This photo taken on June 27, 2025, shows a Papa John’s pizza chain outlet in Seoul. (Yonhap)
SEOUL, Oct. 10 (Korea Bizwire) — South Korea’s franchise industry is showing widening fault lines between franchisors and franchisees, as corporate headquarters enjoy rising revenue while their outlets grapple with falling earnings.
Data released Friday by corporate tracker Leaders Index revealed that across seven key sectors — coffee and beverages, fried chicken, pizza, convenience stores, bakeries, dining, and cosmetics — headquarters have expanded their sales while store-level profits have slipped over the past two years.
The total number of franchise outlets in those industries reached 92,885 last year, a 6.6 percent increase from 2022. But that expansion masked a growing imbalance: headquarters’ combined revenue rose 10.8 percent to 47.8 trillion won ($33.6 billion), while the average franchisee saw sales fall 7.6 percent to 302 million won.
The gap was especially sharp in the pizza business, where headquarters sales soared 66.5 percent to 1.12 trillion won, but franchise store sales tumbled 11.9 percent. Dining chains saw a similar divergence, with headquarters revenue up nearly 30 percent even as franchisees’ income fell by more than 16 percent. In the bakery sector, headquarters sales edged up 5 percent, while franchise outlets’ revenue dropped almost 19 percent.
Only the coffee and beverage segment showed parallel growth. The number of cafes run by 17 major brands rose 19.2 percent to 11,513 locations — the fastest expansion among all categories — as both headquarters and franchisees posted double-digit gains. Headquarters revenue jumped 33.4 percent, and average store sales climbed 14.1 percent.
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)
Convenience stores remained the most ubiquitous franchise format, with more than 55,000 outlets nationwide as of 2024.
“In sectors such as dining, chicken, pizza, and convenience stores, the number of outlets continues to rise but per-store sales are declining — a classic sign of market saturation,” Leaders Index said.
M. H. Lee (mhlee@koreabizwire.com)
