Analysis Of The Game Between Most Controlling Partners And Franchisees (1)

The relationship between alliance owners and franchisees is very simple. Franchisees are authorized to obtain the brand, management mode and products of the franchisee through payment, and then operate independently. The risk is independent, and basically has little to do with the returns of the capital market. However, the recent game rules mutation in the market of joining merchants, more and more franchisees find that if they are right with the "host" (VC's investment partner), they may get several times the capital gains of operating income (after market earnings) in the future.

"Many profitable franchisees simply don't know what to call. Capital gains I simply think that my shop is making money now. Suddenly, 51% of the shares have been bought by the allies. It seems that half of the profits will be allocated to the allies. In fact, the purpose of acquiring the franchisee is not to share the profits with franchisees, but to obtain financial statements to achieve the final listing. Once listed, allies and franchisees can get high capital market returns. Chenguang, chairman of the group, said that her business has just won a first round of $15 million investment from a British venture capital agency and will be available in the future.

Why are franchisees competing to be held?

Recently, the beauty chain brand, the headquarters of aesthetic, received many telephone calls from investors. They hoped to join the aesthetic degree. According to Mr. Karl, manager of the marketing department of aesthetic degree and Taiwan native, only about 1000 such phones in March were received. Only through investigation can we know that these investors have heard that they are going to buy franchisees, and that they are bought at a price earnings ratio of several times.

After spending $15 million this year, the company began to build five major offices in Shenyang, Guangzhou, Shanghai, Chengdu and Beijing, and increased support for franchisees. According to sunrise, President of aesthetic degree, we are really considering the acquisition plan. After a period of time, we begin to buy those franchises with good performance. "In the beauty industry, large-scale acquisition of franchisees has just begun." Dawn said.

Because capital Many franchised chain brands have launched large-scale takeover operations. BELLE, twenty-first Century real estate, small fat sheep, Yonghe soybean milk and game academy have been investing in venture capital funds. After that, they increased the strength of direct chain stores or started the acquisition of franchised stores. In a short time, the proportion of direct investment increased substantially. For example, in twenty-first Century, real estate was added to 150 investment outlets in cities such as Beijing and Shanghai after the second round of investment in the 52 million round of Iwai fund.

In the eyes of venture capital, direct chain stores are more popular. After all, direct chain stores are easier to implement the headquarters management system. "Too many franchisees can lead to confusion in management, and the joining system is very unstable." Zhou Wei, vice president of Kai Peng Hua Ying investment company, said. More importantly, from a financial point of view, even if the franchise system of a larger size, the franchisee's sales revenue and profits can not be reflected in the financial aspects of the allies, therefore, under the promotion of capital, under the temptation of listing, franchised chain brands start to buy franchised stores or open outlets.

"Some of the members who have a keen sense of smell are informed that the headquarters or allies have plans to go public, and they will take the initiative to move closer to the headquarters, hoping that the allies will buy their shares prior to listing, so as to enjoy the profits from the capital market." Senior marketing expert Li Zhiqi analysis. But in different industries, because of the great difference in the price earnings ratio after the listing, the franchisees are not willing to be bought. For example, the education and training industry is generally relatively low due to the low price earnings ratio of the listed companies.

　　 BELLE mode Industry temptation

In May 23, 2007, BELLE International Holdings, a leading female footwear enterprise in the mainland, was officially listed in Hongkong and raised HK $8 billion 660 million. On the day of the listing, the myth of HK $78 billion 900 million was created, which exceeded the market value of Gome on the day of HK $36 billion, and became the largest mainland retail listed company in the market capitalization of the Hongkong stock exchange. So why is a domestic shoe brand so popular in the capital market?

Looking at the financial data in the first three years of BELLE's listing, we can see some clues: in 2004, BELLE's sales revenue and profits were 870 million yuan and 75 million yuan respectively, while in 2006, the two figures jumped to 6 billion 200 million yuan and 970 million yuan, and profits increased 13 times. "This growth rate will certainly be favored by the capital market, but this growth rate is more often achieved through capital means. In the past two years, especially in 2005, BELLE has acquired 1500 quality franchised stores through capital operation, and the number of direct outlets has greatly increased, so that through consolidated financial statements, BELLE's financial turnover and profits are red." An insider familiar with BELLE's capital operation said.

In 2005, BELLE introduced Morgan Stanley and CDH to invest in two PE strategic investors, financing HK $23 million 660 thousand, accounting for about 4% of BELLE's shares. "From these data, we can infer that the valuation of the venture capital company at that time was about HK $600 million, and the market value after the listing reached HK $78 billion 900 million, and the return on investment of Morgan Stanley and CDH reached 130 times.