Yonho To Shift Business Model Away From Franchising

Chinese fast food chain Yonho is now seeking to transfer its operations from a franchising to a directly-run business model.

Currently, Yonho is carrying out strategic fundraising in order to buy its franchised stores back. It plans to operate all directly-run stores in some first-tier cities such as Shanghai in the future.

Yonho has been expanding its business rapidly by franchising. 80% of its 250 stores in mainland China are franchised stores. A representative from Yongho says that the reason for the company's plan for direct operations is that it is hard to manage those franchised stores. He says that too many franchisees may easily cause trademark problems and service quality issues.

Yonho now is discussing with a strategic investment company on financing and is planning to use the funds to buy its franchises stores back. Yonho will also devote more investment to building a factory in Jilin province, to produce the soybean milk powder and canned products of Yonho brand which are going to be sold in supermarkets and restaurants.