[Exclusive] Following Mega MGC Coffee, Deobenti Franchisees Also File Differential Franchise Fee Lawsuit... MOU Signed With Doa Law Firm

Taking on Major Coffee Franchise Cases in Succession
Doa Law Firm Emerging as a Rising Power in the Industry
"Development Must Begin with Transparent Transactions Between Headquarters and Franchisees"

Following Mega MGC Coffee, which has more than 4,000 franchise outlets in Korea, franchisees of Deobenti, which has over 1,500 outlets, have also begun preparing a differential franchise fee lawsuit against the headquarters.

After the Supreme Court ultimately ruled in favor of Pizza Hut franchisees in the final appeal trial on a differential franchise fee lawsuit they had filed against the headquarters on January 15, differential franchise fee lawsuits have been spreading across the entire franchise industry. Against this backdrop, Doa Law Firm has emerged as a rising powerhouse in the field of protecting franchisees' rights and interests, as it has been signing MOUs one after another with major large coffee franchise franchisee organizations in Korea.

Deobenti holds ribbon-cutting ceremony for Amman, Jordan store opening. Yonhap News

According to the legal community on the 13th, Doa Law Firm (Representative Attorneys Park Jongmyung and Lee Haeseong) and the Deobenti Franchisee Association signed a memorandum of understanding (MOU) to strengthen franchisees' rights and interests the previous day at Doa Law Firm's Anguk branch in Jongno-gu, Seoul, and agreed to work closely together on responding to the amended Franchise Business Act, providing legal advice, and improving franchisee rights and interests.

In particular, through this MOU, hundreds of Deobenti franchisees have also begun preparing a differential franchise fee lawsuit against the franchisor.

Under the agreement, Doa Law Firm will provide legal support services including analysis of the latest precedents and review of application plans, legal advice during collective negotiations with the headquarters, correction of unfair practices such as differential franchise fees and the unfair shifting of promotional costs, and the provision of information on franchise-related legislation and policy trends at the Korea Fair Trade Commission.

The firm plans to closely analyze the legal principles of the latest precedents, review which parts can be applied to the Deobenti franchise contract structure, and, if illegality is identified, establish a phased response strategy such as demanding improvements through collective bargaining or pursuing legal action.

Earlier, on January 15, Doa signed an MOU with the Mega MGC Coffee Franchisee Council to protect franchisees' rights and interests and agreed to provide legal support for differential franchise fee lawsuits and other matters. Instead of taking on individual cases, Doa plans to enhance litigation efficiency by signing MOUs with franchisee organizations, gathering a large number of plaintiffs, and filing lawsuits all at once.

Park Jongmyung, Representative Attorney at Doa Law Firm. Doa Law Firm

By consecutively signing MOUs with major large coffee franchise franchisee organizations in Korea, Doa is emerging as a rising powerhouse in the field of protecting franchisees' rights and interests.

This agreement was concluded at a time when the need for legal action has increased across the franchise industry following the recent Supreme Court ruling ordering Pizza Hut to return differential franchise fees.

Differential franchise fees refer to the distribution margins that headquarters obtain in the process of supplying raw and subsidiary materials. In the Pizza Hut case, the Supreme Court recently ruled that when such differential franchise fees are not specified in the contract or otherwise agreed upon, the headquarters' receipt of them constitutes unjust enrichment "without legal cause," and therefore the headquarters must return them to the franchisees.

As a result, moves by franchisees to restore their rights regarding differential franchise fees collected without contractual grounds are spreading across the industry. Franchisees of more than 20 franchise brands, including BHC, Lotte Super and Lotte Fresh, Baskin Robbins, Puradak, Kyochon Chicken, BBQ, Goobne Chicken, Twosome Place, Mom's Touch, Burger King, Frank Burger, and Myeongnyunjinsagalbi, are already pursuing lawsuits against their headquarters to claim the return of unjust enrichment.

Meanwhile, a total of eight people attended the signing ceremony held the previous day, including five executives from the Deobenti Franchisee Association and Doa Law Firm's Representative Attorneys Park Jongmyung and Lee Haeseong, as well as Attorney Yoon Sookyung, to discuss specific directions for cooperation.

The Deobenti Franchisee Association stated, "Franchisees have long faced difficulties in asserting their legitimate rights due to having far less access to information than the headquarters," adding, "By joining hands with Doa Law Firm, which has already built successful cooperative relationships with other large coffee franchises, we will reclaim our franchisees' legitimate rights."

Lee Haeseong, Representative Attorney of Doa Law Firm. Doa Law Firm

Representative Attorney Lee Haeseong of Doa Law Firm said, "It is very meaningful that we are consecutively entering into partnerships with major coffee franchise franchisee associations in Korea," emphasizing that "the sound development of the franchise industry begins with transparent trading relationships between headquarters and franchisees."

He continued, "We will mobilize all of our accumulated know-how in the franchise business field and our specialized capabilities in fair trade, built through cooperation in the coffee franchise industry, to be a reliable partner that protects the legitimate rights and interests of Deobenti franchisees."

The two parties have set the operation of regular legal education programs and the establishment of a dedicated consultation line for franchisees as their top priorities.

The legal education will continuously cover analysis of the latest precedents related to differential franchise fees, key points of the amended Franchise Business Act, and know-how for negotiating with headquarters. Through the dedicated consultation line, they plan to respond immediately to individual franchisees' legal inquiries and, when necessary, support legal relief procedures such as class action lawsuits.

This agreement is expected to serve as an opportunity for Doa Law Firm to establish itself as the leading legal partner in protecting the rights and interests of large coffee franchise franchisees.

A franchise industry insider commented, "Doa is expanding an ecosystem for protecting franchisee rights and interests based on its proven expertise in the coffee franchise sector," adding, "We expect this systematic cooperation model to spread to other franchise sectors as well."

Doa Law Firm is a law firm that provides specialized legal services across the fair trade field, including representing parties in filings with the Korea Fair Trade Commission, responding to investigations, and conducting litigation, and is centered on experts who graduated from Seoul National University and worked at major law firms.

The firm is regarded as having extensive on-site experience in the franchise business field, especially in the coffee franchise industry, enabling it to provide close, hands-on legal advice tailored to franchisees.

Deobenti opened its first store in front of Pusan National University in 2014. By offering large-size coffee, based on Starbucks' largest "Venti" size, at reasonable prices in the 1,500 won to 3,000 won range, it has steadily grown and, together with Mega Coffee, Compose Coffee, and Paik's Coffee, has established itself as one of Korea's four major low-priced coffee franchises.

Despite being a low-priced coffee brand, it has gained strong popularity among younger consumers by introducing a system that allows customers to choose coffee beans according to their preferences and by continuously launching various new menu items. More recently, building on its performance in the domestic market, it has been actively expanding into overseas markets such as Canada, Vietnam, and Jordan.