Gyeonggi Franchisees Indifferent to “Difference in Franchise Fees”… Unaware of Specific Amounts

A recent survey found that a significant number of franchisees in the Gyeonggi region remain indifferent to the growing “difference in franchise fees”-the distribution margin paid to franchise headquarters-even though this amount has been increasing each year.

Gyeonggi Province announced the results of its “2025 Status Survey on Franchise Business Transactions in the Province” on January 14.

The survey was conducted from July to December of last year to analyze trends in the franchise business, understand the transaction structure between headquarters and franchisees, and comprehensively examine unfair trade practices.

The difference in franchise fees refers to the distribution margin earned by franchise headquarters when supplying goods or raw materials to franchisees at a price higher than the wholesale (purchase) price. For example, if the headquarters purchases food ingredients for 5 million won and supplies them to franchisees for 7 million won, the difference of 2 million won constitutes the difference in franchise fees.

Status Table of Whether Franchisees Recognize the Difference in Franchise Fees

According to the survey, 53% of franchise headquarters responded that a difference in franchise fees exists, with the average annual amount reported at 2.24 million won. Among franchisees surveyed, only 45.2% were aware of the scale of the difference in franchise fees. The most common reason for not knowing the exact amount was indifference, cited by 72.1% of respondents.

Additionally, 73.8% of franchise headquarters reported the existence of mandatory purchase items that franchisees are required to buy. Among these mandatory items, raw materials and food ingredients accounted for the largest share at 64.8%, followed by packaging materials and consumables (38.5%), and interior, facilities, and equipment (27.9%). Regarding the scope of mandatory purchase items, the majority of both headquarters (41%) and franchisees (58.7%) responded that these should be determined through consultation with franchisee associations.

Meanwhile, only 22.5% of franchisees voluntarily checked the disclosure statement before starting their business. However, among those who did review it, 73.7% said the disclosure statement was helpful in starting their franchise.

Seo Bongja, Director of Fair Economy at Gyeonggi Province, stated, “The survey results show that awareness of the use of disclosure statements and statutory obligations remains low. We will continue policy efforts to establish a fair trading order, including providing guidance on relevant systems and education to help franchisees make rational business decisions and encourage legal compliance by headquarters.”