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Franchise popularity keeps rising

By Yu Lu (China Daily)
Updated: 2006-03-23 11:03
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The franchise sector in China saw rapid growth last year, according to a report released by the China Chain Store & Franchise Association (CCFA) yesterday.

By the end of 2005, the country had 2,320 chains using franchises, 10.4 per cent more than a year ago, the report shows.
There were 168,000 franchised stores, 40 per cent up compared with about 120,000 by the end of 2004.

The report was based on a survey of 300 major franchise companies, said Pei Liang, secretary-general of the CCFA.

The average number of stores for a single franchised firm increased from 57 in 2004 to 73 in 2005, Pei said.

More and more retail companies began franchising in 2005. Statistics show 49 per cent of franchises were retail businesses, 16 percentage points up on the previous year.

Twenty-six per cent of franchises were in the catering sector, with the other 25 per cent in other service sectors such as home decoration, education and training, laundry and real estate agents.

"Internationalization was one of the key features of the franchise sector in 2005," Pei said.

In the past year, many international franchise chains like Burger King fast food restaurants, Super 8 budget hotels and Uniglobal Travel began franchising in China. The country fully opened the franchise sector in December 2004 according to its World Trade Organization (WTO) commitments.

Meanwhile, more Chinese companies such as Quanjude Roast Duck, Little Sheep Hotpot and Malan Noodles have been expanding their own franchise empires overseas.