Best World

[Boon]

Distribution Channel ONE (DC ONE) under the “Franchise Model”:
Producer (BWL China) =>
=> Retailers ONE (Owners & Operators of BWL Lifestyles Centers).
=> End Consumers ONE
 
Has it got element of “distributorship”? I would say so.
Can elements of franchising be created by incorporating “franchising arrangement” between “Producer” and “Retailer One” ? I would say so. 
 
Distribution Channel TWO (DC TWO) under the “Franchise Model”:
Producer(BWL China)=>
=> Wholesalers TWO
=> Retailers TWO (Owners & Operators of “salons, spas, beauty centers”)
=> End Consumer TWO
 
Has it got element of “distributorship”? I would say so.
Can elements of franchising be created by incorporating “franchising arrangement” between “Producer” and “Wholesalers TWO” ? I don’t think so. 
 _____________________________________________________________________________________________________
 
"DC TWO" evolved from the "Export Model. "The Franchise Model is created by ADDING “DC ONE” to “DC TWO” and NOT by REPLACING it. Can the combined business model as a WHOLE then still be considered as “Franchise Model” ? I don’t think so.
 
Then, why is it still being called “Franchise Model”?
 
Well....................
 
According to the Management: 
 
“The term “Franchise Model” was adopted by the Company to refer to the Group’s distribution model for premium skincare Products in China for the purpose of reporting, and should not be interpreted narrowly. The term was used in replacement of the term “China Wholesale”6 due to its similarity to the Manufacturing/Wholesale Model used for “Aurigen” (全金) Products. 
 
The Franchise Model developed by the Group incorporates elements of authorized distributorship and franchise arrangements, where the Group sells the Products to the Franchisees, and the Franchisees on-sell these Products to consumers. The term “Franchise Model” was adopted as it describes the franchise elements of the arrangements, under which the Franchisees may only sell the Products (to the exclusion of other brands) and are permitted to use the Group’s trademarks in operating BWL Lifestyle Centers, as well as comply with the Group’s brand standards and operating manuals”.
 
It was call "CHINA WHOLESALE" before but later changed to "Franchise Model", to differentiate it from "Manufacturing/Wholesale Model" used for Aurigen Products.

WHY NOT call it “China Wholesale B” and "China Wholesale A" ?

=> B for BWL line of Product, and

=> A for Aurigen line of products

Then, why is it still being called “Franchise Model”?

 According to Management, the term "Franchise Model" was adopted for the purpose of reporting and should not be interpreted narrowly."

What do you mean by "not to be interpreted narrowly"?

Well, you have to ask the Management..................................

[Boon]

Distribution Channel ONE (DC ONE) under the “Franchise Model”:
Producer (BWL China) =>
=> Retailers ONE (Owners & Operators of BWL Lifestyles Centers).
=> End Consumers ONE
 
Has it got element of “distributorship”? I would say so.
Can elements of franchising be created by incorporating “franchising arrangement” between “Producer” and “Retailer One” ? I would say so. 
 
Distribution Channel TWO (DC TWO) under the “Franchise Model”:
Producer(BWL China)=>
=> Wholesalers TWO
=> Retailers TWO (Owners & Operators of “salons, spas, beauty centers”)
=> End Consumer TWO
 
Has it got element of “distributorship”? I would say so.
Can elements of franchising be created by incorporating “franchising arrangement” between “Producer” and “Wholesalers TWO” ? I don’t think so. 
 _____________________________________________________________________________________________________
 
"DC TWO" evolved from the "Export Model. "The Franchise Model is created by ADDING “DC ONE” to “DC TWO” and NOT by REPLACING it. Can the combined business model as a WHOLE then still be considered as “Franchise Model” ? I don’t think so.
 
Then, why is it still being called “Franchise Model”?
 
Well....................
 
According to the Management: 
 
“The term “Franchise Model” was adopted by the Company to refer to the Group’s distribution model for premium skincare Products in China for the purpose of reporting, and should not be interpreted narrowly. The term was used in replacement of the term “China Wholesale”6 due to its similarity to the Manufacturing/Wholesale Model used for “Aurigen” (全金) Products. 
 
The Franchise Model developed by the Group incorporates elements of authorized distributorship and franchise arrangements, where the Group sells the Products to the Franchisees, and the Franchisees on-sell these Products to consumers. The term “Franchise Model” was adopted as it describes the franchise elements of the arrangements, under which the Franchisees may only sell the Products (to the exclusion of other brands) and are permitted to use the Group’s trademarks in operating BWL Lifestyle Centers, as well as comply with the Group’s brand standards and operating manuals”.
 
It was call "CHINA WHOLESALE" before but later changed to "Franchise Model", to differentiate it from "Manufacturing/Wholesale Model" used for Aurigen Products.

WHY NOT call it “China Wholesale B” and "China Wholesale A" ?

=> B for BWL line of Product, and

=> A for Aurigen line of products

Then, why is it still being called “Franchise Model”?

 According to Management, the term "Franchise Model" was adopted for the purpose of reporting and should not be interpreted narrowly."

What do you mean by "not to be interpreted narrowly"?

Well, you have to ask the Management..................................

Do they mean to say for reporting purposes, it need not be called “Franchise Model” and could be called something like “China Wholesale Model or even “X model” ?
 
That's my interpretation, but you have to check and confirm with the management.
 
Then, why is it still being called “Franchise Model”?
 
“Accordingly, the Company announced its intention to transition to the Franchise Model in May 2018 (at that time referred to as the “China Wholesale segment”)2 . However, to avoid confusion with the Group’s Manufacturing/Wholesale Segment in China of the Group’s “Aurigen” Products, the term “China Wholesale segment” was later changed to “Franchise segment”, which also more accurately reflected the Group’s legal relationship with the Franchisees in China3 .”
 
The transition also gave the Group direct contractual relationships with the Franchisees, allowing the Group to work closer with them to expand in China and with greater control over the quality and consistency of services delivered to the consumers
 
Well, according to the Management, “Franchise” more accurately reflected the Group’s legal relationship with the Franchisees in China 3 .”
 
Questions remain:
1)  Is it a ” Franchise Model” or it is NOT, since Franchising agreements do actually exist ?
2) Through the franchising arrangement, can the Group, being the Franchisor, actually exert greater control over the quality and consistency of services delivered to the end consumers?
 

[Boon]

FRANCHISES AND BASIC CONCEPTS OF BUSINESS

By admin
 Posted July 4, 2017 
In blog

In order to truly understand the concept of franchising, an exploration of the basic concepts of business is required. There is no magic in that. It just makes sense in order to provide clarity about the franchising strategy.

Franchising is not a business in itself. It is a business strategy. It’s a business system. That’s a significant distinction that isn’t always clear. McDonalds is in the fast food business – although many people feel they are really in the real estate business, while others think they’re in the entertainment business. Ramada is in the business of operating properties. Snap-On Tools is in the business of selling tools.

Each company uses franchising as its strategy to penetrate and dominate the marketplace. However, their core business relates to the products and services provided to their customers, using the franchising strategy to deliver those products and services in a consistent manner.

If someone says to you that they are in the business of franchising, they don’t really get what they are doing. It’s all about the customer, and if the focus is not on the customer and their needs, then something is wrong. Customers don’t need a franchise. They need hamburgers, hotel rooms and tools. So therefore franchisors are not in the business of franchising.

It has to be about the customer doesn’t it? After all, the customer pays for everything. They pay for salaries, they pay the rent, they pay the utilities, they pay for the costs of delivering the product or service, and they pay the profit. In businesses using the franchising strategy, the customer pays the royalties, the customer pays for the development of the system, including support and operations, and they pay for everything the business does in its day-to-day activities, both franchisor and franchisee.

https://www.thefranchizery.com/franchise...-business/

[RobertTan2171]

It is encouraging to see founders and directors have bought shares. This should be good news.

https://www.businesstimes.com.sg/compani...t-buybacks

[dreamybear]

It is encouraging to see founders and directors have bought shares. This should be good news.

https://www.businesstimes.com.sg/compani...t-buybacks

For me, I wldn't consider it as good news e.g. ex-Starhub CEO bought shares but look at the price of starhub now.
(Ref : https://www.businesstimes.com.sg/compani...-month-low )

I think more imptly, is your personal valuation of BW, i.e. is it currently undervalued -  trading around P/E of 15, Price to NAV of 6.x, dividend yield of <3%. ( http://bestworld.listedcompany.com/stock...ntals.html ) , and the mgmt's track record and probability of reaching BW's China endgame. i.e. capture CNY10bn(appx SGD $2bn) in retail value in the Chinese skincare market in FY22F.

[Roberto76]

Looking at the article below, if i could comment, i think the main point here is Best World is not selling the 6 products covered under the direct selling license. The sales in China is mainly driven by Drs. Secret product. So the notice by the Chinese government should not affect BW's sales performance.

https://skyjuiceiswater.blogspot.com/201...china.html

[dreamybear]

Seems like BW thread is getting quieter, lesser and lesser valuebuddies supporters ?

Anyway, received an unexpected but important email notification from BW that it has applied for "Extension Of Time To Hold The Annual General Meeting For The Financial Year Ended 31 December 2018" in the interests of shareholders, for them to have the chance to question the mgmt on the independent review during the AGM.

More details :
1. http://bestworld.listedcompany.com/newsr...UC41.1.pdf  
2. https://nextinsight.net/story-archive-ma...rim-update

Frankly, with the scope of the review, I wouldn't expect PWC to find any notable issues. I think the main risk is whether the franchises can "conduct the bizness ethnically at all times and indefinitely", and the critical question how to ensure these "proper behaviours" are adhered to. However, it is not entirely within BW's control and as such, the journey in China will unlikely to be smooth sailing.

[chialc88]

BWL Conflicting information?

17 April valuebuddy Roberto76 links and 19 April valuebuddy dreambear on bwl annoucement has a big contention point.

17 Apr article says that Franchise is only for ChangSha, however, bwl has 33 Franchise location and most outside ChangSha
19 Apr bwl says that pwc says that it's Franchise is ok

So, the questions remained and I think that's why bwl requested for a delay of 2 month to do more checkings.

mmm...
boon?

[dreamybear]

BWL Conflicting information?

17 April valuebuddy Roberto76 links and 19 April valuebuddy dreambear on bwl annoucement has a big contention point.

17 Apr article says that Franchise is only for ChangSha, however, bwl has 33 Franchise location and most outside ChangSha
19 Apr bwl says that pwc says that it's Franchise is ok

So, the questions remained and I think that's why bwl requested for a delay of 2 month to do more checkings.

If I may just add on,

On 23 Feb 2019, BW issued a clarification doc in response to BT : " ....... The Company had obtained legal advice from its legal counsel, one of the largest law firms in China, confirming (a) that the operation of the Franchise Model is lawful, (b) that the Group has obtained all material licences for the conduct of such operations in China, and © the business of the Group under the ExportModeland Franchise Model did not and do not constitute direct selling activities in China...."

While the skyjuice blog may hv raised some doubts, I wld think both PWC and the legal counsel wld be more knowledgeable abt the chinese laws.

[Roberto76]

BWL Conflicting information?

17 April valuebuddy Roberto76 links and 19 April valuebuddy dreambear on bwl annoucement has a big contention point.

17 Apr article says that Franchise is only for ChangSha, however, bwl has 33 Franchise location and most outside ChangSha
19 Apr bwl says that pwc says that it's Franchise is ok

So, the questions remained and I think that's why bwl requested for a delay of 2 month to do more checkings.

mmm...
boon?