Ball katsu burgers sold at Yeondon Ball Katsu / Screen captured from YouTuber korean_easycook's channel

Theborn Korea CEO Paik Jong-won / Courtesy of tvN

Theborn Korea has seen its famous ball katsu brand lose more than half of its franchisees and sales falling by as much as 40 percent, according to the country's major food and beverage company Sunday.

The slump came as some of the franchisees last month accused the company's CEO, Paik Jong-won, of promising them a profitable venture as they prepared to open Yeondon Ball Katsu shops. However, their sales figures did not meet expectations. Paik responded to the franchisees saying he didn't promise them anything.

As of Friday, Yeondon's franchisees numbered just 31, according to the brand's business information registered with the Fair Trade Commission (FTC), the country's top antitrust agency. The figure peaked in 2022 at 68 after Paik launched the brand in August of the previous year with four franchisees. The franchisees, following the peak, declined to 49 by the end of 2023.

The brand's average annual sales among franchisees peaked in 2022 at 260 million won ($188,000). However, by the end of last year, it fell by 40 percent to 157 million won, with monthly sales at just 13 million won.

"13 million won per month is disastrous," said one of Yeondon franchisees. "After paying rent and all of the operating costs, I'm left with almost nothing. Most of the brand franchisees see an operating profit of 10 percent of sales, with exceptional franchisees bagging around 15 percent."

Eight Yeondon franchisees under the Korea Franchise Union found that all of their sales peaked within two months of their shop opening but dropped to half just two months later.

One of the franchisees in Seoul opened in May 2022 and saw 45 million won in sales the following month. The figure then fell to 24 million won in July of the same year and to 7.68 million in December of that year. The franchisee has managed to recover his monthly sales to 20 million won this year by investing more in delivery. But he said he isn't happy with his work.

"I work 12 hours each day with my wife just to grab 3 million won a month," the franchisee said.

Yeondon Ball Katsu franchisees under the Korea Franchise Union stage a protest in front of Theborn Korea's office in Seoul on June 18, holding a press conference to share how they were "hoodwinked" by the company into opening the brand shops and have been experiencing disappointing sales. Yonhap

Another franchisee in Gyeonggi Province opened his shop in 2022 and saw sales peak at 28 million won in May the same year. The figure dropped to 13 million won after two months and further down to 6.56 million won in December. Another one in Busan witnessed a peak in sales in September 2022 at 29 million won, but the figure then dropped to 10 million won in December that year.

Yeondon franchisees have criticized Theborn Korea for the falling sales, saying the company trained them for three days, a period they said was not long enough, before their takeout stores opened.

"The poor training caused us to produce ball katsu that often drew complaints from consumers for bad their taste," one of the franchisees said. "We complained to the company about the brand's old recipes and mounting consumer complaints. After one year, the company modified the recipes."

"I kept seeing declining sales. I requested the company to raise prices or reduce ingredient costs but the company didn't listen," another franchisee said. "I'm not sure the company took good care of Yeondon."

Theborn Korea responded to the franchisees saying that the company shouldn't be held solely responsible for the franchisees' sales. Rather, it added that the decent sales require effort from both parties.

"Some franchisees saw a drop in sales, while some saw their sales rise," a company official said.

Some of the Yeondon franchisees last month filed a complaint against Theborn Korea at the FTC, saying the company shared false information with them to promote the brand prior to their stores' opening. Paik appeared on an MBC talk show earlier this month, saying the franchisees shouldn't put the blame entirely on him for their poor sales.

Earlier this month, the FTC launched an investigation against the company.