Seoul: Four out of 10 franchise owners have considered ending their contracts early but most abandoned the idea because of penalties, a government survey showed Tuesday, highlighting the sector's challenging business structure.

According to Yonhap News Agency, the survey by the Fair Trade Commission (FTC) found that 42.5 percent of franchisees said they had contemplated terminating their contracts before the scheduled expiration date. Among those who considered early termination, 60.6 percent cited the burden of penalties as a deterrent, while 46.9 percent expressed hope for a recovery in sales, the FTC reported.

The primary reason for considering early termination was weak sales, cited by 74.5 percent of respondents. Additionally, unfair trading practices by franchise headquarters were also highlighted as a significant concern.

The survey revealed industry-specific insights, with the highest share of franchisees contemplating early termination found in the fast-food sector at 53 percent, followed closely by convenience stores at 51.2 percent, and other dining establishments at 49.4 percent.

In terms of franchise size, owners of franchises with fewer than 100 locations were more likely to consider early termination, at 41.4 percent, compared to those with 300 to 999 locations, where the figure was 38.4 percent.