The year 2006 witnessed huge venture capitals in China franchise industry. In July of 2006, the typical catering franchise enterprise Inner Mongolia Little Sheep Catering Chain Co., Ltd attracted tens of millions US dollars, which gained widespread attention then. In addition, dianping.com and fg114.com also obtained a great amount of venture capitals. The investments into franchise industry have been increasing rapidly in recent years. On Nov 11th, 2006, texuonlin.com together with Center Plaza launched China franchise city to the world. The widely focused Regulations on the Management of Commercial Franchise were officially issued in February, 2007 and will take effect on May 1 2007. Gradually, China franchise market will go to right track as it accelerates its step moving forward.
According to the statistics of ResearchInChina, there had been about 16,000 franchise systems in operation around the world as of 2006, and the number of franchisees exceeded 1.6 million. As is shown from the report of WFC (the World Franchise Council), there are at least 100 well-known franchise enterprises in 29 countries and regions all over the world. As is estimated by WFC, the annual sales of the global franchise industry has been over USD 1 trillion, and created more than 20 million job opportunities. Chinese market has been increasingly attractive to international franchise business, and more and more Chinese enterprises are seeking opportunities to invest into franchise projects that can bring handsome economic returns. At present, China's franchise has covered the most of sectors of the global franchise system except for human resource services, taxation, insurance, accounting, and advertising, etc. The number of Unit franchisees will keeps growing up to 12%-14%. After about two decades' development, China franchise has been involved with over 60 industries, 2,600 franchisees and 168,000 franchise chains. On average, single franchise system has 73 franchise chains. The whole market is growing amazingly at a year-on-year rate of 40-50%.
The Number of China Franchise Systems, 2001-2006
Despite the rapid development of franchise in China, there are still some problems to be solved. The five major problems faced by franchise headquarters (by concern rate) at present include strategic development orientation, the standardization of administrative system, the regulations for franchisees, the unified standards for product services and, political and legal environments. China's domestic consumption in the future will be more quality-oriented, diversified and individualized. Hotspot is turning to such emerging consumption fields as education, healthcare & hairdressing, automobile and household services, which, together with changing consumption structure, brings huge development potential for franchise.
Moreover, the 2008 Olympic Games can also create huge opportunities for franchise industry. It is estimated the market scale of franchised Olympic Games products will reach about RMB 25-28 billion.
The report data is sourced from the National Bureau of Statistics, the Ministry of Commerce, China Chain Store & Franchise Association and the Development Research Center of State Council, etc. The report not only analyzes the status quo, development trend and investment prospect of China franchise industry, but also gives an in-depth study on the predominant enterprises in franchise industry. Therefore, it is of valuable reference for franchise enterprises as well as the investors.