The Bon Korea's rejection of a National Assembly mediation proposal has sent its dispute with Yeondon Bolkatsu franchisees back to square one, while the company's stock continues its downward trajectory.
According to the National Franchise Owners Association on the 10th, The Bon Korea rejected the final mediation recommendation proposed by the Democratic Party of Korea's Euljiro Committee on the 4th. The proposal reportedly included an expression of regret from the franchisor and payment of 70 million won per franchisee.
Yeondon Bolkatsu franchisees have alleged false and exaggerated advertising, claiming The Bon Korea promoted specific expected sales and profits to prospective franchisees that actual returns failed to meet.
The franchisees filed for mediation with the Gyeonggi Province Franchise Business Dispute Mediation Council in December 2023, but The Bon Korea rejected the mediation proposal. In June of the following year, they reported the company to the Fair Trade Commission for alleged violations of the Franchise Business Act. Negotiations through the Euljiro Committee began in December last year but ended with the same outcome.
"The Bon Korea's talk of mutual prosperity is merely rhetoric to avoid crisis," the association said. "If their participation in the Euljiro Committee mediation was just a stalling tactic for CEO Baek Jong-won's return to broadcasting, they have deceived both franchisees and the National Assembly."
The Bon Korea countered that it "actively participated in dialogue, but progressive discussion was difficult as only the same demands from two years ago were repeated," adding that it is "awaiting the Fair Trade Commission's investigation results."
The Bon Korea shares traded at 21,300 won as of 2 p.m., up 350 won (1.67%) from the previous session. The stock remains 37.35% below its October 2024 IPO price of 34,000 won.
Financial performance has deteriorated sharply. The company posted operating profit of 36 billion won in 2024 but swung to a 23.7 billion won operating loss last year. Revenue fell 22.2% from 464.2 billion won to 361.2 billion won.
The poor performance stems from damage to CEO Baek Jong-won's public image. Beginning with the Yeondon Bolkatsu profitability controversy before the 2024 listing, the company faced successive scandals last year including disputes over the value proposition of its Baekham products, allegations of false origin labeling on some products, and ingredient content issues.
Consumer disappointment grew over the gap between Baek's televised advice to small business owners and actual business operations. Analysts say the company's expansion strategy, heavily reliant on Baek's personal brand, has backfired. Baek issued an apology in May last year and suspended broadcasting activities, returning in November and December through MBC's "Chef of Antarctica" and Netflix's "Culinary Class Wars Season 2," but public sentiment has not recovered.