"Support for Rent and Logistics Costs at Damaged Stores"…Franchise Headquarters Take Action to Save Franchisees (Comprehensive)

Over 1,500 Confirmed COVID-19 Cases Increase Franchise Losses
Lotte GRS "Extension of Payment Deadlines"
The Venti "Royalty Waiver... 10% Reduction in Logistics Costs"
Myeongnyun Jinsagalbi "300 Million KRW Monthly Rent Support for One Month"

[Asia Economy Reporter Choi Saeng-hye] Domestic dining franchise headquarters have rolled up their sleeves to prepare measures for franchise stores hit by the spread of the novel coronavirus infection (COVID-19). As the number of confirmed cases in Korea exceeded 1,200 within five weeks of the first domestic occurrence, consumers have increasingly avoided dining out, causing a sharp decline in sales at many dining establishments. In fact, according to a comparison of the average daily number of customers during the two weeks before and after the first confirmed case on the 20th of last month by the Korea Foodservice Industry Research Institute under the Korea Foodservice Industry Association, 85.7% of 600 dining businesses experienced a decrease in customers.

On the 27th, Lotte GRS announced that starting from the 25th, it has decided to extend the payment deadlines for goods to consider the sales damage of Lotteria and Angel-in-us franchise stores in the Daegu and Gyeongbuk regions. There are 127 Lotteria franchise stores and 70 Angel-in-us stores in the Daegu and Gyeongbuk areas.

The Ventii is exempting the entire royalty fee for February for about 430 franchise stores nationwide and reducing logistics costs by 10%. This is intended to share the difficulties of franchise stores caused by customer decline due to the ongoing COVID-19 situation and to minimize damage. The Ventii plans to continuously check the scale of damage and difficulties of each franchise store and prepare additional support measures within March to provide support until sales at all stores return to normal.

Myeongryun Jinsa Galbi decided on the 25th to fully support one month's rent totaling 2.3 billion KRW for 522 franchise stores nationwide. The amount supported per franchise store ranges from a minimum of 3 million KRW to a maximum of 16.9 million KRW. Myeongryun Jinsa Galbi plans to provide additional support to franchise stores until sales at all stores normalize, conduct free disinfection of all stores nationwide, and support store cleaning.

Mom's Touch decided on the 24th to implement phased support measures for 1,243 franchise stores nationwide (as of December). Franchise stores identified as visited by confirmed COVID-19 patients are classified as ‘confirmed’ and will voluntarily close temporarily and undergo additional disinfection, while receiving a small amount of consolation money and support for goods payments to comfort sales losses.

The ‘serious’ stage applies to franchise stores operating in areas designated as ‘special infectious disease control zones’ by the Korea Centers for Disease Control and Prevention. Currently, the Daegu and Gyeongbuk regions are the target areas for serious stage support, where about 30% of Mom's Touch stores are concentrated. These stores receive a certain amount of goods payment support. The majority of franchise stores are classified under the ‘caution’ stage, and the headquarters supports hygiene-related preventive inspections.

Genesis BBQ decided on the 25th to supplement the spray-type disinfection with the ‘ULV mist coating sterilization method,’ which sprays disinfectant in ultrafine particles. They have allocated a special budget of about 150 million KRW to support disinfection efforts.

BHC Chicken urgently provided masks and hand sanitizers to franchise stores in Daegu and adjacent areas. Goobne Chicken strengthened its existing QSC (Quality, Service, Hygiene) manual and distributed preventive action guidelines issued by the Korea Centers for Disease Control and Prevention to stores. McDonald's checks employees' temperatures daily before work and provides masks.

A franchise industry official sighed, saying, "Many stores, especially in the Daegu and Gyeongbuk regions, have stopped in-store orders and are substituting with delivery and takeout. When confirmed cases occur in some areas, nearby stores voluntarily close, and there are even cases where part-time workers refuse to come to work, causing closures due to labor shortages." It was also reported that many stores in crowded places such as theme parks and parks have voluntarily closed.

Another franchise official appealed, saying, "Although the headquarters has proposed win-win measures, if the situation does not improve by March or April, the franchise industry will face an emergency. The government should also prepare concrete measures that can provide practical help to franchises."