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| A Tous les Jours bakery shop; and Gyeonggi Governor Lee Jae-myung / Korea Times files |
PEFs face obstacles in buying bakery chain from CJ
By Park Jae-hyuk
Affirma Capital and JKL Partners are facing bigger difficulties in their bids to buy Tous les Jours from CJ Foodville after the Gyeonggi Provincial Government began supporting the bakery chain's franchisees who oppose the sale.
The provincial government said Friday it will investigate conflicts between franchisers and franchisees and the damage franchisees have suffered in the aftermath of the acquisition of food and beverage franchises by private equity firms (PEFs).
The announcement came after provincial government officials met Tous les Jours franchisees, Sept. 11.
The franchisees have protested CJ's attempt to sell its bakery chain, saying it was a unilateral decision.
After it was reported that only the two buyout firms took part in the preliminary bidding, the franchisees have urged the conglomerate to stop the sale unless it sells the brand to another conglomerate as large as CJ.
The Gyeonggi Province government plans to refer franchisers to the Fair Trade Commission if it discovers any unfair practices.
"If franchisers continue to sell their brands unilaterally, the status of franchisees and the quality and prices of products will be unstable," said Kim Ji-ye, the head of the fair consumer division at the provincial government.
"This could lead to damage to consumers who trust the brands. Through this investigation, we will inspect the current situation and problems thoroughly, and will reform relevant regulations."
Governor Lee Jae-myung seems to be behind the province's recent decision because he organized the fair consumer division.
He has recently been active in expressing opinions about issues in the financial sector, including short-selling, lending rates and local currencies.
The governor also criticized IGIS Asset Management for its previous purchase of an entire apartment building in the affluent district of Gangnam-gu, southern Seoul, using a private equity fund it manages.
Meanwhile, the investigation by the province may contract the market for food franchise M&As here, most of which involve domestic and foreign buyout firms.
Over the past few years, PEFs have participated in several deals involving food and beverage brands, such as Gong Cha, A Twosome Place, Nolboo, Outback Steakhouse Korea, BHC, Mom's Touch and Mr. Pizza.
TGI Friday's and Popeyes, which are expected to be put on the market soon, are also expected to be sold to PEFs.
This is because conglomerates are getting out of the restaurant business amid rising minimum wages and tightened regulations. The spread of the coronavirus has accelerated this trend.
