A Selfish Owner Who Opened a New Coffee Shop Near the One They Sold... 'Refreshing' Verdict Sparks Attention

After receiving the key money and transferring the franchise coffee shop, the court issued a business prohibition order against the owner who opened a new coffee shop nearby.

On the 23rd, the Ulsan District Court Civil Division 22 (Presiding Judge Shim Hyun-wook) announced that it accepted the 'business prohibition provisional injunction' filed by coffee shop owner Mr. A against another coffee shop owner Mr. B.

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In August 2022, Mr. A paid Mr. B 150 million KRW in key money and took over the business rights, including the business facilities and equipment, clients, business know-how, and location advantages of a franchise coffee shop in Yangsan, Gyeongnam, and started operating it.

However, in June of this year, Mr. B opened another franchise coffee shop near Mr. A’s coffee shop. The distance between the two coffee shops was 1.4 km, and both were located within a specific industrial complex. Accordingly, Mr. A filed a provisional injunction with the court, claiming that Mr. B violated the obligation to refrain from business competition.

The court ruled that Mr. B violated the Commercial Act and accepted Mr. A’s provisional injunction application. The court took into consideration that when Mr. B transferred the coffee shop to Mr. A, they had contracted to transfer all clients and location advantages. The court judged that since both Mr. A’s coffee shop and Mr. B’s newly opened coffee shop are located within the same industrial complex, if Mr. B continues to operate, customers would overlap, causing damage to Mr. A.

The court decided to prohibit Mr. B from operating the business until the final judgment is confirmed or until August 2032, which is 10 years from the contract date, and ordered that if violated, Mr. B must pay Mr. A 500,000 KRW per day.

Meanwhile, Article 41, Paragraph 1 of the Commercial Act stipulates that when business rights are transferred, unless otherwise agreed, the transferor is prohibited from engaging in the same type of business within the same special city, metropolitan city, city, county, or adjacent special city, metropolitan city, city, or county for 10 years.