YK Law Firm Files Complaint Against Delivery Service Baemin for Unfair Practices
On the 20th, YK Law Firm announced that it has filed a complaint with the Fair Trade Commission on behalf of the Chicken Franchise Owners Association of Cheonggukjang Chicken against Baemin, the delivery platform operated by Woowa Brothers, and the franchise headquarters, Korean 153. Baemin has argued that it is engaged in fair market competition activities aimed at increasing the profits of franchise owners, leading to a heated exchange with YK.
YK claims that Baemins promotional strategy deprives franchise owners of opportunities to engage with other delivery apps. According to YK, Baemin proposed to reduce the commission from the standard rate of 7.8% to 3.5% on the condition that franchise owners only engage in transactions with Baemin, after signing a Memorandum of Understanding (MOU) with the franchise headquarters.
YK pointed out that while the promotion appears to offer some benefits, the actual economic advantages for the franchise owners are negligible. They argue that this strategy effectively eliminates opportunities for transactions through other delivery apps, which could significantly decrease franchise revenues.
Additionally, YK has raised concerns about the discount promotion settlement method. For instance, if a chicken that costs 30,000 won is sold with an 8,000 won discount for 22,000 won, Baemin would support 4,000 won of the discount. However, YK argues that although it seems Baemin is covering 50% of the discount, the franchise owner actually bears a fixed discount burden of 4,000 won. Furthermore, YK claims that Baemin can unilaterally adjust the total discount amount, setting the franchise owners burden to only 1,000 to 3,000 won.
YK contends that while increased sales may lead to higher overall commission revenue for Baemin, the franchise owners end up shouldering excessive discount amounts. The association emphasized that the structure of the MOU being signed unilaterally by the platform and headquarters makes it virtually impossible for individual franchise owners to refuse participation in the promotions, urging the Fair Trade Commission to investigate this matter.
YK claims that Baemins promotional strategy deprives franchise owners of opportunities to engage with other delivery apps. According to YK, Baemin proposed to reduce the commission from the standard rate of 7.8% to 3.5% on the condition that franchise owners only engage in transactions with Baemin, after signing a Memorandum of Understanding (MOU) with the franchise headquarters.
YK pointed out that while the promotion appears to offer some benefits, the actual economic advantages for the franchise owners are negligible. They argue that this strategy effectively eliminates opportunities for transactions through other delivery apps, which could significantly decrease franchise revenues.
Additionally, YK has raised concerns about the discount promotion settlement method. For instance, if a chicken that costs 30,000 won is sold with an 8,000 won discount for 22,000 won, Baemin would support 4,000 won of the discount. However, YK argues that although it seems Baemin is covering 50% of the discount, the franchise owner actually bears a fixed discount burden of 4,000 won. Furthermore, YK claims that Baemin can unilaterally adjust the total discount amount, setting the franchise owners burden to only 1,000 to 3,000 won.
YK contends that while increased sales may lead to higher overall commission revenue for Baemin, the franchise owners end up shouldering excessive discount amounts. The association emphasized that the structure of the MOU being signed unilaterally by the platform and headquarters makes it virtually impossible for individual franchise owners to refuse participation in the promotions, urging the Fair Trade Commission to investigate this matter.
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