National Assembly Probes Adidas Korea, A Twosome Place, and Burger King for Alleged Franchise Abuse

The National Assembly highlighted alleged unfair practices by Adidas Korea, A Twosome Place, and Burger King Korea during a session focused on the relationship between these companies and their franchisees.

Adidas Korea's Abrupt Termination of Contracts Sparks Controversy

Adidas Korea, the local subsidiary of the renowned athletic apparel manufacturer, triggered discontent among its franchise owners. In January 2022, the company notified 80 franchisees of its decision to terminate their contracts by 2024 as part of its restructuring plans, focusing on online malls and offline stores managed directly by the head office, reports the Korea Joongang Daily.

The abrupt nature of the announcement left franchisees feeling blindsided, leading them to argue that this action violated local agency laws.

Concerns Surround A Twosome Place's Financial Burden

The acquisition of A Twosome Place by Carlyle Group, a U.S.-based private equity firm, in 2021 resulted in ongoing conflicts between the headquarters and franchisees, according to The Korea Times. Franchise owners of the popular coffee chain have voiced their grievances, alleging they are burdened with excessive financial obligations imposed by the head office for purchasing goods.

Last month, a group of Twosome franchisees reported the matter to the Fair Trade Commission (FTC), urging the regulatory body to investigate potential unfair business practices by the company's management.

BKR Faces Consequences for Unhealthy Business Practices

BKR, the operator of Burger King's Korean unit, recently faced an order from the FTC to rectify its practices after being caught diverting advertising costs to unrelated areas, leaving the burden on its franchise owners. The regulatory body has pledged strong actions against franchise operators and platforms engaging in unfair and undue influences.

Franchisees Band Together to Voice Concerns

In response to the actions of Adidas Korea, franchise owners formed a consultative group comprising 76 members to increase their criticism of the shoe company's unilateral decision. They argue that how the termination was carried out violated agency laws and left them without due consideration.

Franchise owners of A Twosome Place reported their concerns to the FTC, alleging that the company's head office has imposed excessive financial burdens on them. The owners hope the regulatory body will investigate whether undue business practices were involved.

FTC Vows to Protect Franchisees from Unfair Influences

FTC Chairman Han Ki-jeong expressed determination to take stern measures against franchise operators and platforms found guilty of exerting unfair and undue influences to protect franchisees' rights. The regulatory body will not tolerate any violation of established laws and practices.

"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.

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