South Korea's $81 Billion Franchise Market Flashes Warning Signs with Slowest Growth Since Pandemic

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.