Research On The Franchising Store Mode Of Jiangsu Five Star Appliance Co.,Ltd. In Rural Area

Jiangsu Five Star Home Appliances Company(hereinafter “Five Star”) was founded on 18 th Dec. 1998, and its head office located in Nanjing, China. On 29 th May, 2006, Five Star and Best Buy, one of the home appliances company giants, announced to start a joint company; in Feb 2009, Best Buy acquired the remaining shares and became the owner of Five Star. After 5 years operation, Jiayuan group, a real estate company, became the owner of Five Star, which means Five Star is a localized company again. Five Star turnover in 2014 was about 20 billion RMB, and it is the top 3 of home appliances chain stores; it has more than 210 stores in different areas, i.e. Jiangsu, Zhejiang, Henan, Yunnan, and Sichuan; and has more than 20 thousand staff across country.However, Five Star is facing enormous challenges. From political environment perspective, with the end of energy efficiency subsidy, old products change for new ones and going to rural areas programs, home appliances industry is in a relatively weak situation; from economic environment perspective, the GDP growing is slowing down and meanwhile, real estate industry is still weak, the consuming demand is quite rational. The consuming of home appliances growth rate of is much lower than average growth rate of consuming product; from industry competition perspective, on the one hand, e-commerce is becoming mature and sales is increasing year on year, the market share is growing year by year, it has big negative impact on offline stores; on the other hand, Five Star has a big gap between Suning, which is a top 2 home appliances chain store, and Gome, which has more than 100 billion sales turnover; and from technology perspective, except 3C products, the others don’t have any revolution on technology.From all above, the only way to conquer the disadvantages of limited scope and price competition is to seek differential operation. In addition, the rural area construction is growing quickly; the consuming demand of such place is increasing as well. Based on these two points, the mode of franchising store was came up.This article has four parts. The first part is the introduction, which describes the research background, methods, content and its significance, as well as the literature review and theoretical research. The second part is the summarizing of Five Star present, problems occurred during its development way and its feasibility of going to rural market; the third part emphasizes the franchising mode, incl. where this idea comes from, its goals, conditions, process, management and resource support. The forth part is the introduction of its security measures which basically from four aspects: standardized contracts and policies constraints, organization and human resourcing ensuring, advanced system support and detailed training.