[Invest&Law] Franchise 'Difference in Franchise Fees' Lawsuit Expands... Kim & Chang, Bae, Kim & Lee, YK, and Others Participate

Published 15 Jan.2025 13:17(KST)

Yonhap News

As lawsuits demanding the return of 'difference franchise fees' against franchisors by franchisees expand, law firms are also stepping up. The difference franchise fee refers to the additional amount attached to raw and subsidiary materials purchased by franchisees from the headquarters, and franchisees claim that the headquarters unfairly profited from this.

Currently, a lawsuit filed by about 90 Korea Pizza Hut franchisees against the headquarters for the return of unjust enrichment is pending at the Supreme Court. In this lawsuit, Taepyungyang represents Pizza Hut headquarters, while YK represents the franchisees. Previously, the Seoul High Court ruled in favor of the franchisees, ordering the headquarters to return approximately 21 billion KRW in difference franchise fees collected from 2016 to 2022.

Following the Pizza Hut lawsuit, similar lawsuits have continued across various industries including bhc, Baskin-Robbins, Puradak, and Lotte Super. Franchisees of Twosome Place and Ediya Coffee are also preparing lawsuits. Kim & Chang Law Office is representing bhc headquarters in the litigation.

The distribution industry is closely watching the ripple effects of the difference franchise fee lawsuit outcomes. If franchisees continue to win, headquarters may face situations where they have to return amounts previously collected under existing practices.

In a recent lawsuit filed by about 100 franchisees of Lotte Super and Lotte Fresh, the 'right to claim prohibition of renewal refusal' has emerged as a new issue. This right requires the headquarters not to refuse the renewal of franchise contracts, and as it intertwines with the difference franchise fee return lawsuits, legal disputes are expected to deepen.