Baskin-Robbins franchisees reported BR Korea, the head office, to the Korea Fair Trade Commission, saying it forced them to buy a "new pink spoon" for ice cream by designating it a mandatory item. They argue that after last year's amendment to the franchise business law tightened the criteria for designating mandatory items by franchisors, the head office bundled even single-use consumables that can be sourced on the open market as mandatory items.
The issue is whether a franchisor can restrict where franchisees buy disposable spoons on the grounds of brand uniformity. Franchisees argue the new pink spoon does not determine the taste or quality of the ice cream and costs more than twice as much as similar products on the market. BR Korea, on the other hand, says the new pink spoon differs from ordinary disposable spoons in material and design and is necessary for brand uniformity.
◇Franchisees say "there was no substantive consultation in the process of designating mandatory items"
According to legal sources on the 8th, the Baskin-Robbins Franchisee Association reported BR Korea to the Korea Fair Trade Commission (FTC) in Feb. on suspicion of violating the franchise business law. BR Korea is an affiliate of SPC Group and operates the Baskin-Robbins and Dunkin franchises.
BR Korea applied for the new pink spoon design in 2020 and registered the design right the following year. It then introduced the new pink spoon, which differs in hue from the existing pink spoon, as part of a brand renewal, and, according to the franchisee association, required its use at all stores nationwide starting in Apr. 2022.
The dispute intensified after the amended franchise business law took effect in Jul. 2024. The amendment requires franchisors to list in the franchise agreement items that must be purchased from specific suppliers to maintain brand identity. The intent is to prevent franchisors from forcing franchisees to buy items that do not need to be procured through the head office.
BR Korea, in line with the amended law, included the new pink spoon as a compulsory purchase item, that is, a mandatory item, in the franchise agreement. The franchisees argue, "There was no substantive consultation on the need to designate it as a mandatory item, its substitutability, or the basis for its price calculation during this process." The franchise business law requires prior consultation when a franchisor changes transaction terms to the disadvantage of franchisees.
Franchisees do not see the pink spoon as a key item that determines the taste or quality of the ice cream. They say it is a disposable consumable that can be sufficiently replaced with market products as long as it meets certain material, size, and color standards.
Price is also a key issue. According to the complaint the franchisee association submitted to the Korea Fair Trade Commission (FTC), the new pink spoon supplied by BR Korea costs 38.5 won per piece. By contrast, a similar existing pink spoon product that franchisees say can be sourced on the market costs 17.6 won per piece. The head office's supply price is more than twice that of similar market products.
The franchisee association said, "Even though similar products can be obtained externally, we are not guaranteed the right to choose where to buy."
◇"Market products are sufficient" vs. "there are differences in material and design"
Franchisees also argue there is no reason the new pink spoon must be used for brand image. They say the representative color consumers associate with Baskin-Robbins is closer to the hue of the existing pink spoon, and the color of the new pink spoon is closer to an auxiliary color added during the brand renewal.
The franchisee association argued, "Brand distinctiveness is formed by the logo, trade name, store exterior, and the products themselves, and it is hard to see it as being determined by the specific color of a simple utensil like a spoon."
Hyun Min-seok, an attorney at Law Firm YK representing the franchisee association, said, "Courts have held that the head office should not force purchases through it for items that are not directly related to taste or quality and are easily available on the market," and added, "We are considering a class action in addition to the report to the Korea Fair Trade Commission (FTC)."
BR Korea counters that the new pink spoon is different from ordinary disposable spoons on the market. A BR Korea official said, "The pink spoon differs in material, brand logo, and color," and added, "We mixed in a highly elastic material to reduce the risk of the spoon breaking or snapping in the mouth, and we also hold a design right for brand uniformity."