How to Franchise Your Business in Japan

1. A Brief History: How Franchising Took Root in Japan

Franchising in Japan began in 1963, making it the first Asian country to embrace the model. The earliest adopters were Duskin (cleaning services) and Fujiya (confectionery)—two home-grown brands that laid the foundation for Japan’s future franchise landscape.

In 1972, the Japanese Franchise Association (JFA) was formed to nurture this fledgling sector. It established a robust code of ethics emphasizing pre-contract disclosures, franchisor experience, brand integrity, and know-how sharing. Since then, the JFA has helped stabilize and grow the system—establishing regular trade shows like FRAX Tokyo and the Japan International Franchise Exhibition.

By 2016–2017, roughly 1,335 franchise brands operated ~260,000 outlets, generating about 25 trillion JPY in revenue. Compared to a decade earlier, that represented a jump of nearly 90 brands, 30,000 outlets, and 5 trillion JPY in sales.

2. The Current Market: Size, Scale & Structure

As of 2022, the franchise economy in Japan remains vast:

• 1,282 franchise chains
• 249,316 total outlets
• Combined sales of approximately ¥26.99 trillion (around $189 billion USD)

Growth continues despite slight declines in number of chains and stores—thanks to rising same-store sales:

• Food & Beverage: +7.4%
• Retail: +4.2%
• Convenience stores: +3.7%
• Services: +1.0%

The retail chains (305 networks, ~106,000 outlets) and services (432 networks, ~92,000 outlets) together encompass a vast swath, while food and convenience stores anchor consumer-facing growth.

3. Why Franchising Works in Japan

Several factors make franchising thrive in Japan:

1. Urban density and consumer expectations: Highly urbanized regions favor convenience and consistency—ideal for franchise models.
2. Cultural emphasis on quality and service: As seen in hospitality, consumers expect excellence, and franchises can deliver with tight standards.
3. A mature regulatory framework: The JFA’s guidelines bring credibility and trust to both franchisors and franchisees.
4. Global adaptability: Japan’s openness to foreign brands, alongside strong local franchises, creates a unique hybrid market.

Yet, it’s also competitive: many U.S. brands have struggled or exited Japan—even global giants like Wendy’s or Burger King—due to high consumer standards in taste, service, and experience.

4. Top Japanese Franchise Brands: Home-Grown & Global Stars

Four Household Names

• Seven-Eleven Japan: Launched in 1974 (Toyosu, Tokyo) under license from its U.S. parent, it has since become a uniquely Japanese convenience powerhouse (konbini), offering services like bill payment, oden, and yakitori. Ito-Yokado acquired the brand in 1991, rebranding to “7 & i Holdings.”
• MOS Burger: Founded in 1972, it is Japan’s second-largest fast-casual chain after McDonald’s, with 1,700+ outlets across Japan, Asia, and Oceania.
• Doutor Coffee: Established in 1976, Doutor operates 900+ stores in Japan and has branches in South Korea, Taiwan, Malaysia, and Singapore.
• Matsuya Foods: Founded in 1966, this gyūdon (beef bowl) chain has 1,265 outlets across Japan, plus branches in China, Taiwan, and Mongolia.

Regional Powerhouses Spreading Abroad

• Yoshinoya: Established in 1899, with over 1,200 locations. FMS supports Yoshinoya in U.S. market development.
• Gindaco: Famous for takoyaki, with 700+ outlets and ~10 billion yen in annual revenue.
• CoCo Ichibanya: Japan’s leading curry rice chain with 1,300+ domestic locations and global presence.
• Menya Kokoro & Machida Shoten: Expanding mazesoba and ramen chains, with 600+ outlets internationally.
• Gyukatsu Kyoto Katsugyu & Unagi Yondaime Kikukawa: Specialty franchises in beef cutlets and eel, expanding into Taiwan and Canada.
• Yakiniku Gyushige: A BBQ chain with 100+ outlets in Japan and abroad.
• Mitsubishi: FMS works with Mitsubishi to develop a candy/food service brand in the U.S. and Canada.

A Quick Snapshot

5. Market Dynamics & Global Players

• Convenience Store Dominance: Seven-Eleven leads globally thanks to advanced logistics and localized offerings.
• Foreign Entrants vs. Japanese Brands: McDonald’s thrives with localized menus, but others like Wendy’s and Burger King faltered.
• Domino’s Pizza Challenges: Rising costs and competition led to closing 172 stores in Japan.
• Consistent Growth: Overall franchising sales remain resilient, driven by evolving consumer behavior and service diversification.

6. Franchise Culture & Looking Ahead

Cultural Traits

• Text-Based Branding: Logos reflect tradition and trust.
• Quality-Driven: Competition is fierce on service and consistency.
• Adaptive to Trends: Health-conscious options, digital ordering, and ready-to-eat formats thrive.

Future Outlook

• Niche & Health Segments: Growth in healthier franchise models for aging demographics.
• Global Expansion: Brands like CoCo Ichibanya and Menya Kokoro expanding into Canada and Southeast Asia.
• Hybrid Models & Tech: Digital engagement and konbini evolution (banking, prepared foods) drive the next wave.

Japan’s franchise market, dating back to the early 1960s, has matured into one of the world’s largest ecosystems. Rooted in quality service and consumer demand, it blends fierce domestic competition with successful global deployments. From gyūdon to coffee, convenience stores to curry houses, iconic brands define the landscape. Success depends on meeting consumer expectations, innovating services, and respecting cultural nuance.

For more information on how to franchise your business in Japan, contact FMS Franchise Asia: https://fmsfranchiseasia.com/contact/