Mom's Touch Headquarters-Franchise Conflict Escalates

Photo by Mom's Touch

[Asia Economy Reporter Moon Hyewon] Conflicts between the ‘Mom’s Touch’ headquarters and its franchisees over the formation of a franchisee council are intensifying.

According to the food service industry on the 20th, about 200 members of the Mom’s Touch Franchisee Council recently applied to the Gyeonggi Province Dispute Mediation Council for adjustments regarding the increase in burger patty prices, the headquarters’ event management methods, and store evaluation criteria. The total number of Mom’s Touch franchise stores is around 1,300.

According to the council, since the beginning of this year, Mom’s Touch headquarters has terminated franchise contracts with some stores, including the Sangdo Station branch in Seoul, and blocked the practice of borrowing supplies from nearby stores to operate. The headquarters explained that this was due to concerns about potential quality and hygiene issues.

The council claims that although franchisees previously borrowed supplies from nearby stores when they did not have them, the recent prohibition is a kind of ‘retaliatory measure’ against the formation of the council. Mr. A, the owner of the Sangdo Station branch and chairman of the council, asserted, "The headquarters found fault with the act of forming the council, filed a lawsuit for spreading false information, and then terminated the franchise contract," and has filed an injunction with the court to prohibit the action.

The Mom’s Touch headquarters responded, "The suspension of supply was a lawful contract termination due to Mr. A’s breach of contract," and added, "On the contrary, Mr. A has been continuously obstructing the normal operations of the franchise headquarters." In April, Mom’s Touch filed a complaint against Mr. A for defamation and obstruction of business at the Dongjak Police Station in Seoul, but the police cleared Mr. A of charges last month.

However, the controversy flared up again after it was revealed that a headquarters executive visited Mr. A several times and made statements implying, "If you continue (the council’s) activities, you will be prevented from operating." The headquarters stated, "Mr. A continuously spread false information such as the franchise headquarters neglecting the interests of franchisees, which worsened the owners’ management," but avoided directly responding to questions about the executive’s threatening remarks, saying, "We cannot confirm that."

In the food service industry, attention is being paid to the possibility that the current conflict between Mom’s Touch headquarters and its franchisees may follow a similar pattern to past cases involving BBQ and bhc. In May, the Fair Trade Commission imposed corrective orders and fines of 1.532 billion KRW and 500 million KRW respectively on BBQ and bhc for violating the Franchise Business Act by giving disadvantages such as contract termination notices due to collective activities.

The current ‘Act on the Fairness of Franchise Transactions (Franchise Business Act)’ stipulates that "The franchise headquarters shall not disadvantage franchisees because of the formation, membership, or activities of franchisee organizations." It also prohibits making franchise contracts conditional on joining or not joining such organizations.

This content was produced with the assistance of AI translation services.