Starting in February, the possibility has increased that Baskin-Robbins' telecommunications company discount policy will be reduced. This is a result of ongoing conflicts regarding the sharing ratio of discount event costs between the franchising headquarters, BR Korea, and Baskin-Robbins store owners. Currently, both BR Korea and the store owners share half of the discount value during promotional events, but the store owners are demanding a higher burden ratio from the headquarters. The telecommunications company discount is a significant event that can heavily influence Baskin-Robbins' sales.
According to the distribution industry on the 16th, Baskin-Robbins' largest discount event, the telecommunications company (SK Telecom, KT, LG Uplus) discount policy, is facing a reduction.
Until the end of last year, any customers of the three major telecommunications companies in South Korea could purchase ice cream with discount benefits at all Baskin-Robbins stores. However, the likelihood has increased that these discount benefits will disappear or that only some stores will participate in discount events.
There is a growing possibility that the maximum 50% discount (based on single regular) or accumulation policy offered to SK Telecom customers will not be implemented. This is because the agreement rate in a survey conducted among store owners in December of last year did not exceed 70%.
The survey for events to be held starting in February will be conducted until the 17th. If the agreement rate does not exceed 70% again, the agreement between SK Telecom and Baskin-Robbins will end as is. This means that no ongoing discount events will be held during this year.
The discount events for KT and LG Uplus have already been concluded to be voluntary participation by each store. If consumers wish to receive the discount benefits, they need to verify whether the store is participating in the discount event before visiting.
Until now, Baskin-Robbins provided a 50% permanent discount on pint products to KT's VVIP consumers. Additionally, KT's VVIP consumers received four block packs worth 16,000 won for free about once a month. Consumers classified as VVIP or VIP with LG Uplus could receive single king ice cream for free.
This is due to the unresolved and deepening conflicts between BR Korea and the store owners, which have persisted since last year. Baskin-Robbins store owners have been demanding that the headquarters increase its share of the total during various discount events to enhance revenue. They pointed out the excessive frequency of discount events and stated that even if sales increase due to discount events, revenue remains stagnant. The precedent of increasing the headquarters' burden ratio during the COVID-19 period has also played a role.
One Baskin-Robbins store owner said, 'Sales have actually decreased even more than during the COVID-19 period,' adding, 'However, discount events have virtually continued throughout the year, leading to the perception of increased "fictitious sales." The headquarters needs to raise the sharing ratio for discount events.'
BR Korea has maintained the principle that it cannot accommodate requests to increase the sharing ratio. A BR Korea official noted, 'During the COVID-19 period, it was a special situation that required concessions from headquarters, but it is no longer feasible.'
The two sides have failed to find common ground. As the headquarters maintained a firm stance, the store owners ultimately agreed not to participate in the telecommunications company discount event, which is the largest event of the year. This means that even if sales may decrease slightly due to the discount event, they will choose not to participate.
Consequently, the headquarters began to feel urgency as well. If store owners' sales decrease, the headquarters' performance cannot improve. Originally, they should have collected opinions on the discount policy and determined the direction by the end of December last year, but this year they inquired again about discount events and decided to only allow stores with consent to participate.
According to Article 12, Paragraph 6 of the Franchise Business Act, the franchisor must obtain the agreement of more than 70% of the franchisees when conducting promotional events. If this threshold is not met, only the franchisees who have agreed to the promotion can conduct it.
A BR Korea official stated, 'If participation in discount events varies by store, it leads to consumer inconvenience and the filing of complaints with telecommunications companies. Therefore, while the original principle was that if the agreement rate exceeded 70%, all stores would participate in the discount event, we had to make a slight modification as we could not completely abandon the telecommunications discounts and chose this as a last resort.'
The official added, 'We will seek various methods together with the headquarters and franchisees to ensure that there is no inconvenience to consumers.'