This business model was prevalent in China but it also reminds me of big sugary cookies…

快招 (kuài zhāo) = short for 快速招商, “fast franchise recruitment.” A Chinese industry term for companies whose actual product is selling franchise contracts, not running a business. The brand is the bait; franchisees are the customers.

The pipeline is like this:

  • First the schemers manufacture a brand — usually in a treding consumer facing category (bubble milk tea, BBQ etc), register a brand name, often a near clone of a real hit (茶颜观色 vs 茶颜悦色).
  • Then the schemers will fake a popularity proof — by opening one or two showcase stores run at a loss with paid queues and fake “already 500 stores nationwide,” bought media placements and awards etc.
  • They would also buy online ’leads’ like TikTok feeds, franchise-listing portals, trade expos.
  • Then the scheme begin — the schemers would sell ‘franchise’ opportunities to uninformed ppl. They will do FOMO marketing like “it’s the last slot in your district”, fee waived if you sign today, non-refundable deposit taken on the spot, no time to think or verify.
  • Extraction — franchise fee (¥30k–300k), deposit, plus marked-up equipment, décor, and mandatory supplies. This is the entire revenue model.
  • Abandon and reshell — no real operational support; the store dies in 3–12 months. The brand entity is dissolved and a new brand launches. One operator often cycles dozens of brands in parallel.

The key difference is, legitimate franchising earns from royalties, so the franchisor needs your store to survive. But this kind of fake franchise earns entirely up front through franchise fee and selling marked-up equipment and supplies, so the store’s later failure cose them nothing.

Legally, for now, brand entity is separated from the operating company; contracts styled as “cooperation” or “technical service” rather than more tight business relationship, hence skipping crucial legal requirements (two self-run stores for one year, MOFCOM filing, disclosure, etc). Victims usually end up in civil disputes rather than fraud prosecutions.

The landmark case:

官方重拳整治快招？诈骗超5800人约4.4亿元，快招团伙最高被判刑14.5年

Official crackdown on “quick recruitment” (fast franchising) scams: Over 5,800 people defrauded of about 440 million yuan, with fast recruitment gang members receiving maximum prison sentences of 14.5 years. 36Kr

It was triggered when two Shanghai reporters grew suspicious of a permanently-packed tea shop near People’s Square in November 2021 and went undercover among the paid queue-standers. Police traced it to 万郁集团, which operated under 24 brand names — 台铺奶茶, 茶颜光年, 茶芝兰, 炸鸡特工 among them, 17 of them in-house — and took over ¥440 million from more than 5,800 franchisees.

It’s a company founded in 2014 was split in 2018 into 29 affiliated entities under a group umbrella, cycling brands rapidly while faking market presence, operational capability, and authorizations, and hiring celebrity endorsers; franchisee support requests were stonewalled, and once civil suits appeared, funds were moved to dodge refunds. Outcome: 69 people sentenced, terms from 5 to 14.5 years plus fines.

SPP typical case, published 2023-10-23 — the first KuaiZhao operation prosecuted as contract fraud