The Korea Fair Trade Commission announced the results of a written fact-finding survey in the franchise sector. The share of franchisees who experienced unfair conduct decreased, but perceptions of improved transaction practices and satisfaction with policies slipped slightly.
On the 30th, the Korea Fair Trade Commission (FTC) released the results of the "2025 written fact-finding survey in the franchise sector," conducted on 200 franchisors across 21 industries and 12,000 franchise outlets. The period for those surveyed was from July last year to June this year.
According to the Korea Fair Trade Commission (FTC), 71.1% of franchisees said unfair transaction practices had improved. The share who said they were satisfied with policies in the franchise sector was 78.7%. The two indicators fell by 0.5 percentage point and 0.1 percentage point, respectively, from a year earlier. The score for perceived improvement in transaction practices also dropped 1.8 points to 60.4 from the previous year.
The share of franchisees who said they had experienced unfair conduct by franchisors was 47.8%. This was down 7.1 percentage points from a year earlier. Among types of unfair conduct, cases where key information such as sales was inflated, concealed, or downplayed and provided contrary to fact accounted for the largest share at 28.8%. Cases where advertising expenses and the like were unfairly passed on were 15.9%. Cases where transaction terms such as required items were changed unilaterally without consultation were 14.8%.
The Korea Fair Trade Commission (FTC) cited the structural crisis in self-employment and the economic downturn as reasons why perceptions and satisfaction fell despite fewer experiences of unfair conduct. The Korea Fair Trade Commission (FTC) said business conditions in the franchise industry had deteriorated.
Regarding improvements to the required items system, 66.5% of franchisees said they recognized that the types of required items and the method for calculating supply prices must be stated in franchise contracts. The share who said predictability over price fluctuations of required items had improved was 55.7%.
In the franchisor survey, among 163 franchisors who said required items exist, 87.1% said they stated the list of required items and the method for calculating supply prices in the contract. Sixty-one franchisors said they consulted when changing required item transaction terms to the disadvantage of franchisees. As for consultation methods, non-face-to-face channels such as email and phone calls were the most common at 63.9%.
The number of midterm franchise contract terminations was 16,359 in the first half of this year. The Korea Fair Trade Commission (FTC) said 14,936 terminations occurred at a single franchisor. The Korea Fair Trade Commission (FTC) explained that excluding this, the total was 1,423, down from a year earlier. The number of cases where liquidated damages for business were imposed was 238, down 47.0% from a year earlier.
In this survey, the Korea Fair Trade Commission (FTC) for the first time included whether franchisees had considered midterm termination. The share who said they had considered midterm termination was 42.5%. The most common reason for considering midterm termination was poor sales at 74.5%. Responses citing franchisors' unfair transactions were 31.3%.
The Korea Fair Trade Commission (FTC) said it plans to revamp the disclosure document in the first half of next year to provide information on midterm termination penalties more accessibly. The Korea Fair Trade Commission (FTC) said it will continue policies and law enforcement to strengthen the rights and interests of franchisees.