Dubon Korea pointed out the withdrawal of half of its launch brand, saying, "Only 7 franchises actually did."

Amid the mention of the Yeondon Volkatsu incident during the parliamentary audit, Dubon Korea explained the criticism that it has withdrawn half of its launch brand.

Rep. Lee Kang-il of the Democratic Party of Korea, a member of the National Assembly's political affairs committee, called for a quick investigation by the Fair Trade Commission, referring to the conflict between Dubon Korea, which is represented by Jongwon Baek, and some franchisees of its affiliated brand, Yeon Don Volkatsu.

Rep. Lee said, "The key to the Yonsei Volkatsu scandal is whether it provided false exaggerated information," adding, "Dubon Korea presented a number different from the written (expected sales calculation) when consulting verbally. False advertisements posted on the website also played a part. In some cases, expected sales information was provided based on brands with completely different recognition, size, and number of affiliates. This is a clear violation of the Affiliate Business Act, he said. "It is necessary to investigate the entire authority of all franchisees in Durbon Korea, including Yondon Volkatsu."

Rep. Lee also raised the issue of "expanding the octopus-style business" for Dubon Korea. He said, "50 brands have launched and 25 are still alive, which is half of them. Over the past three years, more than 1,800 have been opened, and more than 600 have been closed. 70% of stores are concentrated in three locations, and "Saemaul Restaurant" and "Hanshin Pocha" have more stores closed than stores. As of the first half of 2024, sales of two places, "Baekda-bang" and "Hong Kong Banjeom 0410," reached 50% of the total. It is doubtful that more new brands may be launched to resolve this phenomenon of high dependence on specific brands. Even within the same commercial district, Dubon Korea brands are interfering in the market," he pointed out.

Lawmaker Lee said, "If we list on the KOSPI in this state, it is very likely that many agency owners or minority shareholders will suffer damage," and urged, "We need to investigate quickly and set the main criteria for listing."

In this regard, Dubon Korea said, "There are differences from some of the facts about the operation of multiple brands," adding, "A total of 49 brands have been registered since the company was established and only 25 brands are currently operating, but only 7 of the 24 brands that voluntarily withdrew have actually carried out franchise businesses."

The Bourbon Korea's voluntary withdrawal brand status

Dubon Korea said, "Just because a brand has been created does not mean that it will be a franchise business or commercialization of all brands. Some brands withdrew because they judged it difficult to commercialize franchisees after operating and inspecting brand test stores or direct stores, and although they registered information disclosures, they simply withdrew information disclosures without conducting any business because they judged it difficult to test or operate direct stores depending on the situation.

In addition, two of the seven brands that operated the franchise business (Macao and Hongma have transferred their affiliates to the Hong Kong branch brands they currently operate and have withdrawn their information disclosures. Considering this, only five brands have withdrawn from operating the franchise business, he said. "Multi-brand operation is not an octopus-style business expansion, but we are working responsibly to provide a stable start-up model."

According to statistics on the status of franchise business in 2023 released by the Fair Trade Commission in April, 3.1% of large brands have more than 100 franchises, 22.4% of medium-sized brands with more than 10 and less than 100, and 74.5% of small brands with less than 10 franchises.

Based on the data, Dubon Korea compared, "In our case, among the 25 brands registered information disclosure, 22 brands are currently conducting real franchise business, with 31.8% of large brands with more than 100 franchises, 50% of medium-sized brands with more than 10 and less than 100, and 18.2% of less than 10 brands."

"It is very difficult for a brand to have more than 10 franchises. As such, the restaurant franchise industry is highly competitive and small businesses are scattered," he said. "Due to the nature of the industry, we are continuously developing new items and trying to provide a stable business model to those who wish to start a business through various verification and supplementation."

In addition, "The average sales of the restaurant industry in 2022 are 314 million won (the status of the Fair Trade Commission franchise business), and the company is 394 million won, which is about 80 million won higher than the average sales of the restaurant industry." It is showing a high competitive advantage compared to the average of restaurants," he said.

In addition, Dubon Korea said, "We recently launched a new menu of annual pork volcats, and the average sales increased 124% in a month to 32 million won (August), and we formed a consensus for shared growth through meetings with merchants in September."

[Photo = Courtesy of The Born Korea]

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