[Exclusive] "Sales Slump Makes Me Unable to Pay Rent" Paris Baguette Franchise Store Closure Lawsuit

Contract Termination Lawsuit Against Consignment Manager... "Head Office's Unfair Profit Demand" Backlash

[Asia Economy Reporter Kim Hyung-min] Paris Croissant is engaged in a lawsuit with the lessor over the closure of the Paris Baguette directly managed store in Seogyo-dong.

According to the legal and related industries on the 17th, Paris Croissant filed a "confirmation of non-existence of debt lawsuit" against Company A, which manages the building where the directly managed store in Seogyo-dong, Mapo-gu, Seoul is located, in October last year. The lawsuit requests confirmation that there is no obligation to pay the money. Paris Croissant filed the lawsuit demanding a 30% reduction in the building rent. The trial is being handled by the 11th Civil Division of the Seoul Northern District Court, and the first hearing has not yet been held.

Paris Croissant and Company A signed a sublease contract (re-leasing by a tenant who is not the building owner) for a commercial building on June 2018 for five years with a deposit of 700 million KRW and a monthly rent of 37 million KRW. Paris Croissant opened and operated a Paris Baguette directly managed store there, but when sales declined due to COVID-19 in June 2020, they requested contract termination or a 30% rent reduction. The directly managed store was converted into a consignment store. When Company A opposed, Paris Croissant filed a "confirmation of non-existence of debt lawsuit" related to the rent reduction claim along with a certified letter. In January, an amendment to the Commercial Building Lease Protection Act was passed, granting tenants who had to close due to quarantine measures the right to terminate the lease contract. Based on this, Paris Croissant obtained a "certificate of business closure report" in the name of the consignment store owner on January 10 and additionally filed a lawsuit for lease contract termination, requesting the court to consolidate it with the previous lawsuit.

Company A argues that the party to the building contract is clearly Paris Croissant, not the consignment store owner, so the demand for rent reduction and contract termination due to closure is unjustified. Even though zero sales decreased, since the headquarters made a profit, they cannot accept the rent reduction or lease contract termination due to closure. Paris Croissant's side maintains that they are exercising their legitimate rights to demand rent reduction and contract termination and that there is no problem.