Joyworks Emergency Committee Calls for Protection of SMEs That Have Developed Overseas Brands

Joyworks: "Difficult to Receive Compensation for Brand Development Contributions"
Concerns Over Employment of Over 140 Employees, Calls for Institutional Reform

The controversy surrounding the domestic licensing rights for the global sports brand "HOKA" is spreading. This is because employees of Joyworks, the former distributor of HOKA, have begun calling for the establishment of institutional measures to recognize and protect the contributions of small and medium-sized enterprises that discover overseas brands and nurture them in the domestic market.

Provided by the Joyworks Employees Emergency Committee.

The Emergency Response Committee (ERC), made up of Joyworks employees, announced on the 24th, "In the domestic distribution and fashion industry, there is a repeated 'nurture-and-retrieve' structure, where small and medium-sized companies grow the market after discovering overseas brands, only to have the licensing rights transferred to large corporations."

Joyworks secured the domestic licensing rights for the American running shoe brand HOKA, owned by Deckers, in 2018, and has been operating the business since then. According to Joyworks, thanks in part to the growth of HOKA, the company’s revenue increased from 22.8 billion won in 2022 to 82 billion won in 2024—more than tripling in just two years. Recently, Deckers terminated its contract with Joyworks and selected E-Land as the new domestic master distributor for HOKA, sparking protests from Joyworks employees.

The ERC pointed out that, due to the nature of overseas brand licensing business, domestic companies invest significant costs and time to build up brand awareness and distribution networks, but have few avenues for compensation when contracts end. Since overseas headquarters typically end the contract with an existing distributor and sign a new one with another company, the firm taking over the licensing rights also has no obligation to succeed the employment of former employees.

The ERC also highlighted the limitations of seeking remedies under current laws. Laws such as the Subcontracting Act and the Franchise Business Act are primarily intended for domestic contractor-subcontractor or headquarters-franchisee relationships, making it difficult to apply them to licensing contracts between overseas headquarters and domestic distributors. The committee emphasized, "Institutional mechanisms are needed to protect the intangible assets invested by small and medium-sized enterprises in brand development and the employment of their workers."

The committee added, "There needs to be a discussion on how to assess the market development contributions of domestic business entities that have nurtured foreign brands when licensing rights are transferred, and on how to protect the employment of workers at companies that lose their licensing rights." The ERC stated it plans to urge the government and relevant authorities to reform the system.

This content was produced with the assistance of AI translation services.