What Is The Mystery Of Clothing And Footwear Franchising Fees?

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What is "shearing wool"?

A simple explanation is that some franchisees have entered the brand marketing system in the period of brand growth. But once the brand is mature, unilaterally increasing the franchise fee, the business risk will be pferred to the franchisee, resulting in a smaller profit margin for franchisees.

Puzzled agents rush to raise threshold

One weekend morning, the South Tower shoe city was as busy as ever.

Du Ling was nervously managing his business.

She is a shoe brand agent, recently encountered a problem, that is, her acting brand affiliate fees increased.

She is discussing with some overseas agents how to deal with the manufacturers.

"To tell you the truth, when we first represented the brand, the threshold was very low. But our agents are also risky. The popularity is not so high. Is it not our agents who have made the brand for them?

Now raise the threshold, what is this called?

Du Ling said indignantly.

When asked whether she would give up the brand, she said she was very conflicted and had to consult with her counterparts in the field to put pressure on brands so that they could not easily increase their affiliate fees.

What kind of mystery is involved in the survey?

According to Qian you, director of the office of Shenyang Footwear Association, many small and medium sized brands have attracted the attention of investors because of their low franchise fees and even "zero franchise fees" in order to quickly realize the establishment and market coverage of their franchise system.

In this regard, he expressed some concerns: it is understandable for licensed brands to occupy the market. However, lowering the threshold and starting point of market access unilaterally will only destroy the cause.

As we all know, Europe and the United States and other foreign franchise brands have been able to survive through the past hundred years of survival challenges and sustainable development, a very important factor is to maintain the market entry system and market competition barriers firm position and accurate sense of direction.

He said that in the shoe industry, there are also some brands that mature, unilaterally increase the membership fee.

It also needs to be analyzed from the composition of the brand's profit. The profits of the brand include two parts: tangible product income and intangible product income, that is, product price difference income and franchise fee income.

In foreign countries, the royalties from franchised brands account for more than 50% of the total revenue structure.

We can imagine that if the franchisee does not have the benefits of intangible products, it will inevitably lose this part of the loss to tangible products (reduce the cost of products or raise the market price of products). In this way, after the maturity of the brand, it is also a normal business behavior for the brand to increase the affiliation fee. However, this kind of backsliding does indeed damage the interests of the franchisees, which is a typical "shearing wool".

In this regard, producers also have the saying that Mr. Kim, director of a garment enterprise in Wenzhou, said: "some of our enterprises even sell fixed assets such as factories to invest a large number of advertising fees to fry a brand, and franchisees are undoubtedly the biggest winners of this kind of speculation. In the terminal market, the greater the brand awareness, the larger their profit margins.

And we used to give them water, that is to say, almost no affiliate fees or low franchise fees.

How can we recover these early investments?

Is this always the way to bring up franchisees?

This is obviously not in line with business rules.

So, this is not sheared wool, just normal harvest.

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Dealing with shares to counteract water risk

On the issue of franchise fee, Qian you, director of the office of Shenyang Footwear Association, believes that there are still many good ways to resolve disputes.

He cited an example of a famous bird leisure clothing company. They used a clever way to solve the problem of franchisees. That is to let franchisees from all over the world hold certain shares.

In this way, the franchisee has also become the owner of the business. There is no such controversy over the franchise fee.

At the very beginning, the "noble bird" is also an enterprise that does OEM for foreign countries. When establishing its own brand, it needs a lot of capital. At this time, some agents willing to join the company take some capital as shares.

After the development of the brand, there is no such thing as collectives, or manufacturers unilaterally increase the membership fees.

However, this approach may not be suitable for all brands, and most brands are faced with business confusion after growth and maturity.

Direct shop is a historical trend.

Lou Jinghong, executive vice president of the Shenyang textile and Garment Chamber of Commerce, believes that the direct store is a big historical trend.

Chain affiliate has indeed raised many brands, but the profit of this mode is more and more pparent and thinner.

With the maturity of some brands, the franchise threshold is higher, the affiliate fees are often hundreds of thousands of yuan, the rate of deduction is higher, the profit margins of single commodities are smaller, and the local strong brands focus more on brand maintenance, and have no time to take care of franchisee management, so that the terminal franchisees often complain that good sellers can not get goods in season, and those that are not sold well become inventory. Finally, they do not even go through the headquarters to agree to discounts and promotions.

So, in this game of shearing, management and interests are always a problem, and no one is the real winner.

The bar should not be played unilaterally on the butt of the brand or franchisee. This is a common problem faced by many growing brands. At present, it is still a good way to eliminate the risk of water damage by using shares. The second is to vigorously develop the direct operation mode. For example, the Wenzhou news bird brand is building the national direct business system and gradually reducing the proportion of franchisees.