Chapter 230
Chapter 230
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Translator: penny
Chapter: 230
Chapter Title: The Future of Franchising
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"Article 12 of the Franchise Business Act states that franchisors cannot impose unfair transaction conditions on franchisees or force things like unreasonable price reductions."
No Se-hee continued calmly. It was something I already knew well.
"In other words, franchisors cannot unilaterally control prices."
"That's right. Legally speaking."
But laws always have loopholes, and companies naturally exploit them.
"However, franchise agreements typically specify that 'franchisees must maintain selling prices in accordance with the headquarters' pricing policy.' Franchisees are obligated to follow those set guidelines."
That's why franchisors could penalize franchisees for arbitrarily raising prices, basing it on those contract clauses.
According to Article 9 of the Franchise Business Act Enforcement Decree, franchisors couldn't uniformly set sales prices, but they were allowed to provide price guidelines or recommended consumer prices.
'Of course, they call it a guideline, but failing to follow it could be seen as a contract violation, allowing them to impose penalties.'
Laws created to address the power imbalance between franchisors and franchisees inevitably ended up being half-measures because of this.
"Naturally, The Song's franchise agreements also specify pricing guidelines."
I knew what No Se-hee was getting at.
"Even without some compromise like this, even without a negotiation table, the CEO could have just given the order."
"......"
"But why go to the trouble of... "
"Beating around the bush?"
She fell silent, as I'd hit the nail on the head.
"Do you think so too, Team Leader Jo? That I'm taking the hard road unnecessarily."
Jo Yi-ruk, who had been standing quietly, adjusted his glasses with his fingertips and spoke.
"I believe there's a reason for it."
"Team Leader Jo, you sometimes come off like a fanatic."
No Se-hee muttered as if exasperated. Watching from the side, that unwavering faith must seem pretty strange to her.
"Of course, calling the CEO a genius doesn't even do it justice... But we can't just be yes-men."
No Se-hee pressed her furrowed brow with her fingertips to smooth it out. Then, in a low, subdued tone, she continued.
"That's why we're asking directly. We can't know the CEO's intentions otherwise."
Fair enough. I'd been handling things on my own whim every time, and only after it all wrapped up would these two be left stammering.
Unless they knew I had foreknowledge of the future, my words and actions must seem utterly mysterious to them.
I nodded and opened my mouth.
"I knew about everything Team Leader No mentioned. And that we didn't need to set up this negotiation table. Of course, pretending to communicate would make it easier to quell complaints."
On top of that, it could lead to internal strife, like blaming the representatives for botching the negotiations.
Franchisees without a unifying force couldn't wield any real power. Then things would wrap up on the franchisor's terms again.
That's probably why other franchise headquarters at least pretend to listen—those few advantages.
"I think... the hierarchical structure between franchisors and franchisees will gradually fade away."
In 2019, the Franchise Business Act undergoes a change. It strengthens franchisees' legal right to form groups and negotiate with franchisors.
As a result, franchisors can no longer set prices without consulting franchisees.
And it doesn't stop there.
The Franchise Business Act changes bit by bit. Eventually, franchisees gain the ability to set their own prices, ignoring the guidelines from headquarters.
'Prices varied slightly from store to store because of that.'
Headquarters would try to block price hikes as much as possible, but if franchisees dug in their heels, there'd be no way to stop them.
"Of course, right now, we hold the power. But will that continue forever?"
"......"
"It might sound far-fetched, but I believe the laws will change so that franchisors can't hold all the power."
It's a future that's not far off.
'And when that happens, what if relations between headquarters and franchisees are bad?'
Headquarters might completely lose control.
If we button this first step right, wouldn't it embed a positive perception of headquarters in the franchisees' minds?
"When the day comes that franchisors no longer have this authority, and franchisees no longer follow our word—what will we use to coexist with them? We need to think about that."
No Se-hee and Jo Yi-ruk looked shocked, as if they'd never even considered it.
"But... friendly franchisees and headquarters? I've never heard of such a thing."
No Se-hee spoke in a tone that still couldn't quite accept it.
Of course, good relations between franchisors and franchisees are extremely, extremely difficult by nature.
'As long as money's involved, it's inevitable.'
From the franchisees' perspective, they bust their asses daily to boost sales, only for headquarters to swoop in and skim from their pockets—how could they not resent it?
From headquarters' side, managing franchisees inevitably brings stress from the troublemakers that crop up.
And that's not all. They try to provide raw materials as cheaply as possible, but it's not always feasible.
'That's both the advantage and downside of long-term contracts.'
If they secured cheap prices during a bad harvest when costs were high, they had to buy expensive during a bumper crop when market prices dropped—that was the fate.
Franchisees would benefit more from hitting the markets at dawn, but paying a premium to buy from headquarters would boil their blood.
'We've tried to accommodate that with support fund policies as much as possible. Still, the fact is, they buy expensive.'
For all these reasons, franchisors and franchisees end up harboring grudges against each other.
"I'm not saying I want franchisors and franchisees to be best buddies. That's impossible. But..."
I slowly lifted my head and said,
"At the very least, if they know we're not corrupt officials sucking them dry and fattening our bellies, won't franchisees trust and follow us?"
That alone would be a success.
Trust plays the biggest role in getting them to follow headquarters' direction without major pushback.
"It might look foolish to others."
I shrugged.
Assuming a future that hasn't arrived yet and choosing the hard path over the easy one wouldn't seem rational.
I had no rebuttal if No Se-hee criticized me for it.
So I braced for the lengthy lecture... but oddly, No Se-hee stayed quiet.
"?"
Tilting my head in confusion, I saw her staring at me with her lips pressed tight.
"......"
A storm of emotions swirled in her eyes. After a moment of silence, she let out a short, hollow chuckle and said,
"I really have nothing to say. To hear this from the CEO of all people."
"It's pretty absurd, right?"
"No."
No Se-hee denied it immediately.
"...I wish we'd met just a little earlier."
"Huh?"
Before I could ask what that meant, No Se-hee bowed deeply.
"I overstepped. I'm sorry, CEO."
"No. Overstepped? Someone has to say it. As you said, Team Leader No, we can't all be yes-men."
"I did say that, but honestly, it was mostly my personal feelings mixed in."
What was that supposed to mean? As I widened my eyes, No Se-hee slowly raised her head and said,
"When I worked at Hyunmu, I was first assigned to sales."
"Ah."
Sales—more precisely, the franchise management department—handled franchise oversight within headquarters.
It was the part Jo Yi-ruk and Hyun Ye-won handled now. Of course, as the company grew, more staff were added under them.
Either way, managing countless franchises wasn't easy. Enforcing myriad policies and regulations was even harder.
She must have seen a lot of ugly scenes.
"I worked hard as ordered from above. I wanted recognition. To climb higher, to gain financial and social stability."
"......"
"All while having no idea what I was actually doing."
No Se-hee gave a bitter smile. It felt like self-mockery.
"Hyunmu is pretty coercive with its franchisees. You might know... They force expensive raw materials, demand unnecessary remodels. Suddenly, they'll demand ad fees regardless of sales and collect them."
I could imagine without her saying.
The abuses franchisors inflict on franchisees are too numerous to list.
"I acted like a puppet, following orders from above. I pushed hard even against franchisees' pleas. It was all for my performance metrics."
Doing that kind of work makes people stop seeing other people as people. Just numbers boosting your stats.
"By the time I realized something was wrong, it was too late."
No Se-hee muttered, her face pale.
She covered her mouth with one hand, looking like her stomach was churning as if she might vomit.
"What happened?"
After my question, No Se-hee fell into a long silence.
When she finally spoke,
"...One day, I came to work and saw that the number of franchises I managed had decreased."
A shocking story emerged.
"They said it was a suicide. That's all I heard."