The Mom's Touch franchise headquarters announced on the 26th that it won a second trial in the unjust enrichment return lawsuit, which some franchisees appealed against the first trial ruling.
According to Mom's Touch, the appeals trial was held at the Seoul High Court on the 21st. On that day, the plaintiffs argued that there were substantive flaws and procedural flaws in the first and second price hikes implemented by the headquarters. A substantive flaw refers to an essential or substantive defect that arises from legal or administrative actions, contracts, etc. A procedural flaw refers to a defect arising from violations of procedural regulations in administrative actions or disciplinary procedures.
The judges of the Seoul High Court ruled on that day, stating, "It cannot be concluded that there was no necessity for price increases at the time of the first and second price hikes, so the plaintiffs' assertion that there were substantive flaws in each price hike process is unfounded."
They further stated, "Article 28, Paragraph 1 of the franchise agreement stipulates that the headquarters can change the price of raw and auxiliary materials only after consultations with franchisees when there is a 'need for price changes.'" They added, "Here, 'consultation' should not be interpreted as an agreement meaning consensus of the parties, but rather as a mutual discussion, so there is also no procedural flaw."
This implies that the headquarters' pricing policy was part of managerial judgment to respond to the uniformity of the franchise business and changes in market conditions. The judiciary determined that claims by some franchisees that the price hike was invalid lacked basis, as the headquarters engaged in consultations with franchisees multiple times during this process.
Mom's Touch maintains that it will not condone the actions of some franchisees that led to the destruction of trust between the headquarters and the franchisees. A Mom's Touch official said, "We will no longer tolerate or be swayed by attempts to undermine the trust relationship between the headquarters and franchisees or unfounded claims that incite conflict for personal gain, and from now on, we will focus all our efforts on solving the challenges at hand while facing reality squarely."
Additionally, they added, "We hope that the brand's reputation, which has been damaged over the years, and the wounds of the majority of honest franchisees will be somewhat restored through this victory in the appeals trial."