[비즈한국] Franchisees of Cheogajip Seasoned Chicken are reporting increased burdens from sales declines and excess inventory following the implementation of 'Baemin Only,' a system requiring exclusive entry into Baedal Minjok. They allege that because orders from other delivery platforms have been blocked, sales volume has dropped, and to clear out the resulting inventory, the headquarters has been supplying franchisees with chicken nearing its expiration date.
"Dumping Inventory" vs. "Unrelated to Baemin Only"
Since the 'Baemin Only' system was implemented on February 9th, complaints from Cheogajip Seasoned Chicken franchisees have been rising. They claim that franchise sales have significantly decreased since the adoption of the exclusive Baedal Minjok operation structure. One franchisee said, "We used to utilize multiple delivery platforms, but now we are in a situation where we must use only Baemin. Since we can no longer receive orders from other platforms, our sales have dropped by about 15% since the implementation of Baemin Only."
Among franchisees, there is also talk that Baemin Only has increased the burden of inventory. The argument is that as order volume failed to meet expectations following the implementation of Baemin Only, the speed at which raw materials are consumed has slowed, leading to a structure where surplus stock from the headquarters is being offloaded to franchisees. A franchisee complained, "I received chicken with only one day left before expiration, told that it was inventory left over from the Lunar New Year holiday. Is this not going too far?" adding, "The fallout from the sales decline caused by Baemin Only has ultimately fallen back onto the franchisees."
An official from the Cheogajip Seasoned Chicken Franchisee Council also pointed out, "Discontent among franchisees has grown as the headquarters supplies chicken with only about two days left until expiration. I understand that some stores have received volumes that are difficult to manage. If they cannot sell the received inventory in time, the franchisee must discard the remainder. Ultimately, the cost burden is shouldered entirely by the franchisee."
Korea 153, which operates Cheogajip Seasoned Chicken, stated that the inventory issue is unrelated to the implementation of Baemin Only. A Korea 153 representative explained, "There were long holidays, and issues with demand forecasting coincided, which caused the situation. The implementation of Baemin Only and the inventory issue are unrelated."
Furthermore, they clarified that the impact of the sales decline on franchises after the implementation of Baemin Only is not significant. The aforementioned representative stated, "There was some confusion for a while after implementation, leading to a slight drop in sales, but they are currently recovering. We expect the sales trend for this month to be similar to last year."
Franchisees Report Headquarters and Baemin to the KFTC
Franchisees are now moving toward collective action. On the 20th, the Cheogajip Seasoned Chicken Franchisee Council reported Woowa Brothers, the operator of Baedal Minjok, and the franchisor, Korea 153, to the Korea Fair Trade Commission (KFTC) through the law firm YK. They allege that there were unfair trade practices such as abuse of market-dominant position, exclusive dealing, and deceptive fee settlement methods during the process of the MOU signed between Baemin and the franchisor.
In January, Baemin signed a business agreement with Korea 153 to introduce the so-called 'Baemin Only' system, which restricts Cheogajip Seasoned Chicken to its platform only. The system offers franchisees who agree to the promotion a lower brokerage fee—reduced from 7.8% to 3.5%—but in exchange, they must not accept orders through other delivery platforms. Korea 153 proceeded with obtaining consent from franchisees, and it is reported that 90% of the approximately 1,200 franchises nationwide have participated in Baemin Only.
However, the Franchisee Council is strongly protesting, claiming that the consent process was effectively 'semi-coercive.' The Council argues that Baemin, leveraging its position as the market leader, induced a structure bordering on exclusive dealing. Since stores that do not agree to exclusive Baemin entry are excluded from discounts and promotions within the app, franchisees argue that their actual choice was limited, as they felt compelled to follow the headquarters' demands due to fears of sales decline.
In reality, the price difference perceived by consumers in the Baemin app is distinct. As of the 23rd in Yongsan-gu, Seoul, searching for Cheogajip Seasoned Chicken in the Baemin app displays four franchises. When ordering the popular 'Supreme Seasoned Chicken,' Store A, which agreed to Baemin Only, allows payment of 20,000 KRW with a 4,000 KRW discount coupon applied.
In contrast, Store B, which did not agree, has no discount, requiring the customer to purchase the same menu for 24,000 KRW. As consumers are highly likely to choose cheaper stores, franchisees are complaining that the structure effectively forces their hand.
One franchisee stated, "We are in a situation where franchises in the same region are competing, so if the discount amounts differ, will orders come in? Even the supervisor said that because other branches in the area are participating in Baemin Only, it would be difficult to maintain sales if we don't."-
On the other hand, Baemin and Korea 153 emphasize that it was an autonomous choice by the franchisees. Woowa Brothers countered, stating, "It is an 'autonomous contract' signed when the benefits provided by our company are judged to be greater than the opportunity cost of sales through other platforms. It is impossible for a specific platform to exercise coercive power over a franchisor using a superior position."
A Korea 153 representative stated, "We introduced the policy under the judgment that the decline in sales from other platforms could be sufficiently supplemented by the Baemin channel. We are continuously discussing with Baemin so that franchise sales can be substantially improved."
In the industry, questions regarding the appropriateness of the Baemin Only operation method continue to be raised. The Association of Owners for Fair Platforms, the National Franchisee Council, People's Solidarity for Participatory Democracy, and Lawyers for a Democratic Society held a press conference on the 24th and announced that they would report the Baemin Only contract to the KFTC for violations of the Fair Trade Act and the Franchise Business Act.
Lawyer Park Hyun-yong (People's Livelihood Economy Committee of Lawyers for a Democratic Society) pointed out, "Baemin's restriction requiring exclusive entry into Baemin as a market-dominant business operator constitutes abuse of market-dominant position. There is a concern that this strengthens dependency on Baemin for chicken franchise owners who rely heavily on delivery sales, while depriving owners of opportunities for diversification of income generation, thereby infringing on the owners' rights.".