Franchise Association Forms 'Delivery App Crisis Task Force'
Plans to Report Baemin, Coupang, etc. for Unfair Trade to Fair Trade Commission This Month
"Excessive Fee Increases Without Consultation"
"The three major delivery application companies are passing all the costs of free delivery competition onto franchise stores, devastating industries such as chicken, pizza, and jokbal."
A motorcycle delivery worker is making a delivery on Hongdae Street in Mapo-gu, Seoul. Photo by Jinhyung Kang aymsdream@
On the 9th, Nam Myung-seok, Chairman of the Emergency Response Committee for the Delivery App Crisis at the Korea Franchise Industry Association (and Chairman of Jadam Chicken), explained that the association recently formed an emergency response committee to curb the excessive commission fee hikes by the three delivery apps: Baedal Minjok, Coupang Eats, and Yogiyo.
The Franchise Association has classified the drastic commission fee increases by the three delivery apps as unfair practices by monopolistic businesses and plans to take strong joint action this month, including filing a complaint with the Fair Trade Commission. While individual business owners have previously held press conferences opposing delivery commission policies, this is the first time the association has announced plans to file a complaint with the Fair Trade Commission at the organizational level.
The emergency response committee formed on the 6th includes 10 member companies. The Franchise Association decided not to disclose the names of the 10 member companies to protect franchise owners from harm. However, the industries represented include six types of chicken, two types of pizza, and two types of jokbal and meat.
The reason for forming the emergency response committee is that the three delivery companies recently engaged in free delivery competition and excessively raised delivery commission fees demanded from franchise owners without consultation. Baemin, the number one delivery app operator, raised the commission rate for Baemin1 Plus (Baemin Delivery) to 9.8% last month, up 3 percentage points from before. Yogiyo's rate is 9.7%, and Coupang Eats' is 9.8%. Currently, the three delivery apps hold a 96% market share, effectively oligopolizing the market. For franchise owners, it is difficult to reject the commission hike policy and leave the platform. Hence, the association is taking joint action.
Since the COVID-19 pandemic, the three delivery apps, which rapidly expanded their scale, have continuously increased commission fees. Each time, franchise owners protested that the commission burden was excessive, but delivery app usage rates kept rising, and empowered delivery apps did not relent in their intent to raise fees. Then, as free delivery initiated by Coupang Eats earlier this year spread to other companies, the three delivery apps competitively raised commissions to secure the necessary funds.
Jung Hyun-sik, Chairman of the Franchise Association, pointed out, "Recently, the burden of delivery commissions on the field has even triggered price increases, but the three delivery apps are still only eager to avoid responsibility."
The emergency response committee plans to explore concrete implementation measures so that many companies can prepare alternatives such as public delivery apps or their own apps. To this end, they will focus on expanding industry participation and preparing response measures by holding monthly general meetings and occasional subcommittee meetings.
Chairman Nam of the emergency response committee stated, "We will widely publicize the current situation of the industry and push forward with the Fair Trade Commission complaint this month, while doing our best to activate the emergency response committee so that more brands can participate together."
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