Korea’s rice burger franchisees fight back

BonGousse Rice Burger, which was acquired Tuesday by chain Nene Chicken, is receiving fierce criticism from franchisees for failing to inform them of the deal.

The rice burger chain was established in 2010. The brand rose to fame thanks to its popularity among students, but entered a steep downfall last year when CEO and founder Oh Se-rin was convicted of drug use.

BonGousse franchisees claim they were never informed about the merger by headquarters beforehand and only learned about it after the deal between the companies were finalized last month. According to local news outlets, the association of BonGousse franchisees reported the headquarters to the Fair Trade Commission saying that the deal violated contracts with franchisees.

Franchisees are set to meet with BonGousse headquarters to receive details on the acquisition on Thursday.

“We’re in the process of expanding our business with our expertise in the chicken business and franchise operation,” Nene Chicken said in a statement. “We plan to create synergy with the acquired company based on our experience in the franchise business and quality control.”

BonGousse Rice Burger started out as a street food stall that sold rice balls made in the form of a hamburger. The business took off by establishing restaurants near schools and universities, and the number of branches reached a peak of 1,000 in 2015.

Oh also gained attention and fame as a young entrepreneur, and made many media appearances to encourage entrepreneurship among students. A college dropout, Oh was only 25 when he started BonGousse in front of a high school in Suwon, Gyeonggi.

Oh was found to have taken drugs with three women at a hotel in Seoul in May 2015. He was also found to have used methamphetamines three times with close associates in 2016 at a hotel and at his home. He was sentenced to a year and a half in prison and three years of probation. His conviction in August 2017 tainted the brand’s image and dragged down sales by 30 percent, according to BonGousse franchisees.

In October, a group of around 300 BonGousse franchisees sued Oh and BonGousse headquarters for damages. They said that, after the conviction, the company modified contract terms in a way that increased advertising costs for franchisees while reducing headquarters’ costs.