2024 was a year that was difficult to think about without restructuring and voluntary retirement. In the retail sector, there was a wave of resignations. Starting in March, with 11th Street, one company per month implemented voluntary retirement in the second half of the year. In June, Lotte On, in July, SSG.com, in August, Lotte Duty-Free Shop, in September, G Market, and in October, 7-Eleven all conducted voluntary retirements. In November, Lotte Hotels & Resorts and Shinsegae Duty-Free Shop also let go of employees.
It's not just the retail sector. Among the LG Group affiliates, LG HelloVision accepted its first voluntary retirement applications in its history, and corporations that had been considered stable and solid, like KT and SK Telecom, also conducted voluntary retirement.
According to related industries on the 31st, as corporations hastily implemented voluntary retirement, some predicted that the franchise industry would thrive. This was because many individuals in their 40s and 50s, who had been working in corporations, found it burdensome to jump into entrepreneurship alone, prompting them to consider starting a franchise. In fact, after the International Monetary Fund (IMF) administered bailout funds in 1997 and during the 2008 global financial crisis, retired individuals flocked to the franchise industry, which thrived.
However, the recent situation is somewhat different, according to franchise industry officials. Even when startup information sessions are held, they are not bustling, and it is often not easy to proceed with actual contracts after the sessions. A franchise industry official noted, “We will have to wait until next year to see, but so far, the special circumstances of voluntary retirements don't seem significant.”
While the franchise industry is quiet, there are places bustling with retirees. One of them is the traffic safety experience education center. This is where individuals seeking to operate personal taxis come to meet the necessary conditions.
The cost of personal taxi licenses is also rising. The market price for personal taxis in Seoul has surpassed 100 million won since April, and is currently trading at around 120 million won. The price increase has been steeper compared to previous market rises. The market price in Seoul was around 80 million won in 2021, before entering the 90 million won range from the end of 2022.
An industry official said, “If one works diligently, they can earn a salary similar to that of a large company's director, and the working hours can be adjusted by themselves. Additionally, if one operates during the day, the likelihood of encountering difficult customers decreases.” Furthermore, since 2021, conditions for personal taxi drivers have been relaxed, allowing private drivers with five years of accident-free experience to operate personal taxis, which has also influenced retirees to seek out this avenue.
There are many voices suggesting that the franchise industry must reflect on why retirees are opting for personal taxis instead. The decline in consideration of franchise brands as the top choice for entrepreneurship is partly due to distrust toward the franchise headquarters.
As experiences of failure in franchise entrepreneurship have accumulated and been shared, more people are seeking to avoid them. In a Naver cafe called "It's painful, so I become the owner," many posts can be found discussing how they thought they only needed to pay a franchise fee, royalties, and advertising costs, but ended up having to pay for renovations from designated locations set by the headquarters, leading to being overcharged.
Results from the Fair Trade Commission investigation are not significantly different. According to the '2024 Franchise Sector Actual Condition Survey' released by the commission, 54.9% of franchisees reported having experienced unfair practices from their headquarters. This figure has increased by 16.1% compared to one year ago. The most common types of unfair trading included ▲inflating sales information (20.5%) ▲unjustly shifting advertising costs (18.0%) ▲not providing or delaying the provision of important written documents like information disclosure statements (12.1%).
Franchise headquarters each have their own cooperative councils to strengthen communication and discussions between the headquarters and franchisees. However, despite these efforts, there is a growing atmosphere of distrust, and they are gradually being pushed out of potential startup locations. This raises the question of whether true cooperation has been achieved with franchisees until now. If this aspect is not improved, the growth of the franchise industry will likely remain challenging.