Tense Dispute Over Disclosure of Discount Details in Starbucks Building Rental Fee Lawsuit

During the second hearing of the rent lawsuit filed by Starbucks building landlords against headquarters, both parties engaged in a tense exchange over the disclosure of discount details deducted from each store's total sales.

On the morning of March 5, the Civil Agreement Division 29 of the Seoul Central District Court (Presiding Judge Go Seungil) held the second hearing for the lawsuit filed by 37 Starbucks building landlords, including an individual surnamed Shin, against Starbucks operator SCK Company, demanding payment of commission (rental fees).

A Starbucks store in downtown Seoul. Photo by Yonhap News.

This lawsuit was initiated by Starbucks building landlords, who receive rent based on a certain percentage of each store's sales rather than a fixed amount. They argue that it is unfair for Starbucks headquarters to calculate net sales—the basis for rent payment—using discounted amounts from various promotions, such as the prepaid Buddy Pass subscription service, credit card partnership discounts, and free coupons, rather than the original product prices.

Previously, at the end of April last year, the plaintiffs filed a lawsuit against headquarters, each claiming 14 million won as a portion of unpaid commissions, demanding payment of building rental fees that had not been properly settled. (Reported exclusively by The Asia Business Daily on May 12: [Exclusive] Starbucks Store Landlords File Lawsuit Against Headquarters: "Damages from Omitted Sales")

Given that the number of Starbucks stores nationwide exceeded 2,000 last year, if the court recognizes that Starbucks headquarters gained unjust enrichment through these practices, it is expected that the amount to be returned to all landlords—including those not participating in the current lawsuit—could reach several tens of billions of won.

Starbucks Discloses Only 'Total Discount Amount' ..."Disclose Detailed Discount Breakdown"

During the hearing, a dispute arose over the details of the discount amounts in the sales-related documents submitted by the defendant (Starbucks headquarters) at the request of the plaintiffs (landlords).

Park Jaewan, an attorney from YK Law Firm representing the plaintiffs, stated, "We reviewed the evidence, but the detailed breakdown was not submitted."

After the first hearing, Starbucks submitted sales-related documents, but citing "trade secrets," did not disclose the specific details of the discounts. Only the total sales, total discount amount, net sales after deducting discounts, and value-added tax details were included.

When the presiding judge asked, "Did you not submit the detailed items?" Jang Cheolik, an attorney from Kim & Chang representing Starbucks, responded, "There are too many types of promotional discounts."

The judge told the plaintiffs, "If you need to check the details of the discount items, you can file a request for document submission."

Attorney Park then sought the court's permission to make several arguments on the subject, insisting that a detailed breakdown of discounts is essential for calculating the amount of unjust enrichment.

Attorney Park said, "The defendant submitted the documents, but there is no detailed disclosure of how the discounts were applied. Only the total discount amount was disclosed. To prove our case, the specific breakdown is absolutely necessary."

It is known that Starbucks submitted the total sales and total discount amounts for the three years retroactively from April 2025, the time the lawsuit was filed.

Attorney Park stated, "Upon reviewing the documents, I found that data for three years was submitted. From April 2025, the discount amount relative to total sales has increased sharply—starting at a minimum of 2% or 7%, and in some cases, rising up to 15%."

He continued, "The amounts for various promotional discounts, which the defendant claims cannot be disclosed in detail, are steadily increasing. We will organize our request and file a motion for document submission."

Interpretation of 'Various Discounts' in Contracts and Point-of-Sale (POS) Data Also at Issue

Additionally, the hearing addressed another key issue: the interpretation of the "various discounts" clause in the contracts regarding the deduction of discounts from each landlord's sales, as well as the sales records on point-of-sale (POS) systems.

The presiding judge requested that the plaintiffs' legal representatives organize and submit the real estate lease contracts for each plaintiff.

Depending on when each landlord signed their lease, the contract language regarding deductions from total sales may differ. Some contracts specifically list only free coupons and partner discounts, while others use the more general term "various discounts," which allows for broader interpretation.

In particular, regarding the interpretation of "various discounts," Starbucks argues that it refers to "all forms of discounts applied during the contract period," while the landlords contend it should be interpreted more narrowly, limiting the types of discounts deducted when calculating net sales.

The presiding judge asked the plaintiffs, "Did the disputed commission (the discount amount deducted in the calculation of net sales for rent) already exist at the time the lease contract was signed? You said net sales equals total sales minus partner discounts and free coupons, but is the issue that some discounts are not reflected in the POS system?"

Attorney Hyun Minseok from YK Law Firm, representing the plaintiffs, responded, "In fact, we cannot know for sure, as the landlords do not have access to the store POS systems."

The judge said, "If the various discount amounts deducted from total sales are recorded in the POS, then they can be deducted. If they are not, we need to determine whether they never existed or simply were not recorded. We also need to consider whether sales were defined using only amounts recorded in the POS. If these discounts were created afterward, this could be seen as an illegal act. Please check the timing, as it seems to be a critical issue."

Attorney Jang for Starbucks replied, "We will organize and send the information."

Attorney Hyun Minseok for the plaintiffs said, "Since there is no way to check the POS records through the motion for specification, we would appreciate it if the details recorded in the POS could also be disclosed when we file the motion for document submission."

Attorney Jang for the defendant replied, "We will first submit the documents to the court, and when you file for document submission, we hope the court will determine whether it constitutes a trade secret."

The presiding judge said, "If requested, we will proceed accordingly."

The next hearing will be held on the morning of May 14.

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