Mr. Pizza notices its abrogation of the franchise contract to the store-owners who raised suspicions over advertisement expenses, of which reduction allegedly led to decrease in sales by revising the contract arbitrarily. Under the original context of the contract, the abrogation can be only applied in case of spreading false information.
On February 9, President of Mr. Pizza’s franchise association, surnamed Lee, said in an interview with a broadcaster, “The headquarter of Mr. Pizza has received money from its affiliates for advertisement expenses, but the number of Mr. Pizza’s advertisement is in the decrease.” He already proposed a settlement with Korea Fair Trade Mediation Agency (KOFAIR) by arguing that Mr. Pizza’s head office did not reveal its details of advertisement expenses.
In response, Mr. Pizza’s head office notified President Lee of the abrogation of the franchise contract from March on the ground that he damaged Mr. Pizza’s reputation.
Embarrassed Lee looked up the contract and found the article saying that the owner of a member store should not damage the head office’s reputation and credit by spreading true or false information. According to this article, the franchise contract can be abrogated even if the store-owner would spread true information as long as it is against the interest of Mr. Pizza’s head office. It is reportedly that a KOFAIR’s official pointed its wrongfulness.
In addition, Mr. Pizza’s unilateral abrogation of the franchise contract in the middle of settlement is criticized to limit the activities of its franchise group, a move of what Koreans call ‘Gap-jil’ meaning the arrogant attitude by using its upper hand on the contract.
“The argument of the store-owner is false and we thought it made a problem in the settlement. Resultantly, we decided to notify him of the abrogation of the contract, “an official of Mr. Pizza’s head office, “I think the legal review over the article of the contract is over.”
By Lee Jae-seung
