The recent exposure of the Qian's Mom incident, widely reported by multiple media outlets, has seen the scandal continue to escalate. This has cast a thick shadow of suspicion over the franchise business model. Why do some franchisees thrive and reap substantial profits, while others suffer devastating losses? Below, Aiwei Bio teaches you how to distinguish the "genuine" from the "fake" in profitable ventures!
Riding the wave of community-based business opportunities, Qian Da Ma Fresh Supermarkets—known for its "no overnight meat" policy—has exploded in popularity across China, expanding to over 3,000 stores nationwide within eight years. Previously trending for selling overnight meat as fresh, Qian Da Ma made headlines again this morning after CCTV's exposé "The Inside Story of Qian Da Ma Franchisees' Losses."
It's reported that by February 2021, Qian Mama had rapidly expanded to over 3,000 franchise stores. The "crazy" discount model of Qian Mama fresh food stores essentially means consumers are "taking advantage of franchisees," with most franchisees struggling financially yet persevering. But can such a discount model last?Qian Mama's website lists the requirements for opening a franchise store, with a minimum investment threshold of 236,800 yuan—excluding 13 mandatory service fees. Adding the 70,000 yuan franchise fee, the total initial investment starts at 306,800 yuan.(Quote)
Many franchisees told reporters that the brand promoted gross profit margins exceeding 20% and implied that initial investments could be recouped within the first year. In reality, however, once franchised, the high costs of renovation, franchise fees, operational expenses, and rent leave them barely surviving even when selling at a loss. Behind the "crazy" discounting phenomenon, the brand itself emerges as the beneficiary.
I. Franchising as Low-Cost Entrepreneurship: Many view franchising as a low-cost startup option. Several friends of mine, with modest savings but unwilling to work for others, achieved stable income through branded franchises. However, numerous brands exploit franchisees under the guise of profitable ventures. Below, we share tips to identify common franchise pitfalls.
II. Does the franchise have territorial restrictions? To protect agents' security and stable income, most franchises aren't open to just anyone. Limited territories mean franchising stops in those areas once you join. If a brand claims you can join simply by paying a fee, it might be a trap waiting for you.
III. Does the franchise provide a clear profit model? A legitimate franchise should offer a calculable profit projection for your location or product. If the profit calculation method is vague, be wary—it could be a trap.
5. Does the franchise involve multi-level tiers? Levels like Tier 1, Tier 2, Tier 3 agents are essentially traps designed to make you spend more and stock more inventory. Legitimate brands typically only have 1-2 agent tiers; anything beyond three carries high risk.
7. Franchisees are required to purchase large quantities of inventory. While purchasing goods is normal for brands, requiring massive stockpiles at home is often a trap.
8. Can franchisees return or exchange purchased goods? If a brand refuses to offer returns, exchanges, or an exit mechanism, it poses a significant risk. Being stuck with unsellable inventory is a major headache.
Through these personal insights, I hope to help aspiring entrepreneurs or those new to business gain clarity. I also share franchise case studies to illustrate how legitimate brands ensure their franchisees' viability.However, new franchise outlets cannot open in areas already covered by profitable existing franchisees.
Medium Investment: Appliance Brands Brands like Gree and Midea offer franchises for regional service centers or outlets, though the appliance sector is more complex.
Long-Term Investment: Energy Brands China National Petroleum Corporation (CNPC) and Sinopec offer regional franchises.
Low-investment adult products: Brands like Baiqiushuang offer limited-area franchises. Aiwei Bio's Baiqiushuang brand, with its long-term commitment to integrity, allows entry into adult product markets within designated regions.
However, all franchises share a common trait: franchisees must invest significantly—whether in hiring staff, technical training, or sales channel development. There's no such thing as a free lunch; no franchise yields profits without substantial investment.