LG Household & Health Care Ltd.’s The Face Shop outlet is seen in this photo provided by the company.
SEOUL, July 21 (Korea Bizwire) — South Korean cosmetics and household goods maker LG Household & Health Care Ltd. is planning to exit the cosmetics franchise business due to poor performance.
The company announced the proposal of changing the franchise contract structure into a ‘merchandise supply contract’ to the owners of franchise shops, and related negotiations are underway.
If the contract structure is altered, franchise branches of The Face Shop, the cosmetics unit of LG H&H, will be able to freely sell merchandise from other cosmetics brands, transforming into multi-shops similar to CJ Olive Young.
For franchise shops that agree to the contract changes, the company is considering subsidizing some of their rental fees. The current promotion system, including support for discount events, will be maintained over the next two years.
Moreover, LG H&H presented support and compensation plans to aid franchise shop owners who are contemplating shutting down their businesses.
These plans include assistance for product disposal and return, as well as the payment of three months’ rental fees.
Ashley Song (ashley@koreabizwire.com)
