想問吓佢地要求o既 inventory level 要幾多? 管制範疇有幾大? 係咪好唔合理?

A reader asks few questions regarding DSG's franchise practice and here are the replies.

 

> 想問吓佢地要求o既 inventory level 要幾多 ? 

 

They don't have a quantified inventory level. Just on any report of "sales not meeting target", DSG would suggest you to "fully fill up your cabinets and make deeper discount to your products" as the only method to increase sales. (For their claimed 15 years of fanchise business experience, cutting price seems to be their only tool they know to increase sales.) Their rationale is more stocks mean more choices to customers and it makes more sales. DSG ignore risk of food wastage if stocking too much; they declare that it is subject to franchisee's management practice and risk tolerance so none of their business.

 

Practically it means franchisees should experiment sales cycle and its magnitude all by themselves, and make their own business judgements. When requesting support of sales analysis & forcasting, the response is NIL.....

 

If a person has so capable to operate a business with all those skills, he or she will not need a franchise. Franchisees pay handsome franchise fee in hope to buy experience and solutions. DSG gives none of those and so DSG's franchise system sucks.

 

> 有冇 sales quota

 

Typically a franchise system does not evolve from "sales quota". It is a major difference to conventional chain store and MLM (multi-level-marketing) models.

 

> 管制範疇有幾大 ? 係咪好唔合理 ?

A good franchise system should define its scope of control clearly on contracts. DSG does it badly because their contracts gears to protect themselves rather than fairly on both parties.

For example, the contracts have stated conditions when DSG can takeover a franchisee's business and terms when DSG can legally withdraw from the agreements. But they never mention on contracts when and how a franchisee can withdraw or sell back the business to DSG.

On the other hand, DSG has a practice to charge 3-year franchise fee while in HK most shops are leased on a 2-year contract. DSG deliverably makes this one-year difference as a way to encourage franchisee to run the business well on longer term, AND get more advance cash flowing in their business. But their contracts never mention in what condition the last year fee can be refunded in case of (1) the franchisee does not want to continue, or (2) the shop fails to renew its rental to 3rd year any beyond. Practically DSG's contract and practice are creating more business risk to franchisees than necessary.

For more details you may email  directly.