LG Household & Health Care Withdraws from Over 400 Offline Cosmetics Franchise Stores

LG Household & Health Care is effectively withdrawing from the cosmetics franchise business, including The Face Shop and Nature Collection.

Nature Collection by LG Household & Health Care (left) and The Face Shop store view.
[Photo by LG Household & Health Care]

According to the cosmetics industry on the 20th, LG Household & Health Care recently sent official letters to the owners of 406 offline cosmetics franchise stores nationwide, proposing to change the contract structure from the existing 'franchise contract' to a 'goods supply contract.'

By changing the contract structure, franchise stores that were previously only able to sell LG Household & Health Care cosmetics will be able to sell cosmetics from other brands as well.

This decision is interpreted as a response to the domestic cosmetics market being reorganized around online channels and health & beauty (H&B) stores. It is believed that the existing offline road shop store format has lost competitiveness in the market due to changes in consumer purchasing patterns.

In exchange for changing the franchise contract to a goods supply contract, LG Household & Health Care proposed a compensation plan to franchise owners that includes support for interior improvement costs and 50% of store rent for nine months as early settlement expenses. They also offer refunds of previously paid franchise fees, returns of long-unsold inventory of color cosmetics, and replacement of signage.

LG Household & Health Care explained that if a goods supply contract is signed, the current promotion and policy operation methods will be maintained without significant changes for the next two years.

An LG Household & Health Care official said, “Road shop stores are facing many difficulties and are at risk of closure,” adding, “This win-win plan can be chosen voluntarily by each store owner, and the company plans to continue discussions on support and compensation measures accordingly.”

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