Agency operators are investing more than an average of 200 million won to start up, but 6 out of 10 agencies have contract terms of only one year, raising concerns that they may not recoup their investments.
The Fair Trade Commission announced on the 21st the "2025 written fact-finding survey on agency transactions." The survey ran from May to December this year and covered 510 suppliers and 50,000 agencies across 21 industries, including food and beverages, apparel, telecommunications, pharmaceuticals, automobile sales, travel, and sports and leisure.
According to the survey, the average start-up cost invested by agency operators when signing their first contract with suppliers (head offices) was 214.3 million won. That is about 9.3% higher than last year's 196.06 million won.
Contracts for agencies were most commonly set in one-year terms at 62.0%, while 7.5% had no fixed term. However, the actual duration that contractual relationships were maintained was 5 years or more in 70.2% of cases (46.1% were 10 years or more).
The share of agencies that remodeled their stores last year was 14%, and the average expense was found to be 55.93 million won. The average renewal cycle was 7.5 years. Of these, 28.7% were at the supplier's request, and 71.3% were by the agency's voluntary decision.
The Korea Fair Trade Commission (FTC) said, "Although significant investment is being made, including initial start-up expense and renewal expense, agency contracts are generally concluded on one-year terms, raising concerns that agencies may not be fully guaranteed the opportunity to recoup their investment expenses," adding, "We plan to review ways to regulate suppliers' unfair contract terminations and refusals to renew."
Meanwhile, 20.5% said they experienced unfair practices by suppliers while operating their agencies, up 3.9 percentage points from the previous year. Types of unfair practices cited included penalties for failing to meet sales targets (7.8%), coercion to purchase products (4.6%), and demands for agencies' trade secrets (4.2%).