Restauranteur Paik Jong-won's company under fire for allegedly deceiving store owners

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Restauranteur Paik Jong-won's company under fire for allegedly deceiving store owners

Published: 18 Jun. 2024, 15:26 Updated: 19 Jun. 2024, 16:49

Celebrity chef and CEO of Theborn Korea, Paik Jong-won [THEBORN KOREA]

Restauranteur Paik Jong-won's company Theborn Korea is under fire for allegedly providing false information when signing with store owners, with some threatening to report the brand to the government watchdog.

According to owners of Yeondon Ball Katsu, a subsidiary franchise of Theborn Korea, the company said the owners would be able to make more than 30 million won ($21,700) of monthly revenue when first persuading them to sign with the company, but the actual sales figure fell short of even half that amount.

Store owners requested that Theborn Korea lower the cost of essential supplies or allow them to sell their foods at a higher price, but Paik's brand refused to do so, according to a report by local newspaper Hankyoreh on Tuesday.

"The headquarters recruited franchisees by promising false and exaggerated sales figures and profit margins, but have not provided any countermeasures despite the damage caused," franchisees told Hankyoreh.

A mediation committee under the Gyeonggi government recommended that Theborn Korea compensate the store owners last month, but Theborn Korea refused, according to the franchisees.

Eight store owners of Yeondon Ball Katsu will report Theborn Korea to the Fair Trade Commission (FTC) on Tuesday and hold a protest outside of Theborn Korea's headquarters in Gangnam District, southern Seoul, according to the Hankyoreh report.

Celebrity chef Paik [THEBORN KOREA]

Theborn Korea refuted the franchisee claims in a statement on Tuesday.

"The franchise did not promise any false or exaggerated revenues or profit rates during the recruitment process for Yeondon Ball Katsu franchisees," Theborn Korea said in a press release.

The average sales, cost and profit of nationwide stores were properly and clearly stated to those seeking to sign with Theborn Korea, according to the franchise. It also added that it cut the cost of essential supplies.

"We have always conducted sincere negotiations with the franchisees, and it was some of the franchisees who rejected the mediation committee's proposal," the company said. "We plan to respond diligently and actively based on objective facts regarding the FTC complaints and incorrect media reports by some franchisees."

Yeondon Ball Katsu, subsidiary brand of Theborn Korea [THEBORN KOREA]

A standard Yeondon Ball Katsu restaurant made 259.7 million won in 2022, according to a public disclosure filed at the FTC. A year later, the figure fell by 39.4 percent to 156.9 million won. During the same period, Theborn Korea's revenue increased by 45.4 percent from 282 billion won to 410 billion won while its net profit rose by 31.4 percent from 15.9 billion won to 20.9 billion won.

A total of 83 Yeondon Ball Katsu stores opened between 2021 and 2023, and only 30 of them currently remain, according to Hankyoreh.

The Yeondon Ball Katsu incident comes as another misfortune for Theborn Korea as the company tries to go public on the Korean bourse Kospi. Theborn Korea was founded in 1994 by Paik, who owns 76.69 percent of the company.

Paik became a celebrity figure on Korean television through the Olive channel cooking survival show "Hansik Battle 2" (2014) and the MBC entertainment show "My Little Television" (2015).

BY KIM MIN-YOUNG [kim.minyoung5@joongang.co.kr]