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Copycat Franchises: When is the Expiry Date for Brown Sugar?
mkhealth.co.kr

Brown sugar is trending these days. With the start of Taiwan based brown sugar bubble tea brand Tiger Sugar, more than 10 brands such as Black Hwadang, The Alley, Tsunjudan, and Cheonsanding have also been making an impact in the market. Furthermore, food made by combining brown sugar with snacks, sandwiches, bingsu and ice cream as well as beverages has been launched. It is, however, hard to find a trace of the foods that once trended in Korea such as beehive ice cream, handmade hot dogs and giant castella. Let’s find out more about the copycat franchises that sparkle and disappear so quickly.

About Copycat Franchises

Copycat franchises are usually franchises where similar stores appear and disappear quickly when a trendy item appears in the food and beverage sector. When trendy items emerge, copycat franchises are created with similar spellings and designs along with the original brand. They usually trend and sparkle for a short period of time and quickly fall away after the trend is over. The examples from 2013 to 2017 are bingsu brands, beehive ice cream, small beer brands, fresh fruit juice brands and Taiwan Castella. Every year, the same phenomenon repeats, but it still seems to continue.

Copycat Franchise Brands Within Past Five Years (biz.chosun.com)

Problems with Copycat Franchises

Supply Outstrips Demand Due to Reduced Scarcity

Copying franchises have reduced scarcity, leading to reduced demand, and ultimately higher supply than demand. This is why the copycat franchise is not able to last long. Jang Jeong-yong, head of the Korea Institute for Industrial Economics and Trade (KIET), predicted that the popularity of brown sugar bubble tea will not last for more than a year. He said, “Since brown sugar bubble tea has recently been served at most franchise coffee shops, it is not a special menu item that can only be tasted when you go to Tiger Sugar, so the brown sugar bubble tea shops in general will be hit economically soon.”

Ease of Franchise Establishment and Excessive Dependence

Currently in Korea, it is very convenient to make a franchise brand if only an information disclosure is presented. Therefore, people can establish a copycat franchise company without professionalism. The poorly created copycat franchise headquarters over-promotes with the number of open stores and the stable sustainability of the franchise due to a new menu development plan. However, they hide the actual number of closed stores and plans for new menu development are often not actually performed. Start-up business people who are about to start their businesses are often misled by the over-promotion, failing to distinguish between a weak headquarters and a sound headquarters and suffer from economic damage.

Unavoidable Industry Damage Structure

Unlike healthy franchises that have built up solid reputations for a long time, copycat franchises that have become popular in a short period of time and suddenly pop up, are often shut down due to other stores’ mistakes. Taiwan Castella, the most representative example, there were more than 30 indistinguishable franchises, and people have come to perceive many franchises as just Taiwan Castella rather than the names of the franchises. In this case, the industry has been hit hard as the media has also raised the issue of a store or brand by labeling it Taiwan Castella. While it may seem easy to succeed in business in line with the popularity of a trendy item franchise, the inevitable damage caused because of the character of the copycat franchise is enormous.

Solutions to the Copycat Franchise Problems

Discussion of Laws on Similar Franchise Brands

The fundamental and direct cause of copycat franchise problems is the flood of similar brands after the emergence of popular items. That’s why discussions on legislation on similar brand registrations with similar themes and content imitating aid brands are needed. The emergence of large numbers of copycat franchises is a way to bring down the industry and is also a violation of the intellectual property rights of the original brand. Therefore, the government needs to discuss enacting laws to prevent this.

Strengthening the Qualification for Franchise Brand Establishment

In addition to enacting laws on registration of similar brands, there is a fundamental need to raise the barriers on franchise establishment. When establishing a franchise brand, it must undergo sufficient verification and screening of qualifications. In order to reduce the disruption of the copycat franchise, the entry should be harder so that it can only be run by the business that has passed the verification while operating the direct store for a sufficient period of time. In the case of the United Kingdom (UK), more than 12 months of experience in more than one region, and in France, three or more stores with more than seven years of experience are listed as qualifications.

Efforts by Individual Start-ups

The efforts of individual start-ups are as important as the discussion of laws. Instead of starting an easy startup, lured by the advertising of the fictional franchise’s headquarters, people should do it themselves to find objective information. Items should be decided on studying and compiling the stories of experts and media information, and consumer responses that were founded earlier. Even after starting a business, it is very important not to rely on the headquarters of the company, and to do constant research on taste and quality to be competitive.

Taiwan Castella on TV show Food X File (mbk.mk.co.kr)

Consumers are misled by food and beverage items from abroad, the food they see for the first time. However, after some time, there emerges a problem with respect to the gap between limited demand and increased supply. Although the transition to self-employed businesses is uncertain due to the lack of a retirement age guarantee and unstable employment, can they blame only the self-employed? It is time for the government to come up with a system and reform the structure of society.

고수연  suyunkoh@skku.edu

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