[THE INVESTOR] Korean cosmetics maker SKINFOOD said on Oct. 18 that four of its franchisees have filed a lawsuit against it for seeking court receivership.
“We are currently having talks with our franchisees to find a solution,” a SKINFOOD official said in a statement.
Despite the company’s effort, according to sources, more franchisees are currently preparing to file a lawsuit against the company and CEO Cho Yoon-ho, after it announced on Oct. 8 that it has filed for court receivership due to mounting losses.
According to the franchisees, they have been asking for sales commissions and deposit that they paid when signing a retailing contract, but Cho has been avoiding them. The also alleged that the firm has not been supplying its flagship products to them for months.
They claim that the decision to file for court receivership was made only to avoid its management responsibility. If the court decides to put SKINFOOD under court receivership, it will freeze all proceedings against other creditors, as the company will first focus on paying back around 2.9 billion won (US$2.55 million) loans from Industrial Bank of Korea and put their payments aside.
Established in 2004, SKINFOOD was ranked as one of the top three budget beauty brands here in 2010, with sales reaching 164.2 billion won. However, the Korean cosmetics maker has suffered losses since 2014. Its sales dropped 25 percent from 169 billion won to 126.9 billion won on-year in 2017, while its operating loss reached 1 billion won.
By Song Seung-hyun (firstname.lastname@example.org)