C-Store Begins Franchising After 4 Years' Hesitation

By Anita Shen,
FranChina

C-store, a Taiwanese sponsored convenience store, firstly begins to recruit its franchisee kiosk this year after 4-year existence in Shanghai. It is analyzed that as the profit rebounds in convenience sector in Shanghai, there is consequently to be a boom period for franchising development.

C-store recently presented a booth at Shanghai 9th franchising expo. According to workers there, it is the first time C-store embarked on franchising after his appearance in Shanghai 4 years ago. Early this year, C-store has already experimented a test-store (outlet and techniques provided by C-store) in form of deputy franchise.

As a latecomer in franchise market, the prerequisites for franchise to C-store are quite profitable: 60, 000 RMB franchise fee, 200, 000 RMB royalty fee, what's more, a minimum 270,000 RMB net profits guarantee, which is explained that C-store ventures to develop franchise at great loss. Till now, the head quarter enjoys a stable development and hopes to expand the scale by means of setting up franchise system in order to generate profits as soon as possible.

It is recorded that C-store was established in Apr 2001, Shanghai, with his twin brother RT-Mart, affiliated to the first shareholder Taiwan Peng Run Group who used to be a textile dealer. For the past 4 years, C-store is centered in Shanghai and expanded to northern and southern China with the overall number of outlet 150, only 80 of which are located in Shanghai.　

There are 4,000 convenience stores in Shanghai now, struggling fiercely to survive the intensified competition, but there is still spacious room for them to franchise in Shanghai. According to Gu Jianguo, from Shanghai Franchise Study Center, only if the franchise was put in a leading way in operation can convenience stores find their way out. The ratio of company-owned convenience stores to franchised ones is 1:9 abroad, while at home, franchised stores cover only a small amount of 35%, and in other words, it is an opportunity for franchise development. As the business of convenience retailing in Shanghai turns up to rejuvenate, people involved thinks that a good time for franchise boom is coming. The reporter noticed at the expo that 'Guang Ming' convenience store, which is used to be 'Maling Zhen Guanghe', trials to carry out his franchise plan.

However, authorities keep an objective attitude toward it that running franchisee kiosk has to undertake some risks, for it is known that if there were less than 300 convenience outlets in Shanghai, it could not guarantee a profit surplus. Nowadays, with only 80 C-stores in Shanghai, the head quarter has not realized to generate profits yet. Though C-store desperately develops his franchising program even neglecting great loss, there is still wonder that if the franchisor is experiencing a deficit, how can franchisee hook on?