South Korea's $81 Billion Franchise Market Flashes Warning Signs with Slowest Growth Since Pandemic
South Korea's franchise sales hit $81 billion in 2024, but growth slowed to 6.8%, the lowest since the pandemic, signaling economic headwinds and sluggish job creation.
South Korea's massive franchise industry is hitting the brakes. Combined sales for franchised stores reached 117.8 trillion won (US$81 billion) in 2024, but the year-on-year growth rate of 6.8% marks the slowest pace since the COVID-19 pandemic. According to data from the Ministry of Data and Statistics, the figures signal that business conditions remain harsh amid a sluggish national economy.
A Tale of Two Sectors
The 6.8% growth is the smallest increase since 2020, when sales contracted by 0.5% at the height of the pandemic. Despite the overall slowdown, some sectors thrived. Coffee and non-alcoholic beverage franchises led the pack with a 12.8% surge in sales. They were followed by study and leisure space rental services, which grew by 11.2%, and Korean food franchises, up 10%. This divergence suggests that while overall consumer spending is tightening, demand remains robust in specific service-oriented niches.
The Job Market's Quiet Warning
Perhaps more telling than sales is the employment data. The number of people employed at franchise stores rose by just 2.2% to 1.04 million last year, also the weakest increase since 2020's 5.2% drop. The ministry attributed this sluggish job growth to the proliferation of unmanned stores and self-service kiosks. While the total number of stores grew 4% to 314,000, average sales per store only edged up 2.7% to 375.2 million won, indicating that profitability for individual owners isn't keeping pace.
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