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‘Starbucks of South Korea’ Loses Steam on NYC Expansion Following Lawsuits

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The latest in a long line of suits has a franchise owner suing for full control

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Caffe Bene
Caffe Bene on 32nd Street
Photo via Foursquare

More legal drama is brewing for the K-Town location of Caffe Bene, a company known as the “Starbucks of South Korea,” whose ambitious expansion plans have been marred by lawsuits from franchisees for thousands of dollars.

The franchise owner of the K-Town location at 39 West 32nd St. is suing Caffe Bene for full control of the shop after the chain threatened to close the outpost over unpaid royalties. Hyun Joo Kim says parent company Caffe Bene — which has outposts around the world but has financially struggled more recently — stopped helping him with the coffee shop and cafe years ago, and he shouldn’t have to pay the royalties, according to a lawsuit.

Joo Kim, who opened the Caffe Bene on West 32nd Street in August 2014, filed the suit last week in Manhattan Supreme Court to block an eviction by the company, the latest move in a legal battle that goes back to 2016. He currently pays more than $62,000 a month in rent through a sublease from Caffe Bene, but the company stopped offering support for the shop years ago, the suit alleges.

The restaurateur also alleges that since he opened the location, Caffe Bene has failed to train their employees, hasn’t offered advertising support, and even stopped supplying baked goods in the fall of 2015 — forcing the coffee shop to find other suppliers to stay open. By 2016, the K-Town shop was “essentially completely on its own without support of any kind” from Caffe Bene and stopped paying royalties to the chain, according to the suit.

Joo Kim and his wife ran another Caffe Bene franchise in South Korea but moved to New York City in 2013 after being recruited by the company to help it expand. They first opened a shop on West 23rd, which later closed.

They were promised $100,000 and the full support of management and were also told they could make between $5,000 and $10,000 a day at two coffee shops they were opening, according to the lawsuit. But they didn’t make anything near those profits, and the couple claims the company just made the projections up to mislead them. They sued the company in 2016 seeking more than $1 million in damages, which led to an arbitration and settlement without a payout.

Last week’s suit is a last-ditch effort to stay open and take over their current lease without Caffe Bene’s interference, the suit says. A judge has allowed Joo Kim to stay open until a civil court appearance on May 24 if he posts a $100,000 bond this week, according to court documents.

Caffe Bene, known for their coffee drinks, Belgian waffles and traditional Korean snacks, first opened in 2008 and planned a global expansion within a few years. It opened its first outpost in New York City in 2012 with a large Times Square shop, and had big expansion plans for the city, with deals to open as many as 80 locations with franchise owners.

But currently, just 10 locations exist across the five boroughs after many shops — including the first one they opened — shuttered. Lawsuits against the company began piling up as franchise owners, who pay $30,000 up front, allege they didn’t receive any support from the coffee chain.

In January, a South Korean court approved Caffe Bene’s request to begin restructuring to get rid of some of its debt, according to Yonhap News. The company’s plans to expand throughout China had also floundered, according to Forbes.

Lawyers for Caffe Bene did not respond to requests for comment. Reached at his shop, Joo Kim also did not comment.

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