Franchise headquarters post revenue gains as individual outlets stagnate

Franchise outlet counts and individual store sales have stagnated across South Korea's franchise industry, even as headquarters revenues have grown at a comparatively faster pace, a new analysis shows.

Leaders Index, a corporate research firm, released findings Tuesday analyzing 258 brands across eight major franchise sectors — cosmetics, fast food, chicken, dining, convenience stores, bakeries, coffee and beverages, and pizza — for the period from 2023 to 2025. The total number of franchise outlets last year stood at 116,302, down 0.6 percent from 117,058 in 2023.

Average outlet sales grew just 0.6 percent over the two years, rising from 323.32 million won ($238,000) to 325.38 million won. By contrast, combined headquarters revenue across the eight sectors climbed 2.9 percent, from 59.03 trillion won to 60.76 trillion won — a rate roughly 4.8 times faster than the growth in average outlet sales.

The dining sector showed the widest gap between headquarters and outlet performance. Dining franchise headquarters posted a 4.6 percent revenue increase over the two years, while average outlet sales fell 2.6 percent — a gap of 7.2 percentage points.

Convenience store headquarters revenue rose 2.8 percent, while average outlet sales dropped 3.9 percent. Bakery and coffee and beverage headquarters each posted modest gains of 0.7 percent and 0.4 percent, respectively, but average outlet sales in those sectors declined 1.9 percent and 0.5 percent.

Among individual brands, the divergence was most pronounced at Myeongnyundang, which recently drew sanctions from the Fair Trade Commission over a "loan-sharking" controversy. The company's headquarters revenue surged 79.2 percent, from 250.8 billion won to 449.3 billion won, while average outlet sales at its flagship brand Myeongnyun Jinsa Galbi fell 22.4 percent, from 942.35 million won to 730.8 million won.

At Sulbing, average outlet sales slipped 3.1 percent from 451.16 million won to 437.33 million won, while headquarters revenue jumped 219.3 percent, from 26.1 billion won to 83.4 billion won.

Cosmetics posted the highest headquarters revenue growth among all sectors surveyed, with combined sales across four brands rising 28.4 percent from 292.5 billion won to 375.5 billion won. Outlet counts, however, broadly declined. Tonymoly shed 29 locations, falling from 111 outlets to 82; Cerenicque dropped from 17 to 15; and Skin Food shrank from 19 to just 7. Selvio held steady at 13 outlets.