The South Korean government on Thursday ordered Paris Baguette, a leading bakery and patisserie brand of SPC Group, to offer legitimate jobs to more than 5,000 bakers and cafe workers who were found to have been put to work unlawfully at franchise stores.

According to the ministry’s recent supervision on the labor conditions at Paris Baguette headquarters and its franchise stores and suppliers, 4,362 bakers and 1,016 cafe workers were found to have been hired and managed under breached contract conditions. For instance, the ministry discovered that Paris Baguette headquarters gave direct work orders to bakers at franchise stores although they were hired by its suppliers.

Based on the findings, the ministry ordered Paris Baguette headquarters to directly hire 5,378 bakers and cafe workers working at 3,396 franchise stores, and if not, it will take judicial action or impose a fine.

The ministry also ordered Paris Baguette suppliers to provide 11 billion won ($9.7 million) worth of unpaid allowance to bakers that worked overtime and on holidays.

The order comes after the ministry conducted supervision from July 11 on 68 outlets including Paris Baguette headquarters, its 11 suppliers that provide bakers, and 56 directly-managed, consigned, or franchised stores.

The ministry’s order is expected to place financial burden on Paris Baguette because it will force the company to spend more on labor costs to cover over 5,000 additional workers. The decision was immediately met with opposition from the local franchise industry that worries similar orders would be imposed on other companies in the francise industry.

The country’s franchise industry argued that its business environment is different from that of the manufacturing industry and the latest decision should not be made based on the same rules that are applied to the manufacturing industry.

Unlike the manufacturing industry where suppliers are dedicated to big companies in a vertically integrated business model, franchise owners often operate their stores independently from headquarters.

An unnamed official from Paris Baguette said the ministry’s latest action is too harsh as it takes into consideration only labor law, arguing the company has not breached any fair franchise practices. Sources raised the possibility of the case being taken to court.

By Na Hyun-joon and Lee Hee-soo

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]