Interview With Zhang Rongyao, Director Of China Chain Store Association

Reporters on Franchise The ten year development history has interviewed the director of China Chain Store Association and Zhang Rongyao, executive deputy director of the China Federation of Commerce and dyeing Specialized Committee.

Reporter: what kind of development stage has China franchised experienced?

　　 Wing Yiu Cheung China's franchising can be roughly divided into three stages. In the first stage, the biggest competitiveness of franchising is "people without me". Therefore, its core content is unique formula, technology and specialized equipment, and pays attention to practicality.

In the second stage, franchising begins to form "brand competitiveness". Under the stimulation of advertising, mode updating and capital push, Franchising's brand expansion is very fast, everywhere, and is well known. At present, the franchise system in China is mostly in the second stage.

Now, many franchising systems have had different degrees of "brand crisis". This kind of crisis has promoted franchising to enter the third stage of development, which is to pay attention to the system construction of franchise system / format. Such a system involves many aspects, such as property rights, capital structure, informatization and team building.

Reporter: whether ordinary consumers or franchised investors, the most important thing is its brand appeal. Why does franchising appear? brand Crisis?

Zhang Rongyao: the crisis manifests itself in several aspects. First of all, the brand expansion of franchising is very strong. The speed of "horse race" is even faster than that of the operators. "Chain is locked" becomes the biggest confusion of brand owners. Over the years, there has been such a case: the branch of franchising has actually become an independent company, with financial opaque and poor cash flow management.

Second, the profit model of the franchise system was once exaggerated and became synonymous with money and speculation. In the field of franchising, slogans such as "eight months' recovery of investment", "no collection of gold, rights and deposits" (commonly known as "three gold") are everywhere. However, high return means high risk. There is no stable growth mode. Franchising can only be a "city changing banner". Brand owners can only engage in a franchise system in a few years. This practice can not be said to be harmful to investors and consumers.

Reporter: what kind of system construction does franchise system need?

Zhang Rongyao: I think franchising system needs property right reform first. The franchising system in the past is mostly a family workshop mode. The brand owners do not have the governance structure of the mature companies, and the couple shops occupy the majority in the shops. Now we need to carry out property rights reform, (brand owners) introduce multiple shareholders, improve governance structure, formulate long-term enterprise development strategy, and gradually promote implementation.

Next is the transformation of capital structure. Franchising system is usually maintained by thousands of shops. Then, how to carry out the financing, how to manage the cash flow, how to establish financial transparency, and whether we can form the visible and touching option system need to transform the capital structure. Through the reform of property rights and capital structure, the franchise system can be transparent and sustainable.

Also because of the basic situation of thousands of stores, the franchise system needs to be informationized. My company (Note: Rongchang Elsa washing & Dyeing Group) has developed its own information management system to promote the standardization of franchising system. For example, our network stored value consumer card, according to estimates, the implementation of more than a year, the company's average profit increased by 15%.

And team building. The franchising system has a strong personality compared with other business models, so the brand owners must make every employee and management member feel the combination of system / format development and their own interests, so it is necessary to build a team of great efforts.