The domestic franchise market is growing rapidly. As the number of franchisors, brands and franchise outlets all rises, the industry is expanding in scale. But relatively few brands actually survive for the long term. Industry observers say the focus should shift away from quantitative growth through store expansion and toward "sustainable growth" built on brand competitiveness and a solid operating system.
According to the "2025 Franchise Business Status" released recently by the Korea Fair Trade Commission (KFTC), there were 9,960 franchisors and 13,725 brands in South Korea as of the end of last year. The number of franchise outlets stood at 379,739. Compared with the previous year, franchisors increased 13.2 percent, brands 10.9 percent and outlets 4 percent. However, many brands remain small. Large brands with 100 or more outlets accounted for just 3.6 percent of the total. Mid-sized brands with 10 to 99 outlets made up 21.9 percent, while small brands with fewer than 10 outlets accounted for 74.4 percent. The share of small brands rose 1.7 percentage points from 72.7 percent a year earlier, while the share of large brands fell from 4.0 percent to 3.6 percent.
In the food-service franchise sector, long-term survival is also a major challenge. Related research found that the average lifespan of domestic food-service franchise companies was 6.82 years, while the average brand lifespan was 5.70 years. The study also pointed to the large number of companies entering franchising without operating company-owned stores, as well as the small scale of many franchisors, as structural weaknesses in the industry.
Yoon In-cheol, a professor in the Department of Entrepreneurship at Gwangju University, said, "If a brand pursues an expansion strategy without first assessing what kind of lifestyle and emotion it wants to offer, it may grow slowly and fail to last long."
He added, "For a franchise brand to survive over the long term, it must have three elements: a brand concept, a competitive advantage and an operating system."
A brand concept can become a source of corporate competitiveness. The key is not simply to sell "delicious food," but to define clearly what kind of lifestyle and emotional value the brand will offer consumers. Manghyang Bibim Guksu has built a distinctive taste and sense of nostalgia by placing a single lettuce leaf on top of its bibim guksu. It has also been praised for creating a uniquely Korean identity through more than 10 kinds of fresh vegetables, vegetable broth made with mineral spring water, and white kimchi.
Competitive advantage means finding strengths that set a brand apart from others based on a precise analysis of the market and consumers. Juk Story emphasizes healthy flavors through a cooking system that uses large pots, while also improving store efficiency with standardized preparation methods. It has also focused on reducing the burden on franchisees by systematizing repetitive cooking processes. That approach is seen as one reason the brand has continued since its launch in 2003. Strategies tailored to specific commercial districts can also be a competitive edge. Cafe 1847, a coffee shop chain centered on university areas, has applied bright lighting and comfortable seating to its stores, reflecting the usage patterns of students and nearby office workers. By offering more than 50 kinds of coffee and beverages at relatively low prices, it targets university-area customers who tend to stay for long periods.
An operating system is also an important factor in strengthening brand competitiveness. As a brand grows, there are limits to relying on the experience and capabilities of a particular employee or manager. That means stores and franchisee management must be standardized, with systems in place to manage operations based on data. Recently, enterprise resource planning (ERP) systems and artificial intelligence-based solutions have also emerged to support headquarters' management tasks. Lead Planet introduced an AI platform called "LEAD SVI" to help franchise headquarters with operational management. A key feature is that it can be used without building a separate system, by uploading Excel data downloaded from POS systems, delivery platforms and kiosks.
Once franchisee information and QSC checklists are registered, the AI-based operations management function can be used. Its proprietary generative AI engine, "LEADi," analyzes sales changes and cost ratios, and provides alerts when unusual signs appear. The system is designed to automate repetitive data collection and report writing, helping headquarters manage franchise outlets more efficiently.
One franchise industry official said, "Before expanding in scale, having a differentiated brand identity, competitiveness and the operating system to support them has become a condition for long-term survival in the franchise market."
Kim Se-hyeong, Sportschosun, fax123@sportschosun.com
This article has been translated by GripLabs Mingo AI.
