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 declined, but perceived improvement in transaction practices and satisfaction with policy dipped slightly.
On the 30th, the Korea Fair Trade Commission (FTC) released the results of the "2025 franchise sector written fact-finding survey," conducted on 200 franchisors and 12,000 franchisees across 21 industries. The period covered 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 policy in the franchise sector was 78.7%. The two indicators fell by 0.5 percentage points and 0.1 percentage point, respectively, from a year earlier. The perceived score for improvement in transaction practices also fell by 1.8 points to 60.4.
The share of franchisees who said they had experienced unfair conduct from franchisors was 47.8%. This rate fell by 7.1 percentage points from a year earlier. Among types of unfair conduct, providing key information such as sales figures that was inflated, concealed, or downplayed contrary to the facts accounted for the largest share at 28.8%. Passing on advertising costs and the like unfairly was 15.9%. Unilaterally changing transaction terms such as mandatory items without consultation was 14.8%.
The Korea Fair Trade Commission (FTC) pointed to the structural crisis in self-employment and the economic downturn as the reasons why perceived improvement and satisfaction fell even as experiences of unfair conduct decreased. The Korea Fair Trade Commission (FTC) said business conditions in the franchise industry had deteriorated.
Regarding improvements to the mandatory items system, 66.5% of franchisees said they recognized that the types of mandatory items and the method for calculating supply prices must be stated in the franchise contract. The share who said predictability regarding changes in mandatory item prices had improved was 55.7%.
In the franchisor survey, among the 163 franchisors who said mandatory items exist, 87.1% said they had stated the list of mandatory items and the supply price calculation method in the contract. Sixty-one franchisors said they consulted when changing mandatory item transaction terms to the disadvantage of franchisees. The most common consultation method was non-face-to-face, such as email or phone, at 63.9%.
The number of mid-term franchise contract terminations was 16,359 in the first half of this year. The Korea Fair Trade Commission (FTC) said 14,936 contract terminations occurred at a single franchisor. The Korea Fair Trade Commission (FTC) said that excluding this, the number was 1,423, down from a year earlier. The number of cases where liquidated damages for business were imposed was 238, down 47.0% year over year.
In this survey, the Korea Fair Trade Commission (FTC) for the first time included franchisees' consideration of mid-term termination. The share who said they had considered mid-term termination was 42.5%. The most common reason for considering mid-term termination was sluggish sales at 74.5%. Those who cited franchisors' unfair transactions were 31.3%.
The Korea Fair Trade Commission (FTC) said it plans to revamp disclosure documents in the first half of next year to provide information on mid-term termination penalties more accessibly. The Korea Fair Trade Commission (FTC) said it will continue policies and law enforcement to strengthen franchisee rights and interests.