South korea: Franchise headquarters in South Korea experienced a rise in revenue, while franchise outlets saw declining earnings over the past two years, highlighting an increasing imbalance between franchisors and franchisees.
According to Yonhap News Agency, sales trends across seven key sectors-coffee and beverages, fried chicken, pizza, convenience stores, bakery, dining, and cosmetics-revealed widening disparities between headquarters and franchisees. The total number of franchise outlets in these sectors reached 92,885 last year, marking a 6.6 percent increase from 87,108 in 2022.
During this period, franchise headquarters’ revenue increased by 10.8 percent to 47.79 trillion won (US$33.6 billion), while average franchise store sales decreased by 7.6 percent to 302 million won. The pizza sector showed the most significant disparity, with headquarters’ combined sales surging 66.5 percent to 1.12 trillion won as franchisees’ average sales dropped 11.9 percent to 311.6 million won.
In the dining sector, sales at 54 franchise headquarters rose 29.7 percent over the two-year period, yet average franchise store revenue declined 16.4 percent. Meanwhile, in the bakery sector, headquarters’ revenue increased by 5 percent, contrasting with an 18.7 percent decrease in franchisees’ revenue.
The coffee and beverage sector was the only segment to show simultaneous growth at both the headquarters and outlet levels since the COVID-19 pandemic. The number of outlets run by 17 coffee and beverage brands rose 19.2 percent over the two-year period to 11,513, the fastest growth among all sectors. Headquarters’ revenue climbed 33.4 percent to 3.94 trillion won, while average franchise store sales rose 14.1 percent to 252 million won.
The convenience store sector remained the largest by outlet count, with 55,331 stores nationwide as of 2024. Leaders Index commented, “In sectors such as dining, chicken, pizza, and convenience stores, the number of outlets continues to rise, but per-store sales are declining, reflecting a classic case of market saturation.”