Earth Group franchise owners allege unpaid remuneration as report examines control of takings

Several franchise owners at Japanese hair salon chain Earth Group allege that owners of loss-making salons receive no remuneration under the chain’s payment arrangements. An article published on Yahoo! News on 14 November 2026 reported their claims. The report focuses on payments to owners and head office’s management of franchisees’ takings. Readers should distinguish between franchisees’ allegations and established facts.

Several owners allege unpaid remuneration

According to the report, Earth Group operates 258 salons across Japan and recorded turnover of ¥21.3 billion in the 2024 financial year. Anonymous franchise owners within the chain have raised concerns about how their remuneration is handled when they run loss-making salons.

One owner, identified as A, says he worked as an assistant and then a salon manager before becoming an independent franchise owner. He now operates a salon in the Greater Tokyo area. He alleges that when a salon makes a loss, its owner receives no “salary”, affecting the owner’s ability to meet personal living costs.

Another franchise owner, B, also says he is working without remuneration. The article describes concerns shared by several owners, rather than a complaint from just one individual. However, the nationwide outlet count indicates the size of the chain as a whole, not the number of salons where similar complaints have been made or where owner remuneration has allegedly gone unpaid.

The word “salary” used in the report also requires care. It is the term used in the reporting and the owners’ accounts; the label alone does not establish whether the payments are wages arising from an employment relationship or remuneration paid to a business owner by a franchise company. Understanding the issue requires clarity about who pays whom, under which contract and on what calculation basis.

Owners say head office controls takings and bank accounts

According to A, each salon’s takings are first collected by head office, which then pays money back to the salon as “salary” and “expenses”. He says head office also holds the franchise companies’ bank passbooks and registered seals, which are used to authorise certain banking transactions in Japan, leaving owners unable to move funds freely themselves.

A also says he pays around 5% of turnover to head office, with the total burden reaching 20% once other items are included. These figures come from his account and were not presented as contractual terms applying to all franchisees. Nor should the 20% figure be treated as a royalty rate: his account describes it as including other charges.

The report concerns more than the level of costs. It also raises questions about day-to-day cash management: where salon takings are deposited, who calculates payments and when franchisees receive their funds.

For prospective franchisees, this highlights the need to distinguish projected profit from cash actually available to spend. Alongside understanding the accounting calculations, practical due diligence includes checking payment dates, deductions and payment approval powers in the contract and settlement statements.

Meeting announcements and payment statements also questioned

A says a policy of not paying salaries to owners of loss-making salons was announced at a meeting attended by owners from across Japan, at a time he recalls as seven or eight years earlier. The report quotes his account that company president Toshiharu Kokubun announced the policy.

According to A, no new contract was signed at the time; the change was communicated verbally. He further alleges that payment statements show salaries as having been paid even though owners of loss-making salons do not actually receive the money.

Several distinct issues overlap here: when and how the policy was communicated, how it relates to contractual terms, and whether the amounts recorded on statements match actual transfers. What was explained at a meeting and how much an individual owner received need to be checked separately.

B also says owners of loss-making salons previously received salaries. However, the two owners’ recollections cannot be combined to establish a definitive date for the change in practice. The report should be understood as describing franchisees’ concerns about explanations and payments.

A also says he has taken casual day work and drawn on savings to cover his living costs. His account suggests that the remuneration issue affects not only salon profitability but also owners’ personal financial planning. These statements alone, however, do not establish head office’s financial position or legal liability.

Check remuneration and cash management separately before signing

The report highlights three matters for the franchise community to examine: owner remuneration, management of franchisee funds and changes to operating arrangements after a contract has been signed. None can be fully understood from sales forecasts and start-up costs alone.

Prospective franchisees should first establish which payments take priority when a salon makes a loss and how owner remuneration is treated. They should then clarify whose name is on the account receiving salon takings, who holds the passbooks and registered seals, and who has authority to transfer or withdraw money. It is also worth checking the written procedures for notification, consultation and agreement if charges or payment arrangements change.

For existing franchisees, a practical step is to reconcile payment statements with funds actually received. Where deductions or discrepancies are unclear, they should check the relevant contractual provisions and supporting calculations. Assessing an individual dispute requires contracts, statements and transfer records to be compared, rather than relying on testimony alone.

Practical takeaway: Before committing to a franchise, obtain written confirmation not only of “how much profit can I make?” but also of “who controls the money, and what happens to my remuneration if the business makes a loss?”