Ban puts lid on pizza parlors, chicken chains

Chicken restaurant and delivery franchises have been banned from opening new stores within an 800-meter (2,625-foot) radius of their pre-existing outlets, the Fair Trade Commission said yesterday.

Pizza franchises are subject to a similar restriction but with a less generous radius of 1,500 meters. The move is designed to prevent too many of the same franchise stores opening in the same neighborhood, to the detriment of the individual owners.

The chains’ headquarters will also have to provide financial support of up to 40 percent of the total cost when they order franchises to make renovations, the FTC said, adding that such outlets do not have to change their interiors within seven years of opening.

“As pizza and chicken restaurants show a high rate of franchise affiliation, protecting them from the headquarters is seen as the most effective way of minimizing the risk of individual store owners [going out of business],” the FTC said in a release.

More than 20,300 of 27,238 chicken restaurants, or 74.8 percent, were affiliated to a brand-name chain as of 2010, according to Statistics Korea. For pizza parlors, the same figure stands at 66.6 percent, compared to a national average of 14.7 percent for restaurants in general.

Considering that chicken and pizza franchises rely for much of their business on deliveries, the distance regulation has been set much farther than for bakeries in April.

That month, the watchdog forbade bakery franchises from opening new stores within a 500-meter radius of same-branded operating outlets. It also said they cannot be ordered to renovate within five years.

The rules will be applied to five chicken franchises, including BBQ and Kyochon, and two pizza franchises Mister Pizza and Domino’s Pizza. Exceptions will be made if a new apartment complex with over 3,000 units is nearby or a hospital with at least 300 beds.

By Lee Sun-min[summerlee@joongang.co.kr]