Compose Coffee, a budget-friendly coffee franchise, is at the center of controversy for passing on a portion of the advertising expenses for BTS member V to its franchisees.
According to industry insiders on December 20, Compose Coffee has chosen BTS member V as the brand’s new face to celebrate its upcoming 10th-anniversary launch next year. During this announcement, they revealed their intention to involve franchisees in covering the advertising costs for Compose Coffee.
Consequently, out of the projected advertising expenditure of 6 billion KRW (~4.6 million USD) for V, the brand opted to assign 2 billion KRW (~1.5 million USD) to franchisees, with the remaining sum covered by the headquarters.
This decision implies that franchisees will need to shoulder 72,000 KRW (~55.35 USD) per store per month, totaling 860,000 KRW (~661.11 USD) over 12 months. Additionally, the cost of advertising stickers/posters to be placed on store windows ranges from 200,000 KRW (~153.75 USD) to 300,000 KRW (~230.62 USD) each.
As of November this year, Compose Coffee has surpassed 2,300 franchise stores.
Concerning this, a vote was conducted among franchisees last month to gauge whether they approve or disapprove of the advertisement, with approximately 75% expressing approval. According to the revised Franchise Transaction Act in July, advertising can proceed for all franchise stores if over 50% of franchisees agree.
However, the franchisees criticize that shifting advertising costs onto them is excessive.
Compose Coffee concluded the advertising filming with V earlier this month. The new Compose Coffee ad featuring V is set to be publicly unveiled through various platforms, including TV commercials, YouTube, and franchise outdoor advertising, both online and offline.
A franchise owner commented, “Bearing this cost is not easy, considering that we have to earn double to cover 1 million KRW, factoring in additional expenses.”
Korean netizens commented, “If they can’t handle the high model fees, why did they select him?” “The sales will increase accordingly, so…” “Is the headquarters crazy?” “If they don’t have the money, they shouldn’t use the model,” “Well the franchisees all agreed,” “I don’t think they thought the company would push some of the advertisement fees onto them,” and “Wow, it costs 6 billion KRW.”
