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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] Seoul, September 23, 2025 – Tensions are escalating in Korea’s restaurant franchise industry as franchisees of major chicken brands, including Kyochon Chicken and BHC, prepare to file a damages lawsuit against their headquarters over alleged unfair pricing controls.
According to industry sources, several franchise owners have engaged law firm YK to review potential legal action, claiming that the headquarters’ enforcement of uniform pricing has caused them financial losses. A YK spokesperson confirmed,
“We have received inquiries from franchisees of two to three brands and are currently in discussions regarding the lawsuit.”
Alleged Violation of Franchise Business Act
Franchisees argue that the headquarters’ pricing policy violates Korea’s Fair Transactions in Franchise Business Act, which prohibits franchisors from unfairly restricting franchisees’ business activities, including the right to set product prices.
Article 12(1)(2) of the Act explicitly bans franchisors from “unfairly restricting or limiting franchisees’ prices, trading partners, business areas, or business activities.” The plaintiffs contend that imposing mandatory retail prices under the guise of “recommended prices” undermines fair trade.
Rising Policy Pressure
The dispute comes as the Korean government is moving forward with legislative amendments to grant franchise owners collective bargaining rights. Industry observers warn that this could further intensify conflicts between franchisors and franchisees, reshaping power dynamics in the franchise sector.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
