Third Place Franchise Consulting, a company that specialises in establishing franchised concepts throughout Asia, has published a whitepaper that focussing on franchising in China.

According the company, China currently has the most franchises in the world. The China Chain Store and Franchise Association estimates it has around 10,000 chain store businesses and brands, including approximately 5000 franchise systems.

China’s franchising industry has grown rapidly since the late 1980s, when Yum’s KFC opened its first outlet in Beijing. Other major players in the franchising industry, including well-known restaurants like Subway and Starbucks, soon set up franchise operations.

Even though China has the largest number of franchises, it has fewer outlets than most Western countries. The franchises also make up just three per cent of total retail sales, as opposed to 40 per cent in the US. These statistics show how much potential China has in the franchising industry.

“There are several drivers that can help explain China’s increasing openness to international franchise concepts,” an article on Third Place Franchise Consulting’s website noted, adding that franchising as a business model has become more known and accepted by local entrepreneurs and investment companies, who are actively seeking new franchise opportunities.

“Especially international franchise concepts that can appeal to the increasingly sophisticated needs of China’s growing middle class, are sought after,” said the article.

GB