Insight
Dazzling investment opportunities at Franchise Expo
Last Updated: 2014-06-13 13:14 | CE.cn
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By Wang Jin

The just-concluded China Franchise Expo (CFE), boasting a splendid history of 15 years and being the No. 1 event in China's franchising business and the largest franchising exhibition in Asia, provides a platform not only for the exhibitors to showcase the leading brands and concepts, and to demonstrate latest practice and trend, but also for the investors to seek the potential business opportunitis and partners. More than 400 exhibitors from over 70 industries attended this year's CFE with the investment ranging from 50,000 Yuan to 5 million Yuan.

Fast food brands favored

In the "A Bite of Franchise Expo" pavilion, the fragrance of food and the peddling attracted many investors. As the Chinese saying goes, "food is the paramount necessity of the people". Judging from the survey by the China Chain Store and Franchise Association and signals from the China Franchise Expo, fundamental demands related to people' wellbeing, such as food and beverage and children's education, have become popular choices for industrial investment.

Besides tapping first-tier cities, western fast-food giants have started to shift their focus into second- and third-tier cities. Burger King, with a history of 60 years and more than 13,000 restaurants in 86 countries, is the second largest fast-food franchise in the world and draws investors' attention. A Le, the American boy in charge of promotion, said: "To become a franchisee one needs to have a strong sense of recognition of the brand, and a highly competitive store in the region. The store needs to have an area of 250 m2, with an investment of around RMB 5 million Yuan. For the moment, we are seeking franchisees in South China and East China".

"Eat fried chicken and drink beer". The popularity of Korean TV plays like "Star Love" has made Korean snacks, as well as related industries, popular in China. Korean restaurants, fried chicken stores, cafés, and grillrooms were sought after by young people in the Expo. A person from the Korean friend chicken brand "Honeyed Chicken" said that: "Our franchising fee is merely RMB 120,000 Yuan, and we play to open 200 stores in China in the next two years".

Selling points of leisure drinks

According to the latest Franchise Investment Prosperity Report published by China Chain Store and Franchise Association, in 2014, in the vote for the most favored franchise industries, the top industrial forms most favored by investors are: coffee and drink, Chinese fast food, early education, convenient stores, and car maintenance and beautifying shops.

In this year's exhibition, there were more than 40 brands from the coffee and drink industry, including such well-known brands as Dio Coffee, Café de Paris, C. Straits Café, Happy Lemon, and Fruitime. Laoshe Teahouse started its franchise business in April this year, and this was its first time in the exhibition. With a bowl-shaped entrance, the Laoshe Teahouse booth was rather eye-catching, with multi-media LED screens playing video showing visits by a hundred high-ranking officials and company promotion video, and the shouts that were uttered by the waiters from time to time added some more Beijing flavor to it. Li Guizhong, regional manager of the Franchise Development Division of Beijing Laoshe Teahouse Company Limited, said: "Laoshe Teahouse has a history of more than 30 years. It is a restaurant that integrates Beijing Flavor Culture, tea culture, traditional Chinese opera culture, and traditional Beijing cuisine culture, offering food, tea, Chinese opera, and courtesy services and products. To become a franchisee of Laoshe Teahouse, the investment for opening a standard franchise is between RMB 3 to 3.5 million Yuan, and that for a flagship store is around RMB 10 million Yuan. By now, the first franchisee has been signed in Wuhan, Hubei province. It is the first day of the exhibition, and many people have come to make inquires and sign up, and more than 300 people have left their contact information".

Some fresh brands and innovative technology have also made investors highly interested. In front of a Vingoo orange juice vending machine, many people were scanning the QR Code that contains information of the store with their mobile phones. The head office gathers fresh oranges directly from orchards, selects and cleans the oranges and sends them to the vending terminals; each cup of orange juice is made from 5 to 6 oranges, without addition of water, sugar, or additives. Zhang Shuai, who was in charge of inquiry, said that: "We have handed out all our pamphlets. We already have franchises in more than 40 cities including Beijing. This vending terminal takes up an area of only 1.5 m2. If one has their own store, they can set up such a fully intelligent orange juice automatic making vending machine". Health and convenience are the main selling points of this project.

New business opportunities in cross-industry combinations

The combinations and crossovers of different industries have generated some new bright spots in the market.

Education and training has always been a popular field of franchising. In front of the booth of NEOBEAR, Cai Zhujun, sales manager of Youngzone (Shanghai) Corp, held a reading card with the word "volcano" on it and scanned it on the NEOBEAR machine. Right away the screen showed an erupting volcano, which rotated on his hand when he rotated the card. He said: "This is a high-tech intelligence-developing toy, able to help children achieve interactive learning by such means as 3D cards, scientific video, and Chinese and English Q&A, helping children to explore nature's mysteries".

On site, the reporter saw that O2O online offline intelligent furniture and electric appliances and financial investment, among others, had become the new highlights of this year. The number of visitors who made reservation online this year increases by nearly 30 percent over previous years. Pei Liang, secretary general of China Chain Store and Franchise Association, reasoned that currently the government is encouraging creating jobs through entrepreneurship; franchising is sought after by investors because of its stable yields, comparatively low risk, and easiness of operation. "I took a tour in the exhibition, and found many people of the post-80s, or even post-90s, generation looking for business projects. With the progress of China's urbanization and consumption upgrading, the level of enthusiasm would continue to go up". He also warned investors that: "After finding a project they are interested in, investors have better visit and investigate the entity store. The Administration of Commercial Franchise Procedures stipulates that investors have a week of calming-down period. Besides, well-known brands have very high requirements for investors. It is very important to be prepared to engage in an undertaking and not to seek rapid profit irrationally".

 

 

 

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