China: Franchising Industry Access Dynamic and Emerging Markets

CHINA: Franchising Industry Commercial Service The JLJ Group US chafe Dynamic and Emerging Markets China Franchising Industry Page 1 of 23 The JLJ Group September 2007 INTRODUCTION The objective of this report is to provide an overview of the Chinese franchise market1 with focus on four fields: food & beverage, app bel, cultivation, and fitness, beyond the already established cities of Shanghai, Beijing, and Guangzhou. EXECUTIVE SUMMARY Market overview. There are an estimated 2,600 brands with some 200,000 franchised retail stores in over 80 sectors. Franchising has to a fault experienced significant growth in the last a few(prenominal) years due to rising disposable incomes and an increasing turn of Chinese entrepreneurs willing to adopt franchising models. Regulatory environment. Chinas first franchise law was enacted in 1997, but there were some(prenominal) uncertainties and grey areas, particularly for foreign franchisors. More regulations were issued in 2005 and in March 2007, which further clarified the law; for sample cross-border franchising2, which was previously in a grey area, is now permitted. This opens up opportunities for mid-sized US franchisors that do not necessarily want to or have the resources to set up a legal nominal head in China. Key sectors.

The franchising model has been used to different degrees in the four sectors analyzed in this report. The F&B sector was one of the first to use franchising in China, but majority of franchisors are domestic; many international F&B brands have few franchised stores in China. In the apparel sector, franchising is in general used to expand in Tier 2 or Tier 3 cities, while stores in Tier 1 markets are usually kept as direct-owned outlets. There is a large presence of foreign companies in both the education and fitness sectors. In education, the use of franchising is limited by regulations. In the fitness sector, franchising is still a common strategy for expansion, although several large gym chains are moving forward from it... If you want to get a full essay, order it on our website: Orderessay

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