Digitization plays key role in development of franchised enterprises

Digitization, penetration to county-level markets and overseas expansion have played a key role in driving the development of top franchised enterprises in the country, according to an industry survey.

The China Chain Store & Franchise Association released the Top 300 list of franchise industries for the first time, covering top franchising enterprises in the catering, retail and service sectors. The total number of stores of the Top 300 franchise brands involved in the survey reaches 570,000. Of them, seven main franchise brands each operate more than 10,000 stores.

The report has found that digital tools help brands grow rapidly. Digitization has profoundly changed the underlying logic of traditional franchising, said the report.

Internet platforms and digital tools have contributed to brand marketing, directing volumes to the stores and direct operations, significantly improving the operational quality of the franchise system and the investment returns of franchisees, laying solid foundation for the store expansions.

Penetrations in county-levels have deepened and intensified among the franchising sector. In the report, tea drinks, fast food, snacks and convenience stores have significantly increased their expansion speed and intensified the density in the county level market.

Investors in third and fourth tier markets have a stronger will to partake in franchising compared to first and second tier cities, according to the report.

A rising number of Chinese brands such as Mixue Ice Cream & Tea and Miniso have accelerated their expansion pace at countries and regions involved in the Belt and Road Initiative through franchising models, said the report.

Wangzhuoqiong@chinadaily.com.cn