I, acting as an agent, had 1.4 million in debt for 8 months

Image source @ Visual China

Text | Shenrancaijing, author | Wang Min, Editor | Golden Dragon

When it comes to franchise agents, many people will think of the classic "double reed scam".

In this kind of scam, the scam company first took the initiative to call the target person, saying that one of its products was recruiting agents, and the conditions were very favorable.

When the boss hesitated, the scam company looked for someone to pretend to be a buyer to consult the product, and was very interested, saying that if there was a stock, it would buy a large number. As soon as the boss heard, "the opportunity to make money is coming", he paid for the agent to buy a large number of goods.

When the goods arrived, when the boss contacted the buyer, the other party canceled the order for various reasons. The cooked duck flew, the boss was anxious, applied for a return, and the scam company naturally obstructed it, and even directly cut off the contact. In the end, the goods smashed into his own hands, and the boss had to admit his bad luck.

In fact, joining is a mutually beneficial and win-win model, the brand side will be their own brand use rights, business models, products, etc. to the franchisee, through the franchisee to quickly expand the scale, improve the brand influence, franchisees can also use the relatively mature model to run the market. Therefore, this model has penetrated into all walks of life, from coffee milk tea, hot pot, convenience stores, to the express delivery outlets in the logistics and express delivery industry, the shared charging treasure in the field of sharing economy, the brush face payment and POS machine in the payment field...

However, this model is targeted by some unscrupulous institutions because of its huge profit margins, such as the quick recruitment company hidden in the shadows (a company that quickly attracts investment in the short term to obtain benefits such as franchise fees) to harvest franchise fees, and the "double reed scam" is also a kind of agent franchise scam. This has led to the good model being played badly, and there are even rumors of "nine cheats for ten franchises" and "one joining is as deep as the sea".

Even some agents who have evaded scam companies and joined regular brands have said that it is easy to misjudge the market and be "squeezed" in the rules formulated by the brand to make a loss-making transaction. Aunt Qian, who was reported by CCTV to open a store quickly and close a large number of stores at the same time, is an example.

A number of agents recaptured the experience of joining the failure to join the deep fire. Shared charging treasure agents to Chenjun because has not been able to receive the brand side of the commission, entrepreneurship for more than 8 months of debt of about 1.4 million, chose to start a second business; express delivery industry agent Cai Yuhang, and partners invested 13 million to take the agency rights of a district, less than two years of operation has begun to liquidate and transfer; want to join the grilled fish brand Zhang Cheng, was pit 600,000 franchise fees, the store is not open, is still fighting a lawsuit.

These agents, whether they are blindly on the ship with a rich mentality, or think that they have made enough preparations to rush up, will always find that the links are complicated, too many routines, and it is not easy to make money.

Worked as an agent for 8 months, with debts of 1.4 million

No matter which industry, as long as the franchise agency model appears, there is no shortage of cases of routines.

Before Xiang Chenjun became a shared charging treasure agent, he first worked in the direct sales team of a head shared charging treasure brand for four or five months, thinking that he had found out the doorway in early 2020, and several friends gathered 500,000 to start a business and became an agent of the brand.

When the epidemic stabilized, he began to lead the team to frantically lay out equipment and occupy merchants. The craziest was from May to July 2021, when his team size grew from more than 70 to more than 200 in just two months.

Fighting on the front line, he did not expect to be "pitted" by the brand side. In the early stage, the two sides reached an agreement to give a certain machine difference and a commission share of two points for each shared charging treasure device. However, the process of the contract has not been completed, and "the brand side refuses to advance by delaying the process", so it has not been able to get the contract with the seal. Moreover, the difference between the charging treasure machine and the commission share were delayed in arriving, and Xiang Chenjun had to borrow money to maintain the operation.

Afterwards, Xiang Chenjun learned that the shared charging treasure company also set up a team of its own, similar to its own business model. Perhaps it is for this reason that the head office has been delaying for the sake of going through the process and refusing to pay the commission previously promised.

In August of that year, his startup collapsed due to a broken capital chain, unable to pay rent and team operating expenses, and he personally suffered from a debt of about 1.4 million, "I took over the debt of my partner, which is equivalent to spending 1.4 million to buy a lesson, and I no longer believe in the franchise agent."

Xiang Chenjun's entrepreneurial failure was because he trusted the former team too much in the early stage and underestimated the legal risks. Cai Yuhang, who started a business as a courier agent in a southern provincial capital city, misjudged the industry situation and the difficulty of starting a business.

Since April 2020, after seeing that the epidemic has been initially controlled, Cai Yuhang has set his sights on the express delivery agency business. He took out 5 million yuan, and three partners jointly invested 13 million yuan, and won the agency right of 7 express delivery companies in an urban area of the provincial capital city, each in charge of one or two.

They chose to do express delivery agency entrepreneurship in this district because they are optimistic that the local area is a high-speed growth development zone, many residential real estate are newly built, "in the future, with the increase in the flow of people and the development of the community, the express delivery business will surely flourish."

Cai Yuhang and his friends are very optimistic. "In the early days, I operated first, and after about three years, I would transfer the express delivery business in my hand and then transfer it, and I would definitely be able to make a small profit."

The highlight of his agency business was that the company once contracted more than 70 outlets and managed more than 400 people. The ideal is very beautiful, the reality is very cruel, before waiting for three years of operation, due to the fierce competition in the local express delivery industry, the price war is also strict management, and he can't stick to the contractor.

By the beginning of 2022, the two express deliveries managed by one of Cai Yuhang's partners had given up operations. The two companies he was in charge of himself also began to liquidate. "The best result is to be able to sell these two companies at a price of five or six hundred thousand, but in the end I may still have to lose more than 3 million."

Unlike Xiang Chenjun and Cai Yuhang, who joined the big brand and failed, Zhangcheng in Guangdong may be destined to be harvested from the beginning.

He has been engaged in the catering industry before, originally planned to join a grilled fish brand, in the process of understanding, under the persuasion of the brand side, paid half of the franchise fee of 300,000 yuan. As soon as the money was handed over, when the direct store was really inspected, it was reacted to, "Joining this brand will not make money, and some franchisees have been forced to close their doors", and apply for withdrawal.

The brand refused to refund the 300,000 franchise fee, on the grounds that the contract was already in the process and difficult to terminate, and also promised him that after completing the remaining franchise fee, after completing the contract, the agency right could be transferred and the franchise fee refunded.

In order to return the franchise fee, Zhang Cheng had to pay the other half, and after paying 600,000 yuan, the brand side had promised to help transfer the agency right, but it has been delayed and delayed. Zhang Cheng has not asked for a franchise fee so far.

A person in the legal profession told Shen Yan that the catering industry has become a high incidence of problems with franchises, and there are not a few people who are deeply involved in franchise agency disputes and even losses and liabilities.

Or naked harvesting, or disguised pressing, join the routine ring buckle

Anecdotal rumors "ten franchise nine cheats", Zhang Cheng encountered the "franchise fee" routine, is the most typical one, that is, with a very high franchise fee, first harvest a wave of leeks.

Shen Yuan, a lawyer at Jiangsu Tianxu Law Firm, has represented more than 100 franchisee dispute cases in the past four years or so. He concluded that the routine of franchise agents is that the brand side first makes a big noise through packaging, and then promises such as "within a few months will return the cost", "after joining the brand side will invest a lot of money for brand promotion", in order to attract franchisees to take the bait and collect a batch of franchise fees.

"Even if the franchise agent is a brand with regular operation and successfully opens a store, you can't sit back and relax," Shen Yuan said. Some agents said that brands will set various "traps" in management and operation.

One of the "routines" for brands to make money is to only allow franchisees to buy equipment and raw materials from themselves, and the price is often much higher than the market price.

A tea franchisee mentioned to Shen Yan that in the second half of 2021, the tea drink business was popular on platforms such as Douyin, and he also wanted to share a piece of the pie, but he was bitter about no experience, so he found a new brand, paid a franchise fee of more than 10,000 yuan, plus miscellaneous fees, and his tea shop invested a total of more than 200,000 yuan.

At present, his franchise store has been open for about four months, and "the price of raw materials purchased from headquarters is much more expensive than the market price", so he is recently planning to create his own brand, hoping to reduce the cost of raw materials.

In the consumer electronics industry, this "power" is reflected in the channel tilt. A consumer electronics brand dealer complains about deep combustion, selling electronic products, users are most concerned about whether they can get new goods at the first time, but the new product release of the brand side will give priority to the supply of direct sales channels, and dealers cannot get the goods at the first time, which naturally directly affects business performance.

In addition to the "source of goods", in the case of fierce competition in the same industry, some brand parties are becoming more and more strict with franchisees and agents in terms of operation and management. From the perspective of the brand side, it is necessary to use the management system to strengthen the control of franchisees, but in the eyes of many franchisees, some systems have rationalized the "squeezing".

A convenience store franchisee said on the social platform that the brand side will require each store to reach a certain order volume every day, "but in actual operation, it is difficult to achieve", in order to complete the KPI, the order volume is always higher than the actual shipment.

Products that cannot be sold, backlogged in the warehouse, become the franchisee's own loss, in the long run, it is difficult not to lose.

In order to appease franchisees, some brands will give certain support in the form of goods subsidies. Some franchisees can survive with headquarters subsidies, and once the subsidies cannot be in place, it will be difficult for franchisees to maintain.

Due to the fierce competition in the industry, the express delivery industry has a strict control over agents. In the case of the industry is deeply involved in the price war, each company wants to take the price and compete for the opportunity to become the industry leader with the scale effect. As an agent, Cai Yuhang obviously feels that the price war is a dozen, and the merchants send express delivery cheaper, but their daily operations are more difficult.

"To achieve a balance of payments, each express delivery is at least about 8 cents, but the courier company from the beginning of the 1.2 yuan continuous price reduction, all the way down to about 6 mao", he said, the cost of a single express delivery is unchanged, but the dispatch fee is constantly decreasing, resulting in the company has no funds to recruit people, and even often send their own couriers.

There is no money because one side has been fined, and the other side has not yet paid the bill.

By the first half of last year, Cai Yuhang, who had been operating for less than a year, felt that the punishment imposed by the head office on user complaints and express damage was more stringent than before. The two couriers he was in charge of were fined more than 300,000 yuan in a single month.

Cai Yuhang can also receive occasional dispatch fees, and a courier brand he is responsible for by his partners has not received dispatch fees for 9 months. The head office began to give the reason that the user complained, the express mail damage needed to be fined, "the delivery fee is not enough to fine", and then directly delayed the payment of the dispatch fee.

"Rent, manpower, and material resources are all being consumed, and the head office has not paid on time, and it will soon be difficult to operate." Since April 2020, less than two years of operation, Cai Yuhang and his partners have almost been unable to persist. Of the 7 express delivery brands, 4 have given up operations and 2 are in liquidation seeking transfer.

Agent franchise routine, how to hide?

When the business chain is broken and the franchisees go to discuss the arguments, it is always a long road to safeguard their rights.

Zhang Cheng has a deep understanding of this, "The brand side either refuses to communicate, or disappears directly, and cannot be contacted if you want to." In order to get back the franchise fee, in August 2021, he sued the grilled fish brand fang in court, "just the evidence materials, more than a dozen pounds were prepared."

But before the trial began, the other party cancelled the company, forcing Zhang Cheng to terminate the lawsuit initiated against the company, wasting time and energy, not to mention, and losing a lot of litigation fees, and finally Zhang Cheng had to go to other courts to continue to defend his rights, "The brand side constantly changed the location of the court, and wanted to use it to fight lawsuits all over the country, dragging down my energy."

Cai is also looking for new buyers for regional agency rights for the two couriers. Recently, he has been reviewing, thinking that the agency model itself is feasible, and the fault is that he has wrongly judged the difficulty of the market and entrepreneurship, "When we entered, the business of express delivery was not good."

Although he had in-depth communication with many regional contractors before he was a real agent, he still lacked front-line experience, did not know enough about industry trends, and "he also had a fluke mentality, thinking of 'shooting a shot and running', and the result was harvested."

More than 3 million have been adrift, but fortunately, Cai Yuhang has not yet been in debt. He decided to stop the express delivery business, and now he plans to find a new wealth and make a comeback.

Xiang Chenjun thought about using legal channels to protect his rights as early as 2020, but due to the delay in arriving at the contract, he was told by a number of lawyers that "there is no chance of winning the lawsuit."

In order to repay the debts borne by the agent during the start-up, he found investment again and opened a second venture to share the charging treasure - self-created brand, no longer as an agent.

But the second venture was not smooth and almost failed. Due to the competition with the previously represented brands in the business, "when the business is promoted, it is often excluded."

He has decided to abandon the business of sharing charging treasures and look for new entrepreneurial opportunities. "If I give up starting a business and get a job to save money to pay off, I won't necessarily be able to pay off my debt in ten years." Only if I continue to start a business will I have the opportunity to pay off my debts. In his concept, as long as he leaves the "card table" of entrepreneurship, it means that he has really lost the opportunity to turn the tables.

But whether it is express delivery or shared charging treasure, these two businesses have passed the industry dividend period.

Cai Yuhang is also well aware that the express delivery industry has become very mature and has strict standards. Express delivery outlets make money mainly by shipping profits and the distribution fee of the head office, the former has a high profit per piece but a small amount, and the latter is more trivial and low profits. The new boss needs to have very mature experience and teamwork, and it is best to bring his own express traffic, such as local vegetable and fruit fresh e-commerce, Internet celebrities with goods and other resources, so that it is possible to achieve profitability.

The shared charging treasure industry has been fiercely competitive since 2020. Agents want to make money, they have to lay more equipment to get more commissions, but in order to seize the point, the share and incentive of merchants are rising. Agents who can't afford to fight the subsidy war have less and less living space.

As for the agents who choose to join the catering brand like Zhang Cheng, Shen Yuan's suggestion is that the preliminary investigation and inspection should be sufficient to avoid some unknown risks. Before joining, you must understand whether the brand has a direct store, which means whether the brand has a mature business model and whether it has the ability to join; secondly, examine the number, location, and operation effect of the brand's franchise stores; in addition, through the enterprise background inquiry software, understand the brand's past information and whether there are relevant disputes.

Liu Tingting, a lawyer at Henan Yinji Law Firm, also reminded that before franchisees and agents sign a contract with the brand, both parties must make a good agreement on the relevant rules, including the scope and time of brand use, how to deal with the backlog of goods, and how to exit. At least, there is an early agreement in the front, and if the two parties cannot reach it in the later stage, when they resort to the law, there are still rules to follow, so as not to become a confused account.

In fact, whether it is franchise or agency, relying on themselves is the real way to survive, in addition to avoiding the pit of brand owners as much as possible, franchisees need to examine their own capabilities and take stock of resources.

If you enter the market with the mentality of getting rich, dreaming of being an agent to join the business successfully, even if it is not harvested by the shallow scam, it is very likely to be punched in the face by reality in daily operations. You help the brand run the market, and in the end it may be abandoned by the market.

*At the request of the interviewees, Xiang Chenjun, Cai Yuhang, and Zhang Cheng are pseudonyms.