BBQ loses to BHC in chicken war… Court “Reimburse 30 Billion”

Input 2021.01.14 15:45

The court ruled to pay 30 billion won to BHC, a subsidiary of Chicken Franchise BBQ. The chicken war between two companies that used to be one roof and two families since 2014 is flowing in favor of BHC.

BBQ and BHC Chicken Wars. / Chosun Ilbo DB

On the 14th, the 16th Division of Civil Affairs of the Seoul Central District Court ruled in a lawsuit for damages for termination of product supply, which BHC filed against BBQ, to indemnify BBQ with 29 billion won.

In 2013, BBQ sold its subsidiary BHC to a foreign private equity fund, saying, “In the future, we will receive logistics services and some products such as sauce and tempura powder from BHC.”

However, in 2014, when a private equity fund filed a complaint with the arbitration court under the International Chamber of Commerce (ICC), saying, “BBQ sold BHC, it inflated the number of franchisees,” and BBQ reimbursed 9.6 billion won, resulting in a fierce battle between the two sides.

When BHC beat BBQ in 2016 based on sales and operating profit, the goal of the conflict deepened.

BBQ said, “New menu development information may leak,” and announced that it would cancel the logistics contract with BHC in April 2017, and that it would terminate the product supply contract in October of the same year. For each declaration of termination, BHC filed a lawsuit for claiming damages for a total of 300 billion units.

In the ruling that day, the judge did not admit the reason for termination, which BBQ claimed that “in-house confidentiality may leak.” The amount of damages was calculated by multiplying the expected sales by 19.6%, considering that BBQ stated to BHC at the time of the supply contract that “We will guarantee an operating margin of 19.6% for 15 years.”

BHC said, “We expect to win a lawsuit for damages for termination of logistics contracts that have not yet come out. The reason that the court did not admit all reasons for the cancellation of BBQ is that BBQ has made a one-sided argument ignoring facts and laws. It’s proven.”

The industry predicted that BBQ will appeal as the amount of damage compensation of 30 billion won significantly exceeds BBQ’s 2019 operating profit of 25.9 billion won.

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