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Compromise in restaurant sector agreement not likely

Posted March. 25, 2013 04:17,   


Negotiations are proving difficult with just one week left until the proposed deadline by the National Commission for Corporate Partnership for an agreement on designating the restaurant industry as a sector suitable for small and medium businesses.

If the interested parties fail to reach a compromise by the deadline, the situation could end up like that of the bakery sector in that the commission accepts claims by smaller companies and announces them as its final recommendation.

The commission held its sixth meeting on corporate partnership in the restaurant industry Friday, attended by the Korea Food Service Industry Association, the Korea Food Industry Association, the Korea Franchise Business Association and other parties. Participants failed to narrow differences in talks on the “boundary of subway station zones,” where conglomerates and franchisers are banned from opening branch stores.

The food service industry association, which represents small and medium-size businesses, said, “Only in areas around 60 subway stations should conglomerates be allowed to open branch stores within 50 meters from a station, and mid-sized established companies should be allowed to do so within 100 meters. The rest should be outright banned.” The food industry association that represents conglomerates, however, claimed that large corporations should be allowed to open stores within 500 meters at any subway station. The franchise association added, “Since franchise owners are also self-employed people, they should be outright excluded from those subject to recommendations.”

With the interested parties failing to compromise, observers say the National Commission for Corporate Partnership will inevitably suggest binding arbitration. When the interested parties displayed stark differences in views in a main meeting of the commission last month, commission chairman Yoo Jang-hee accepted a demand from the Korea Bakery Association to limit the number of new branch stores to be opened in a year to within 2 percent of the number of stores a conglomerate or franchise was operating in the previous year. A ban was also placed on new stores from opening within 500 meters on foot from a neighborhood bakery shop run by the self-employed.