A Brief Analysis Of The "New Game" Of Most Controlling Partners And Franchisees

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.

"A lot of profitable franchisees actually do not understand what capital gains are. They simply think that their stores are making money now, and suddenly they are bought 51% stake by the allies. It seems that half of the profits they earn will be given to the owners.

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.

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.

The US $15 million this year.

Due to the entry of 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 and other well-known chain companies have invested in venture capital. After that, they have increased the strength of direct chain stores or started the acquisition of franchised stores. In a short time, the proportion of direct investment has increased substantially. For example, real estate in twenty-first Century has been increased by 150 outlets in cities such as Beijing and Shanghai on the second round of the investment of the 52 million round of the AI 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.

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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 incorporated Morgan Stanley and CDH to invest two PE strategic investors in 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.

So, for those franchised stores that were acquired before being listed, although they were held in stock, their earnings multiplier resulted in a much larger profit than those held by them.

BELLE listed its earnings per share at HK $0.1475 per share, HK $6.20 per share IPO in 2006, and its listed price earnings ratio reached 42 times.

"What's more, BELLE uses equity purchase, and uses the premium after the listing to get 51% of the franchisee's shares, thereby gaining a controlling position. It does not share dividends with the franchisee before listing. This ensures the interests of the franchisee, and at the same time, it merges the financial data of the 1500 franchisees to the BELLE account at a very low price, thus giving the capital market a beautiful result."

The man familiar with capital operation showed the story.

In fact, after the listing of BELLE, those franchisees also enjoyed huge profits from listing and created a large number of multimillionaire.

BELLE's operation mode is no longer the secret of the industry. Many chain enterprises are planning to launch a "takeover" to franchisees in accordance with this mode.

Franchised stores to acquire quality resources

Lin Shengmei joined the aesthetic degree two years ago and opened an aesthetic beauty salon in Ji'nan, Shandong. The business has been relatively stable.

Lin Shengmei, who was not familiar with the capital market, recently heard that headquarters had planned to buy a franchised store and had no idea at the moment. He was worried that he would lose control of the beauty salon after he bought the headquarters.

Through communication with headquarters, we learned about the plan to prepare for listing in the next one or two years, and found friends who are familiar with the capital market. Lin's attitude has come to a 180 degree change. He has offered the headquarters financial data for the past two years and requested headquarters purchase.

As an authorized institution in Canada, the aesthetic degree has opened 1600 franchises in China.

"In the 1600 existing franchisees, we have divided them into four levels of ABCD. The A level first considers acquisitions, B and C need to be reassessed after planting, and then consider repurchase."

Dawn said.

The alliance's acquisition of franchisees was not accomplished overnight. With the metaphor of dawn, the apple tree was picked up, carefully watered and fertilized, and then purchased for two yuan.

In this process, although the aesthetic degree has not yet fully realized the holding of the franchise, but has begun to use direct management.

"By redesigning the storefront, reconfiguring the instrument, establishing beauty training school, training beauty professionals, and gradually realizing the standardization and standardization of the whole service."

For the specific acquisition strategy, Chen Guang avoided talking about it. It was only a understatement that it could not be excluded from the way of stock purchase.

Therefore, it is very likely that BELLE will adopt a takeover strategy.

In fact, venture capital investment is not only a huge channel network, but also more importantly, the aesthetic degree has relatively strong control ability to the terminal. Once franchisees join, they must buy products from headquarters, and there is no way to replace the product in the actual business process. This provides a stable product profit for the headquarters, and the franchisee is a service profit, and it does not conflict with each other.

This is quite different from that of many chain brands, which only rely on the use of royalties or licensing fees.

"Even chain stores like small fat sheep and Dong Lai Shun can not guarantee franchisees to purchase their raw materials, so it is hard for them to make money in this sector."

Li Zhiqi said.

Therefore, it is not surprising that the chain brands like aesthetics are favored by capital. The enterprises without filing in May 1st under the regulations on chain operation management can not engage in franchise chain. Before the 5. 1 deadline this year, the first batch of aesthetic degrees was obtained from the Ministry of Commerce's chain store operation and obtained the nationwide qualification for developing chain operation.

According to Chenguang introduction, after the news that the company plans to buy a batch of high-quality franchisees, most of the franchisees are more willing to accept the acquisition, and even have aroused the interest of new investors to join in, so that investment has also been heated up.