Japan Franchise Market
Now may be a good time for U.S. franchises to enter Japan, one of the largest and most attractive markets for foreign franchises.
The restaurant industry in Japan suffered significant sales and job losses during the COVID-19 pandemic. As for restaurant franchises, the number of chains decreased by nine chains (-1.6 percent), the number of stores decreased by 4,210 (-7.4 percent), and sales decreased by 655.2 billion yen (-15.1 percent). However, 2022 has been a period of recovery, with consumers willing to hold social gatherings. In addition, some premium locations are now vacant and available for new businesses. If entering the market, it is important to understand current trends. For example, in 2022, new food service businesses have appeared in the Japanese market, such as virtual restaurants and Japanese BBQ for one.
Japan is one of the largest and most attractive markets for foreign franchises. It has the third largest economy in the world after the United States and China, and the market is very receptive to all kinds of franchises. 7-Eleven, the U.S. chain of retail convenience stores, for instance, entered the Japanese market and grew within Japan and other Asian markets with localized products and services. Japan now has more 7-Eleven locations than anywhere else in the world, with nearly 30 percent of global stores. Japan also had the most McDonald’s restaurants in any foreign market until China increased its number of stores during the pandemic. Although Japan has guidelines, there are no laws or regulations specific to either domestic or foreign franchise businesses.
While the market is open and relatively easy to enter for foreign players, succeeding in this mature and extremely competitive market is very difficult. Fast-food franchise giants Burger King and Wendy’s had to leave Japan several times to update their business strategies. Burger King entered in 1993, 1996 and 2007. Wendy’s opened its first store in Japan in 1980, closed all 71 stores in 2009 and re-entered the market in 2011. Although Japanese consumers are receptive to new, foreign foods and concepts, they have very high expectations in terms of food quality, taste, safety, service and experience. Tokyo has the most Michelin-star restaurants in the world, and people are particular about tastes and the overall dining experience.
For more information on the franchising sector in the Japanese market, please contact Office.Tokyo@trade.gov.