Will you begin to carve out this year? Does your enterprise have its expansion plan? Franchising is becoming an important approach for individuals to carve out and for enterprises to expand due to its characteristic of "cloning successes and copying fortunes".

What kind of new changes appeared in franchising industries in 2005? And in what kind of fields business opportunities will converge in 2006? The reporter interviewed Ms. Guo Gepoing, Chairwoman of the China Chain Store & Franchise Association (CCFA) exclusively.

Guo's first impression is that "standardization and development" is the primary key in the domestic franchising market. She said that on December 30, 2004, the Ministry of Commerce promulgated the new Administrative Measures on Commercial Franchising Operations. In the Administrative Measures that was formally put into effect on February 1, 2005, specific prescriptions had been made on the qualification of the franchisors, the disclosure system of franchising information, and also the protection of investors, which is very important for the consummation of the regulation and administration over franchising industries. In the meantime, China's retailing market formally opened up to foreign funds on December 11, 2004; thus, franchising brands at home and abroad began to compete directly with one another.

"Obviously, foreign franchising enterprises quickened their steps to enter into the Chinese market last year. Burger King, one of the three global magnates in western-style snacks, opened its first regular chain in Shanghai."

"This year, they are ready to open 10 more stores. Both Super 8 Hotel, a brand of economic hotel, and Autobacs, a brand of after-market services for motor vehicles, have begun to place their chessman in the Chinese market. On last year's China Franchise Expo, overseas enterprises were rather enthusiastic in joining the delegation. As shown by statistics, over 60 out of the world's top 200 franchise chain brands have begun to exploit their market in China. It is forecast that international brands will further quicken their steps to enter into the Chinese market this year."

The introduction of internationalized enterprises has brought forth new commercial concepts. The coverage of franchising industries and types of operation has further expanded especially to commercial services, after-market services for motor vehicles, etc. Guo pointed out that a batch of Chinese franchising enterprises having their own independent intellectual property rights and specific characteristics of ethnic culture as well as fairly famous brands like Tongrentang, Tanmujiang, Daniang Dumpling, etc. would also go abroad. Guo was very confident in Chinese franchising enterprises' anabasis abroad.

Which industries develop most rapidly as the competition inside franchise industry is getting more and more intense? Guo said, "Our investigation shows that at present, franchising enterprises engaged in the after-market services for motor vehicles, domestic fit-up, housing agency and education and training are expanding comparatively fast; in the future, more and more franchising service enterprises including daily-life services and commercial services will mushroom and they have a quite large development space.

Commercial services developed very fast outside China, and shaped up a rather new field. For instance, courier service and lunch services for commercial companies, and high-end kindergartens, there are a lot of market to tap."

The reporter often meets readers consulting "I want to carve out but my capital is rather limited, what should I start with?"
"With abundant funds, one can run large businesses; however, people with less money can also carve out their undertakings. As our living modes change, business opportunities in many new industries like outdoors camp commodities, laundries, and digital rapid printing stores deserve attention. We found that there had emerged a lot of minor industries with the further classification of the market when we went to attend overseas franchise expos. Once I saw a company focusing on embroidering exquisite logos on the working costumes and caps of various enterprises, this work is especially suitable for small companies to do." Guo tended to be in spirits when talking about business opportunities.

The Olympic Games to be held in Beijing has produced many new business opportunities; for example, the tourism industry and the sports and healthcare industry develop rapidly while many business opportunities will emerge in the hotel industry and the retailing industry. After the Beijing Olympic Games franchise plan were officially launched, main participants of the Olympic franchise plan were classified into franchised producers and franchised retailers (the former are enterprises involved in the design, production and distribution of franchised commodities while the latter includes professional corporate distributors of franchised commodities). Both of the two items are good opportunities left for the development of middle and small-sized enterprises in the Olympic market development plan.

Statistics of the World Franchise Council (WFC) in 2005 show that till the end of 2004, there are more than 15,000 franchise systems and 1.2 million brand-name retailers in the 37 countries and regions under survey with the sales volume of US$1.8 trillion and a total of 15.5 million employees. In 2004, the turnover of franchised operational enterprises in some European countries was rather large as well: 94.8 billion Euro for France, 28 billion Euro for Germany, 18.8 billion Euro for Netherlands, and 16.9 billion Euro for Italy.

Results of an investigation conducted by the IFA on the franchise in the USA show that franchise has become the most important employment channel and the most important driving force for the economic growth in the USA. All economic outputs brought forth by franchising enterprises have surpassed US$1.53 trillion with nearly 10 million direct jobs created. Entrepreneur, a US magazine, declared recently that in 2005, the sales volume of the top 500 franchise enterprises in the USA had amounted to US$134.2 billion; and the conclusion is that: the franchise mode has become the most important driving force for the development of middle- and small-sized enterprises in the USA.

Guo stated that the franchise industry is an industry linking up employment and carve-out, and it is easy to cultivate many small bosses in such an industry.

Two conspicuous characteristics of the international franchise industry deserve attention. Firstly, the development of the IT technology and the Internet has made it possible for the franchise operations to develop greatly. The network has shortened the distance between the franchise headquarters and brand-name retailers and ensured the universal management. However, it has also brought forth new problems for franchising enterprises; for instance, how to allot the sales volume realized online between various brand-name stores, etc., which has become conspicuous in the franchise operations in the USA. Secondly, the mergers and acquisitions in the franchise field has become a hot topic. On one hand, quite a lot of overseas franchise brands will enter into the Chinese market and occupy the market rapidly through acquisitions and mergers; on the other hand, some potential or mature domestic franchise brands will fall into the favor of investment banks or overseas enterprises.
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