Franchise industry expects tough times

South Korea’s franchise industry is bracing for tough times in the second half of this year mainly due to a slowdown in economic growth, a corporate poll showed Sunday.

The survey conducted by the Korea Chamber of Commerce and Industry on 300 franchise organizations showed the business forecast index for the six-month period hitting just 73, which is far below the break-even 100-point mark. An index reading below 100 means pessimists outnumber optimists in terms of future outlook.

“The weak number is directly related to concerns that South Korea’s growth will fall shy of previous predictions,” said the country’s largest private economic organization.

The government recently downgraded the country’s growth forecast for this year to 3.3 percent from 3.7 percent, as persistent eurozone woes and slower-than-expected growth in the United States and China exerted a negative influence on exports, business investments and domestic consumption.

The KCCI’s latest findings showed index numbers for Internet and PC gaming franchises hitting 156 on expectations that more people will use such facilities, as on-line game firms release new programs.

This was followed by cosmetics franchises, whose numbers hit 100 on steady consumer demand for mid-to-low priced products.

The index numbers for coffee shops, convenient stores, beauty salons and bakeries, however, all fell below the 100 mark, with indexes for pizzeria and auto repair franchises posting numbers as low as 51 and 53, respectively.

The report showed 32.2 percent of franchises were worried about weak consumption, with 21.4 percent concerned about rising roduction and services costs.

Business were, in addition, worried about tougher competition that can eat into earnings. 

(Yonhap News)