Many of 24-hour convenience stores in Korea may change to day-time operation only

The government enacted guidelines on after-hours operation of convenience stores and excessive cancellation fees of contracts imposed on convenience store owners by franchise headquarters starting from 14th,Feb.

The move follows a recent incident in which a convenience store owner committed suicide after a conflict with CU over cancellation of the contract. The owner wanted to close the store, but CU demanded that the owner pay for ending the contract prematurely.

CU(former,Family Mart)is the nation’s No. 1 convenience store chain with a market share of 30 percent.

The Fair Trade Commission (FTC), amended the relevant act and notice stating the details of shortening the late-hour operations of convenience stores and lowering the termination fees of contracts fueling a further outcry from parent companies.

The FTC estimates that there are 2,000 convenience stores nationwide with daily sales less than 110,000 won ($99) between midnight and 6 a.m.

Under the amendment to the Franchising Act currently pending in the National Assembly Legislation and Judiciary Committee, the corporate headquarters cannot enforce 24-hour operations when late-night sales are significantly lower than the cost of running the stores or when there are inevitable causes, such as an illness of the store owner.

24-hour convenience shops multiplying at rapid rate during last few years in Korea
Since convenience store market is already saturated, oversupply of stores made franchisees put in long hours and don’t sell enough to earn a decent living.