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Franchise Turnover Up, Outlet Growth Down

The China Chain Stores and Franchise Association (CCSFA) told the Economic Daily on Tuesday that the aggregate turnover of franchises grew by 41.5 percent last year while the growth rate in numbers of outlets slowed by 38 percent.

"This means having as many outlets as possible is not as paramount as it used to be. Most franchise store owners have turned to more solid and sustained development, such as defending the value of brand names, optimizing internal management and improving efficiency in distribution," Guo Geping, chairman of the CCSFA, said.

With more than 2,000 franchise stores and over 120,000 outlets, China has seen its franchise sector grow into the world's largest within the past decade.
The business model is prospering in nearly 50 sectors including convenience stores, automobile maintenance, home decoration, education and training, laundry, attire, books and audio-visual products and catering.
Approximately 1.8 million people are working in franchises now. Last year alone, more than 600,000 job opportunities were created.
"Although China has made phenomenal achievements in developing franchise businesses since the late 1990s, there are still some problems to be tackled, especially in the rectification of market order," said Guo.
Since all previous restrictions on franchise businesses were eliminated in 2004 as required by the WTO, industrial analysts held that the industry has entered its best ever period in history.
In mid-May, the Seventh China Franchise Expo, sponsored by the CCSFA, will be held in Beijing. Over 30 well-known brands such as KFC and McDonalds will seek new opportunities, along with delegations from Germany, Italy, France and South Korea.
(Xinhua News Agency April 15, 2005)

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