[Exclusive] Hanseong Cuts Off Competitor Dealerships' Livelihoods Amid Golf Market Slump

Persuasion to Change Daily Wear Brand to 'All For You' at Agency Operating Ping·Phantom
Sudden 'Hold' Notice Before Final Contract
After Investigation Begins, "We Will Sign the Contract"

"Even if it doesn't help with household expenses, I still have to take responsibility for repaying the loan and paying the rent... I suddenly went bankrupt overnight, so where am I supposed to get extra money from again?"

A franchise owner is facing the risk of losing their livelihood due to Hansung F&I's reckless expansion of its dealerships. After inducing a franchise contract with the Hansung F&I brand, the company suddenly notified that it could not open the store just before the final contract. Established in August 1999, Hansung F&I is a company that sells brands such as TaylorMade, Renoma, and All For You through franchises and department store distribution channels.

According to the distribution industry on the 30th, Mr. A, who operated franchises of the golf wear brands 'Ping' and 'Phantom' in Gyeonggi Province last June, was repeatedly encouraged by Mr. B, the sales manager of Hansung's casual wear brand 'All For You,' to switch franchises. The reason for persuasion was that daily wear sales were better due to the sluggish domestic golf market caused by the economic downturn.

All For You is a casual wear brand targeting men and women over their 40s. Although the existing brands like Ping and Phantom did not have very good sales, Mr. A initially firmly refused Mr. B's suggestion, thinking it was not difficult to operate two brands.

However, after nearly a month of persuasion by Mr. B, Mr. A began to positively consider switching to an All For You store. Mr. B promised that Mr. A could sell the store's clothing online and that sufficient clothing stock would be provided. Recently, fashion companies have reduced the amount of clothing sent to franchises due to decreased domestic consumption, causing nearby franchise owners to struggle with store operations.

The actor couple Kim So-yeon and Lee Sang-woo, who are advertising models for the fashion brand All For You operated by Hansung FI, are showcasing products from the brand.

The contract proceeded quickly. Mr. A claimed, "We decided to open a complex store combining new and clearance items, and discussed the contract margin rate. The company measured the signboard for support, and we agreed to open the store with minimal interior costs." He added, "We also talked about providing gifts so that existing franchise owners could receive presents for intermediate marketing," and "We exchanged the necessary subsidiary documents for the final contract and finished negotiations on the store name."

Before the final contract, Mr. A terminated contracts with the two brands he had been operating so that he could open the new store starting from this fall/winter (FW) season. Ping and Phantom will sequentially cease operations at the end of this month and mid-next month, respectively. The store inventory was also sent back to headquarters.

However, suddenly, Hansung F&I notified Mr. A of a decision to 'postpone' the store opening instead of providing the final contract. This was due to strong protests from nearby franchise owners upon hearing the news of a new store opening.

Mr. A expressed his frustration. He said he asked Mr. B about the protests from nearby franchise owners during the contract stage and received a response that "it's okay." Mr. A said, "The person in charge said they would try and talk to the company, but it has already been a week," adding, "I don't know how long I have to wait. I couldn't even repay the money borrowed during COVID, so my heart is very heavy."

In the legal community, Hansung F&I's franchise sales method can be viewed as an unfair customer inducement act under the Fair Trade Act, and if damages occur due to this incident, a claim for damages is also possible. Jeong Hwan-guk, the representative lawyer of J& Law Office, explained, "(Although it is a matter of proof) a contract is not necessarily concluded only by stamping, so even if a contract is not finalized according to precedent, if it is unfairly terminated during the process, damages can be claimed," adding, "The law cannot regulate many acts occurring during the contract process, but if it reaches the final contract stage, damages caused by relying on this contract can be claimed."

Hansung F&I explained that "an internal conclusion has not yet been reached" when the media began investigating, but on the 28th, they informed Mr. A that they would sign the franchise contract.