees over price discount event

The Korea Times

The Korea Times

Business

Mon, October 2, 2023 | 10:32

Companies

Burger King meets friction with franchisees over price discount event

Posted : 2023-05-22 08:20

Updated : 2023-05-22 08:20

Pedestrians are seen in front of a Burger King restaurant in Seoul on March 8. Newsis

By Kim Jae-heun

Burger King's local franchisees have staged a protest against company headquarters by refusing its price discount promotional event which was launched without consent between May 8 and 21. Among 120 affiliated stores in the country, only 39 followed the Burger King policy.

Franchisees refused the headquarters' discount promotion because they did not agree with how much they had to pay in bearing the expenses for discounts.

The American fast food restaurant chain forced them to lower the price of its Whopper Junior burger item from 4,700 won ($3.54) to 2,200 won for nearly three weeks. The headquarters said it would support only 228.4 won and the rest would be paid by the franchisees.

Franchisees quickly gathered together to oppose the company's proposal and said they would have agreed if the headquarters had supported half of the discount price, or 1,100 won.

Burger King then raised its support amount to 319 won, but ultimately 70 percent of the affiliated restaurants refused to join the promotional event.

"Our franchisees' protest against company discount promotions is not something new," a Burger King official said. "This is a regular event we have been staging for a long time and we had similar numbers of affiliated stores not joining our discount event in previous years too."

Burger King and local franchisees are also in conflict over logistics costs and delivery commission fees.

The franchisee union recently applied for a dispute settlement after the company raised logistics costs by more than 600,000 won from 1,628,000 won to 2,333,000 won and made the franchisees pay delivery fees.

In the fast food industry, however, it is not only Burger King that is at odds with franchisees.

Mega MGC Coffee, an operator of one of the country's largest coffeehouse chains Mega Coffee, hired popular Tottenham Hotspur forward Song Heung-min as its commercial model last year and forced franchisees to pay 50 percent of its annual advertising expense of 6 billion won. Franchisees are said to be pushing to establish a united front to fight the company's one-sided marketing policy that continues this year.

The voices of local franchisees have grown after they banded together and started to engage in protest activities during COVID-19.

"During the COVID-19 pandemic, a number of quarantine measures adopted by the government have hurt franchisees and we started to raise our voices. Franchise restaurant owners of different brands and different industries also shared various pieces of information together and we took collective action together too," the Korea Franchise Union (KFU) said.

In January, the KFU filed a request for review of an unfair contract with the Fair Trade Commission against local coffeehouse chain Hollys. The union claimed Hollys' franchise contract is unjust and asked the anti-trust watchdog to review and correct the terms and conditions.

jhkim@koreatimes.co.kr