After his honorable discharge from the military, Kim Jae-hak underwent rehabilitation and worried about how he would make a living.
He eventually decided to pursue his longtime dream of starting his own business. He had experience working in restaurants, so he was confident in his ability to run one.
Given his leg condition, it would be difficult to do something like a Korean BBQ restaurant that required long hours of standing or serving. After much consideration, he chose a franchise, specifically Meister Pizza.
Although it was a relatively new brand, he trusted it because of its excellent taste and the solid foundation of its headquarters.
He signed a franchise agreement with the headquarters and leased a commercial space. While the store interior was being set up, he underwent various training programs.
Several months later, Meister Pizza branch number 15 opened in Paju.
The pizza market, while not as intense as the chicken market, was still highly competitive. For the first few months after opening, he struggled. However, thanks to the headquarters’ TV commercials featuring famous celebrities and his own diligent efforts, his sales gradually increased.
He gained regular customers and saw his profits grow, giving him hope that he could do even better if he continued to work hard.
Then one day, a manager from the headquarters came to his store.
The manager suggested that he expand to a two-story location, citing the growing commercial area and population in the region.
He had only been in business for a year and was just starting to find his footing. Expanding would require moving locations and completely redoing the interior.
It was too risky, especially since he hadn’t yet recouped his initial investment.
Several higher-ups from the headquarters visited him sequentially, 계속 urging him to expand, but he refused each time. A few months ago, they stopped visiting, and he thought the matter was over.
But one day, on his way to work, he saw a Meister Pizza sign going up on the main road across the street.
***
After Kim Jae-hak finished his story, Ellie asked,
“Didn’t you try complaining to the headquarters?”
“Of course, I did! I went straight to the headquarters to protest.”
When he complained about opening a direct branch so close to a franchise location, the headquarters argued that they were opening the direct branch for customer convenience and that there was no problem since they were in different administrative districts.
It was true that the administrative districts changed on either side of the six-lane road. But only politicians and civil servants cared about that; no one else would.
From a consumer’s perspective, it was just a matter of crossing the street.
If they were selling the same brand and the same food, there was no question which one consumers would choose: the small store in the alley or the large, two-story store on the main road.
When he kept going back to complain, they eventually refused to meet with him and even used security guards to drag him out.
“They warned me that if I kept this up, there could be other disadvantages later, so I couldn’t complain anymore.”
Headquarters have many ways to penalize franchise owners. Therefore, franchisees have no choice but to be mindful of the headquarters’ actions.
Just because there’s already a kimchi stew restaurant nearby doesn’t mean you can’t open another kimchi stew restaurant close by. This is because the products are different.
The newly opened restaurant’s kimchi stew has a different taste, quantity, and price. The choice of which kimchi stew to choose rests entirely with the consumer.
However, franchises sell the same products at the same prices. Therefore, they usually have their own restrictions on opening locations in close proximity.
Of course, it’s not unheard of for the same franchise to open in the same area, but that’s usually in places with high foot traffic like Gangnam, Hongdae, or Myeongdong.
This wasn’t some central area of Seoul or a famous tourist destination. How much foot traffic could there possibly be?
From the moment the direct branch opened nearby, a drop in sales was inevitable.
“The bigger problem than the direct branch itself is the discount.”
As an opening promotion, the direct branch immediately started offering a 40 percent discount on all items.
When a place selling the same pizza for 40 percent less opened up, his sales naturally plummeted. Now, he had virtually no customers at all.
“So, what are you going to do?”
“Well, once the discount ends, things will get better. People might go to the other place to eat in, but at least my delivery sales will recover, right?”
But the opening promotion had been going on for two months already, and there was no word on when it would end. His store was practically closed. The ingredients he ordered from the headquarters were going straight into the trash without being used.
“But can they even make a profit selling at that price?”
Kim Jae-hak shook his head.
“Even if you ignore the ingredient costs, you’re looking at a loss considering the rent and labor costs.”
When he complained about the opening promotion, the headquarters told him that he could offer the same 40 percent discount if he wanted to.
The headquarters could afford to operate at a loss, but his franchise couldn’t.
At this rate, he would have to close down within a few months.
Kim Jae-hak let out a long sigh.
“I wouldn’t feel so wronged if I had done something wrong or if business was bad due to the economy.”
It was maddening to see his business fail because of the headquarters while he was working hard.
He stroked his right leg and muttered,
“I don’t know what others might think, but I poured all the compensation I received for losing my leg into this place. I can’t get a job anywhere with this body, let alone a part-time job. If this store goes under, I’m finished.”
Franchise headquarters all claim to strive for mutual benefit with their franchisees. The idea is that if the franchisees thrive, the headquarters will also thrive.
That’s true in theory, but the reality is a bit different.
When a franchise fails, the owner loses their entire investment, while for the headquarters, it’s just a slight setback; they can simply recruit other franchisees.
Therefore, the relationship between headquarters and franchisees is inherently one of superiority and subordination.
This isn’t just the case with franchises; it’s the same in all fields. In democracy, it’s one person, one vote, but in capitalism, it’s one won, one vote.
Whether it’s finance or industry, having more money always gives you an advantage. If left solely to market principles, the wealthy will monopolize everything.
To prevent this, there are laws like the Fair Trade Act and the Franchise Business Act, but… as always, the law doesn’t provide much help.
Ellie looked at me and asked,
“Why is Korea like this?”
“……”
I had no answer.
The abuse of power by franchise headquarters has a long history. Unilateral termination of franchise agreements, forced interior renovations, excessive marketing fees, and the kickbacks added to the cost of supplied materials, among others.
Every time a problem arose, the need to amend the Franchise Business Act was highlighted, but the relevant laws were still languishing in the National Assembly.
Is this why they call it Hell Joseon?
Of course, there are many franchises where the headquarters and franchisees coexist without major issues. However, if you encounter the wrong headquarters, the franchisee ends up shedding tears of blood, as is happening now.
“What kind of company is the franchise headquarters?”
“It’s MCK Group.”
“MCK?”
That name sounded familiar.
“What do they do?”
“You know Master Chicken? Meister Pizza is an affiliate of theirs.”
“Master Chicken… as in Chae Myeong-ho?”
Kim Jae-hak nodded.
“That’s right. The CEO of Meister Pizza is Chae Myeong-ho.”
“……”
I never expected it to be related to Master Chicken.
Ellie noticed my expression and asked,
“What’s wrong?”
I chuckled dryly.
“It’s nothing. It just brought back some old memories.”
What a twist of fate, that my junior from university would be mistreating my military senior.
I thought back to the business administration junior I had seen at university years ago. I thought he had learned his lesson, but it seemed old habits die hard.
Anyway, now that I knew, I couldn’t just stand idly by.
I said to him, who was sighing deeply with a gloomy expression,
“Don’t worry. I’ll help you.”
“How?”
“That’s…”
I had a lot of money. But that didn’t mean I could do whatever I wanted.
If I used my financial power to unfairly attack Meister Pizza, it would be no different from the abuse of power that chaebols are known for. And these days, public opinion wouldn’t stand for that.
For example, if Chairman Im Jin-yong tried to bankrupt Heungbu Stew, what would people think?
So, what was the best way to resolve this situation?
I knew about cars, batteries, and IT, but I didn’t know much about the restaurant business. I hadn’t even worked a part-time job at a restaurant.
When you don’t know something, you should consult an expert.
I thought about whether I knew any restaurant industry experts. Fortunately, one person came to mind.
I immediately made a call.
[Hello, CEO Kang Jin-hoo.]
“Hello, President Im Soo-mi.”
The flagship businesses of Ceylon Hotel were its hotels and duty-free shops. However, the hotels across the country also operated their own cafes, bakeries, Korean restaurants, and buffets.
These restaurants were all known for their excellent food, and the bakery brand had even been launched as a separate franchise. Therefore, she would know quite a bit about the restaurant industry.
“I’m calling because I have a favor to ask.”
I felt a little bad for only contacting her when I needed something.
President Im Soo-mi said with a cheerful voice,
[If it’s a request from CEO Kang Jin-hoo, I will definitely grant it.]
I briefly explained the situation and then said,
“Could you possibly send a franchise expert?”
[Of course. I’ll send one right away.]
“Thank you.”
After ending the call, I said to the two of them,
“An expert will be here soon, so let’s hear what they have to say.”
***
About an hour later.
A black S-Class Maybach pulled up in front of the store, and a middle-aged woman in a suit came inside.
“Hello.”
I was surprised to see her.
“You only needed to send an expert…”
President Im Soo-mi smiled and said,
“I’m the biggest expert in this field.”
“O-Oh, really?”
Kim Jae-hak was also clearly taken aback. Who would have expected the president of Ceylon Hotel to come to a franchise pizza place in an alley?
It was like getting a Windows error and having Bill Gates show up to fix your computer…
“I haven’t had lunch. Could you make me a pizza first?”
“Ah, yes, of course.”
Kim Jae-hak went into the kitchen and quickly started making a pizza.
President Im Soo-mi sat down and tried the freshly made pizza.
“I’ve had it a few times before, and it’s definitely delicious. MCK Group places a high value on taste and quality, even having separate menu development and quality control teams.”
Master Chicken had faced several controversies over the headquarters’ and chairman’s abuse of power. There had even been boycotts, but they were short-lived. The impact on sales was minimal.
While some people valued ethical consumption, most consumers prioritized brand recognition, price, and taste.
Regardless of his character, Master Chicken’s Chairman Chae Dae-ho clearly had business acumen. He certainly didn’t skimp on investments, especially when it came to taste and quality.
Excellent taste, a systematic operation, and consistent service across all locations were Master Chicken’s greatest strengths. It wasn’t for nothing that they had climbed to the top of the fiercely competitive chicken market.
Kim Jae-hak nodded.
“I also considered several pizza franchises, but after trying them, I chose Meister Pizza because it was the most delicious.”
“I took a look at the newly opened direct branch on the way here. The distance is definitely too close. Considering the foot traffic in this area, there’s no reason for two branches of the same franchise to exist. I don’t know what happened, but you could say the headquarters is trying to kill this franchise.”
“What does the headquarters gain from doing that?”
“As you may have noticed, new apartments are being built, and there’s a lot of land development happening. Of course, it will take a few more years for people to move in, but it’s clear that the commercial area here will grow. If the franchise can’t hold on and closes down, the direct branch will take its place.”
Listening to her, it seemed that headquarters taking over successful franchises in this way was common practice in the franchise industry.
“So, what’s the best course of action?”
“The simplest solution would be for CEO Kang Jin-hoo to step in and protest.”
The headquarters might ignore a franchise owner’s complaints, but they wouldn’t ignore mine.
President Im Soo-mi looked at me and said,
“If the headquarters finds out about the relationship between CEO Kang Jin-hoo and the franchise owner, they will immediately apologize and close the direct branch.”
There was no need to make things difficult when they could be easily resolved.
“Let’s go to the headquarters and talk to them.”
Kim Jae-hak shook his head.
“I told you, I went to the headquarters several times to protest, and they kicked me out. They won’t even accept a meeting request now, and they won’t let me inside the building.”
I said to him, reassuringly,
“Don’t worry. You’re coming with me.”
