Restaurant franchise owners in South Korea typically need about two years and seven months to recoup their initial investment, with the majority continuing to pay fees to headquarters well beyond the startup phase. (Image created by AI/ChatGPT)
SEOUL, Dec. 30 (Korea Bizwire) — Four out of 10 franchise owners have considered ending their contracts early but most abandoned the idea because of penalties, a government survey showed Tuesday, highlighting the sector’s challenging business structure.
According to the survey by the Fair Trade Commission (FTC), 42.5 percent of franchisees said they had considered ending their contracts before the scheduled expiration date.
Among the respondents who considered ending their contracts, 60.6 percent cited the burden of penalties, followed by 46.9 percent who said they had hoped their sales would recover, the FTC said.
The main reason cited for considering early termination was weak sales with 74.5 percent, followed by unfair trading practices by franchise headquarters, the survey showed.
By industry, the share of franchisees considering early termination was highest in fast food at 53 percent, convenience stores at 51.2 percent and other dining establishments at 49.4 percent.
By size, owners of franchises with fewer than 100 locations were more likely to consider early termination at 41.4 percent than those with 300 to 999 locations at 38.4 percent.
(Yonhap)
