The view of a Pizza Hut store in downtown Seoul./Courtesy of News1
The view of a Pizza Hut store in downtown Seoul./Courtesy of News1

The Korea Franchise Industry Association submitted a petition at the end of last year regarding the Pizza Hut differential franchise fee refund lawsuit. The essence is to request a ruling that considers the practices and circumstances of the industry.

According to the Korea Franchise Industry Association on the 6th, the association emphasized in the petition that "the Korean franchise industry has been receiving differential franchise fees with the explicit and implicit consent of franchisees, and that it is a natural principle of commerce for merchants to receive margins in the distribution process."

The petition stated, "If this suddenly is judged as unjust enrichment and a return is demanded, legal stability will be seriously compromised," adding that "differential franchise fees do not solely benefit the franchisor but are a common fund reinvested in various areas including raw and subsidiary material processing, logistics expenses, franchisee support expenses, advertising and marketing expenses, and delivery cost support."

It also noted, "The differential franchise fee itself does not unilaterally benefit the franchisor or harm franchisees," and stated that "currently, 90% of restaurant franchisors receive differential franchise fees, with the receiving rate reaching 60-70%, thus most are affected by the ruling. Small and medium franchisors are engulfed in fear that if the Supreme Court upholds the first and second trial rulings, they may face bankruptcy."

The association continued, saying, "The domestic franchise industry will continue to thoroughly comply with the Franchise Business Act and related regulations to strive for industry growth and the establishment of a cooperative culture," and requested that "the defendant be given a chance for self-survival and that it contributes to the stability of the domestic franchise industry and the economy as a whole."

Earlier, the court ruled in favor of 94 Pizza Hut franchisees who filed a lawsuit against Korea Pizza Hut for the return of unjust enrichment. The amount to be refunded is 21 billion won.