Is There A Future For Franchising? - Daphne Is Pushing Back To Join The Camp.

Scene 1: in February 2009, Ms. A signed a 3 year contract with Daphne and invested about about 500000 yuan.

In the first two years, Ms. A has been in the holding shop for almost no profit in order to open the market. She thought she could start to recover the cost this year. But last November 2nd, Daphne told her that the company did not join the company.

At the same time, Daphne began to exert pressure on franchisees in terms of price and goods.

Ms. A began to negotiate with Daphne.

Ms. A's experience is not unique.

According to the survey, Henan, Chongqing, Zhejiang, Shaanxi,

Hunan, Hubei and other places of Daphne franchisees have a similar situation.

Lens two: in November 2011, some Daphne franchisees in Hunan received the letter of "contract expires no longer with franchisee renewal". They could hardly hide their anger and protest in the form of negotiation and containment.

Lens three: at the end of 8 in 2012, Ms. A and many other franchisees in Hubei joined the industry and Commerce Bureau and the people's Government of Shanghai, where Daphne's headquarters were located.

Under the pressure of media exposure and public opinion, the "go to join" incident was in a great uproar. In September 7th, after consultations, most Hubei franchisees reached an agreement with Daphne, and MS. A also signed a two-year contract.

Shot four: in September 4, 2012, a red Promo Poster was posted on the outer wall glass of a Daphne store near Yuquanlu Road, Haidian District, Beijing. "The full time special price is 99 yuan."

In fact, since the seventh day of the seventh lunar year, most of Daphne's Direct stores have been carrying out a "crazy discount" of 79-99 yuan, which is far below the average price of the franchisee's purchase (120-135 yuan), and is not yet the cost of labor, pportation and rent.

It is reported that Daphne launched the "Daphne impression", "Daphne life" and other high-end fashion, this year only for direct business, the franchisee said, "if the price and goods can not be resolved, we still can not afford to lose, will continue to safeguard their rights."

Lens five: since September 12, 2012, Daphne Hubei franchisee blocked 6 outlets in 4 Daphne outlets in Xiaogan, forcing it to stop business.

One of the franchisees said: "this is just the beginning. If the problem is still not solved, the franchisee will close its respective outlets."

The Daphne incident is like a "secret war". For Daphne companies and agents, it can be described as "two losers", which directly leads to two consequences: first, the brilliant image of Daphne in the public mind is greatly reduced, and the agent feels "injured" because of her passive status. Two, the retention and abolition of the franchise mode hidden behind development for many years has become a hot topic in the industry.

Faced with the potential of the Confederation to join in the Crusade, Daphne has made a concession, but it is merely a "stalling tactic".

Daphne has introduced a series of measures, including increasing the "threshold" of commodity supply, reducing the prices of Direct stores, and expanding the outlets directly, so as to push the franchisee down.

B, a franchisee in Daphne Xiaogan, Hubei, said that Daphne has been looking for outlets in many local counties and cities. The price of the same style products is much lower than that of the franchisees, and the company has set many thresholds for the renewal of the contract. "The company asked for 500 thousand of the goods to renew the contract, but there was no specific explanation when signing the contract."

Ms. B also told reporters that two weeks ago, she had already paid the money to the company. When the payment was made, the company would deliver the goods a week. But the logistics responsible for pporting the goods said that the company had stopped her goods, while the other franchisees had already received the goods.

C, a franchisee, said Daphne's direct store in Guangshui has been open for more than 1 years. Due to the large variety of products and low price, the sales of local franchisees have a great impact.

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For Daphne's statement and various initiatives, the franchisee is not buying it. Most franchisees think: "Daphne brand in the three or four tier market opens up the situation, it depends on the franchisee. Now, we kick the boat like this. We are going to break the bridge. If we can not get a reasonable solution and compensation, we will rely on legal means to protect our interests."

Similarly, Daphne also made it clear that this is strictly in accordance with the agreement signed between the company and the franchisee, the implementation of direct store is Daphne's established policy, will not change.

In the official statement, Daphne wrote, "the future development of the enterprise will be mainly retail, which requires direct contact with the end consumers to understand the market demand and provide better products and services.

Therefore, self employment channel is the main direction of future expansion.

From 2008 to the world

Since the outbreak, the most frequent words in China's shoe industry are "pformation" and "upgrading".

As the market is stagnant and the cost of labor and operation is rising again and again, shoe enterprises must change their original operation mode, pform product research and development, terminal channel and operation system, so as to enhance the added value and competitiveness of the brand.

In this process, the brand of women's shoes is relatively active, because in the most extensive market of consumer shoes, the women's shoes market is more concentrated, and the top ten brands of women shoes have a market share of more than 65%.

As a representative of fashion woman leather shoes, Daphne has always been the top seller of single brand.

However, where there is a market, there is competition.

Not only did Wenzhou fashion women shoes shoes, korkhoff, gimme, gimme, giant days, and famous classics rise rapidly and unstoppable, but the Fujian brand Q also made great efforts in the market by relying on unique business models, and the peers did not dare to underestimate them. By the end of December 2011, BELLE group, the footwear giant, also extended its tentacles to fashionable women's leather shoes. It launched "15MINS" to closely distribute Daphne's brand and price positioning from east to central China, so as to make the competition more intense in the field.

After a period of rapid growth, Daphne has come to realize that its growth is weak.

According to Daphne semi annual report this year, its turnover in the first half of 2012 was HK $5 billion 80 million, an increase of 28.9% over the same period last year, and its operating profit increased by 11% to HK $700 million. However, the gross profit margin of the core brand "Daphne" decreased by 0.5%, while the average stock turnover days increased from 149 days to 202 days.

In order to enhance the profitability of the brand, ensure the sustainable growth of profits, and strengthen the standardized management and efficiency improvement of franchised stores, most brand enterprises first think of pforming into direct battalions, and Daphne is no exception.

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The main reason why Daphne can call China's mainland market is its initial implementation of joining mode, while increasing the number of stores in the first tier cities, and allowing the brand to penetrate into the two or three tier cities.

It is reported that before joining Daphne, there were 4958 Direct stores and 1010 franchises in China.

"This is a way to make the brand bigger."

Partner and vice president of management consulting

It is believed that the business mode of joining can enable the brand enterprises that have just entered the market and have unstable foundations to expand brand awareness and reduce competition risk while reducing sales and management costs.

Now, these franchisees who have made great contributions to Daphne have become the first victims after Daphne's initial pformation.

In the survey, most business owners and professional managers said: "very normal, to join is an inevitable trend of enterprise development and choice."

Because with the increasing number of franchisees, on the one hand, brand enterprises gradually weaken the management and market of franchisees, and constantly emerge in many aspects such as product specifications, after-sales service and so on. This will have a negative impact on the market development of franchised enterprises. On the other hand, some enterprises want to carry out unified management, unified planning and better brand building after completing market expansion and entering a stable development period.

From this perspective, in the past three years, thousands of franchisees laid the market base for the three or four tier cities for Daphne, Daphne seems to have completed its mission, and it has become the most realistic choice for them to make efforts to direct stores and abandon franchisees.

A senior executive at Daphne said, "because of the inability to contact the final customers through direct stores, the sales leadership is in the hands of agents (franchisees), which makes Daphne unable to understand the market demand, and can not timely adjust the design style and sales price, resulting in high inventory."

Another shoe business representatives showed that many franchisees began to invest in real estate and other fields after the help of brand manufacturers, which led to slow promotion of the brand in the later stage, continuous extrusion of terminal accounts receivable, and poor control of the terminal by the head office.

In fact, more than Daphne, many famous brands have abandoned their forwards, such as BELLE, Lining, Anta and so on, after using franchisees to expand the market.

This has hurt the franchisee. "It's so hard to be an agent now. No matter how much you do, it's mostly about making clothes for others, not your own business, but also being controlled by others!" and some franchisees think: "Daphne's approach to franchisees is too intense, no foreshadowing, no human touch, and a reasonable compensation plan or a way of cooperation should be established."

"The change in the direction of operation is the act of independent operation of a licensed enterprise, and laws and regulations must not interfere."

Li Jia, senior lawyer of Ying Ke law firm, said he did not think that the franchisee would be a weak party.

"Franchise contract is the most important legal basis in the franchise mode. If franchised enterprises consider their interests to be deliberately damaged, they can protect themselves according to the content of the contract through legal channels."

What needs to be reminded is that franchisees should remain sober minded when signing contracts, do not deceive their immediate interests, compromise or abandon their protection of their basic rights.

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The advantages of direct operation are obvious: highly centralized management and direct control can achieve four "unification", that is, unified operation funds, unified management strategy, unified management personnel, unified development and utilization of enterprise's overall resources, perfect embodiment and implementation of company's marketing concept, and maintenance of a unified image and brand. Because of its strong strength, direct enterprises are easy to deal with financial institutions and manufacturers, and can fully plan the development scale and speed of enterprises, and can also play an overall advantage in the development and promotion of new products and the modernization of information management.

In addition, the direct operation of the retail sector can directly generate a higher profit for the business, and it will help enterprises to get the most effective market information and understand the characteristics of consumers' needs.

From these points of view, the franchising mode does have major defects.

However, compared with franchising, direct battalion also has its own defects which are hard to overcome.

Direct battalion is radiated from a single capital to the market. Each branch is invested by the headquarters, so it is easy to be affected by capital, manpower and time. Its development scale and speed are limited.

In addition, each branch has little autonomy, and its interests are not close, and its initiative, enthusiasm and creativity are hard to play.

Therefore, at the beginning of the development of many shoe enterprises, because of the lack of resources in terms of capital, skills, talents and management, most of them will choose franchising mode and use the "penetration" of affiliation mode to raise funds quickly and expand the market expansion mode.

When the franchisee's "independence" affects the development goals and business ideas of the company, the company will buy back or terminate the contract.

Franchising and direct marketing have their advantages and disadvantages.

For the head office, the company needs more reserve funds and management input. If managed effectively, it will also help the company solve the problems of arrears, returns and profits.

As Li Chao, general manager of Jiangsu brand brand, said, "Daphne is going to join the straightened battalion. No matter whether it is for policy adjustment or because of the discrepancy between the expected and actual goals, I believe that this decision has its own difficulties.

For franchisees who are not renewed, this is just like the fact that large children are being snatched away, which is also hard to accept.

Throughout China

The market, with its affiliate mode for many years, has a large number of shoe companies with single brand annual sales exceeding 2 billion.

Therefore, in the pformation and upgrading of shoe enterprises, we should not only face the inherent defects and risks of the business models, but also think carefully about how enterprises can find a more brilliant way of cooperation in different stages of development, give full play to the advantages of the business models chosen by enterprises, reduce risks and reduce injuries.