Conflicts between the Baskin-Robbins headquarters and some franchise owners are intensifying over plans for discounts and events, including those related to telecommunications companies next year. B.R. Korea, which operates Baskin-Robbins, stated that it is developing a discount event plan for next year in conjunction with various stakeholders, including telecommunications discounts, to maximize sales. However, some franchise owners oppose the discounts, claiming they undermine their profits.
According to the distribution industry on the 18th, the Baskin-Robbins headquarters and some franchise owners are conducting a survey regarding the agreement on next year's discount event plan. A survey regarding discounts from telecommunications companies such as SKT, KT, and LGU+ is representative.
Franchise owners argue that the burden on stores is continually increasing due to next year's KT discount event. For example, there is a 50% discount benefit for the Baskin-Robbins pint offered to KT VIP customers. KT VIP customers can purchase a Baskin-Robbins pint for 4,900 won, down from the regular price of 9,800 won. At this time, the store owner has been bearing 980 won, but from next year, the store's burden will increase to 1,225 won. This means the burden will increase by about 5 percentage points based on the settlement ratio.
Franchise owners also express dissatisfaction with the fact that various discount events are essentially held 365 days a year. They claim that since Baskin-Robbins accounts for 70% of B.R. Korea's sales, the company is focusing solely on expanding sales through discounts rather than improving product quality or brand value. In this process, they argue that Baskin-Robbins is becoming a brand that 'cannot be consumed without discounts.'
One franchise owner said, 'There are events under various excuses, so there isn't a month without discounts throughout the year,' adding, 'In the past, the 31 Day was a significant discount event, but now it has become meaningless.' The 31 Day event is when customers can upgrade to a half-gallon (31,500 won) by purchasing a family size (26,000 won) in months with 31 days.
There are also many differences of opinions regarding whether a 70% agreement rate among franchise owners has been achieved. Franchise owners claim that when they hold meetings, there aren’t many owners agreeing to the discount events; however, the store consent rate is consistently reported to exceed 70%. According to Article 12-6 of the Franchise Business Act, the headquarters must obtain the consent of more than 70% of franchise stores to hold promotional events. If this threshold is not met, only those stores that agreed to the promotion can participate.
The issue is that last year, around this time, B.R. Korea allegedly manipulated the results of a survey. B.R. Korea admitted in an internal audit in April of this year that some consent forms from certain franchises had been arbitrarily modified due to issues with some employees. This is a violation of Article 33 of the Franchise Business Act, and an investigation by the Fair Trade Commission is underway.
One franchise owner noted, 'There was confusion as stores that did not want to participate were dragged into events with the consent rate being arbitrarily changed, then shifted to non-participation,' adding, 'There are no noticeable improvement measures on this matter.'
Franchise owners are voicing concerns about points such as ▲ headquarters employees pressuring consent until a 70% agreement rate is achieved without a set consent period ▲ it being difficult to review the actual consent rate and only receiving unilateral notices about achieving the consent rate. Some are directly filing complaints with the Fair Trade Commission.
In response, a B.R. Korea official stated, 'We have immediately improved the system to prevent the same issue from occurring regarding promotion consent.' The official also noted, 'We are planning and conducting partnerships with telecommunications companies and various events to provide benefits to consumers, increase satisfaction, and contribute to franchise sales. While the headquarters covered up to 85% of promotion expenses due to the impact of the COVID-19 pandemic, it has generally been the policy that discount events operated by Baskin-Robbins involve equal sharing of costs between the headquarters and the franchisees. As pre-agreement procedures for the telecommunications partnership are currently underway, plans for operational direction will be determined based on the results.'