K-chicken franchises fly high in U.S., while American fast-food brands struggle in Korea

K-chicken franchises fly high in U.S., while American fast-food brands struggle in Korea

최초입력 2022.09.06 08:48:49

[Photo provided by Genesis BBQ ]

South Korea’s fried chicken franchise brand bb.q is growing fast in the United States, with hundreds of new merchants wishing to join the Korean chicken franchise business to ride on the Korean style fried chicken boom in the country. As many as 500 new merchants are in discussion with bb.q to open its franchise stores, while 150 are already in preparation for store opening after completing a deal.

The Korean fried chicken franchise brand posted $73 million in sales in the U.S. last year, up 120 percent from the previous year, and ranked second in the list of the fastest-growing restaurant chains in the U.S. by unit count released by Nation’s Restaurant News in June.

The Korean franchise aims to increase the number of franchisees to 1,000 in the U.S. within the next two years. Kyochon Chicken, Goobne Chicken, Mom’s Touch, and other K-chicken franchises are also gearing up to grab the market share amid heated consumer responses in North America.

Contrary to the Korean peers, American fast-food franchises including McDonald’s, Burger King, and KFC that had commanded the Korean market for more than a generation have lost their ground in the Korean market amid intensifying competition with a broader range of rival brands, cheap or expensive.

The Korean operations of McDonald’s, Burger King and KFC are currently up for sale, looking for new ownership amid the fast change in the market structure.

The difference in business landscape between Korea and the U.S. is related to the fact that the franchise industry in Korea has been experiencing ups and downs for a long time due to conflicts between franchisor and franchisee, according to sources.

Although franchising is effective in rapidly increasing the number of stores, there is a limit to maintaining consistent service quality especially when the franchisor and franchisee cooperation does not work well, a market source said. Recently, more and more brands are increasing the proportion of direct-managed stores or running all franchised stores in a fully direct-operated manner as regulations on the franchisor-franchisee relationship become tight, the source added.

According to the revised Franchise Business Act that came into effect in July, the franchisor must obtain 70 percent consent from all franchisees for promotional events and 50 percent for advertisements. Violation of this rule may result in a fine of up to 10 million won ($7,296).

This is to prevent the franchisor from forcing unreasonable advertising/promotion and cost burden on the franchisee, but there are concerns that the franchise industry itself may be greatly contracted as it can cause restrictions on brand marketing, which is one of the core roles of the franchisor.

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K-chicken franchises fly high in U.S., while American fast-food brands struggle in Korea

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