Law firm YK said on the 20th that it filed a complaint with the Korea Fair Trade Commission on behalf of the Cheogajip franchisees' association against Woowa Brothers, which operates the Baemin delivery platform, and Korea 153, the franchisor.
According to YK that day, the main allegations reported include unfair trade practices seen during the MOU process between Baemin and the franchisor, such as abuse of a market-dominant position, exclusive dealing, and deceptive commission settlement methods.
YK said that when Baemin signed a memorandum of understanding (MOU) with the franchisor, it promised fee reductions and discount support on the condition that franchise owners did not use other delivery apps and engaged in exclusive transactions only with Baemin. Specifically, it said Baemin induced exclusive dealing by proposing to lower the brokerage commission from the existing 7.8% to 3.5%.
YK said, "The actual economic benefit this promotion offers to owners is minimal," and added, "By contrast, it can completely deprive them of transaction opportunities through other delivery apps, inflicting serious sales declines on franchise stores." YK said that in practice, stores participating in the promotion could not use private apps such as Coupang Eats and Yogiyo, or public delivery apps such as Ddangyo and Mukkebi.
According to YK, chicken franchises are a sector with intense competition among brands, and any real sales decline resulting from operating on a single delivery platform must be borne solely by the franchise owners, while Baemin and the franchisor have made no commitment to share responsibility for losses from reduced sales.
YK said that due to these practices by Baemin and the franchisor, more than 90% of franchise stores joined "Baemin Only," which significantly reduced Cheogajip's exposure on other delivery apps, including public delivery apps.
The association said Baemin is leveraging its position as the top operator to induce exclusive transactions that are "formally optional but effectively compulsory." From the franchise owner's standpoint, declining the promotion is effectively difficult because of concerns about disadvantages such as limited exposure within the app. Regarding the franchisor, it said, "They emphasized only favorable terms and failed to clearly explain the complex settlement structure and the true nature of Baemin's subsidies, tying owners to a specific platform." In effect, the dominant delivery app and the franchisor imposed substantial disadvantages on non-participating stores through the "Baemin Only" policy.
YK also saw serious pitfalls in the settlement method of the discount promotion pushed by Baemin and the franchisor. For example, when Baemin sells 30,000-won chicken for 22,000 won, it says it will cover 4,000 won of the 8,000-won discount.
In reality, however, franchise owners must bear a fixed discount of 4,000 won, while Baemin can unilaterally adjust the total discount amount and set its share lower than the owner's, at around 1,000 to 3,000 won. In fact, in February this year, the total discount was set at 6,000 won, leaving owners to shoulder the full 4,000 won while Baemin paid only 2,000 won.
A representative of the franchisees' association said, "The Korea Fair Trade Commission (FTC) must verify whether, under a structure where the platform and headquarters unilaterally sign an MOU, individual owners found it practically difficult to refuse to join the promotion."
YK said, "The platform secures volume and users, while the discount expense and revenue reduction are unfairly shouldered by owners," and added, "Even from the franchisor's standpoint, it is questionable whether there were circumstances behind the MOU—hard to accept on reasonable grounds—that cannot be said to be entirely favorable." It continued, "We hope this Korea Fair Trade Commission (FTC) investigation will end the unfair practice in which a monopolistic operator exclusively dominates the market and shifts all the damage onto franchise owners."
Meanwhile, Woowa Brothers expressed strong regret in a statement that day, saying, "Much of YK's claim is contrary to the facts."
Woowa Brothers said, "Franchise owners can choose whether to participate at any time, and there are no disadvantages for non-participation," adding, "Even for non-participating stores, there are no disadvantages in app exposure, and it has no impact whatsoever on public delivery apps, including Ddangyo."
It also said, "This promotion is fair market competition activity aimed at increasing franchise owners' sales and profits," adding, "We are concentrating benefits—such as lowering brokerage fees and providing discounts from the franchisor and the delivery platform—on stores that voluntarily express their intention to join the joint promotion."