Mom's Touch Franchise Owners File Lawsuit Against Headquarters for Unjust Enrichment Repayment

Mom's Touch store. Photo by Mom's Touch

[Asia Economy Reporter Moon Hyewon] Some franchisees of Mom's Touch have filed a lawsuit against the headquarters for the return of unjust profits.

According to the industry on the 21st, 124 Mom's Touch franchisees filed a lawsuit against the headquarters on the 6th of last month, claiming the return of unjust profits.

The franchisees claim that the headquarters unilaterally raised the supply prices of raw materials and took excessive profits.

According to the franchisees, the headquarters raised the prices of raw materials on October 1, 2020, and February 19 of this year. They argue that the price increase was made without consultation with the franchisees.

The franchise agreement stipulates that any changes in raw material prices must be decided through consultation between the franchisees and the headquarters.

This is the first time franchisees have filed a lawsuit over the headquarters' increase in raw material supply prices.

The franchisees explained that they initially applied for adjustment through an internal autonomous adjustment body but received a response that the matter was not subject to review, leading them to file the lawsuit.

They also filed a complaint with the Fair Trade Commission regarding this issue.

The headquarters maintains that they did not unilaterally raise the supply prices. At the time of the price increase in October 2020, there was no franchisee council, so the franchise management staff obtained understanding and agreement on the supply price adjustment from franchisees nationwide. For the price increase in February this year, meetings were held with multiple franchisee councils, and a calculation error was found in the initially presented headquarters data, which was corrected and explained accordingly.

Mom's Touch started as a native franchise in 1998 and was acquired by the private equity fund KL&Partners in 2019.