514 ENTREPRENEURSHIP CASE
brand suppliers to commit, and the weak-
nesses of The Athlete’s Foot as a franchisor.
“If you want to continue with multi-brand,
we will do our best to help. But you proba-
bly will not get some big brands to fully
cooperate,” Wang said to them. He wel-
comed those who committed to his future
plans, and he committed himself to a parent-
ing role as they made the move with him.
Instead of royalties and operations fees—
such as those they would expect to have to
pay in a standard franchising format—Wang
promised to adopt a direct operational
model: those stores would become more like
sub-dealers, buying the latest supplies from
Wang and paying him a small commission
derived from their sales volumes. In this way,
supply chain problems could be managed,
and franchisee costs would not be fixed if
sales volumes dropped. For those who were
unwilling to follow, Wang chose to take over
their stores, paying fair compensation in each
case. Wang agreed to subsidize their depreci-
ated inventory costs and refund them some
of the money they had paid for their franchis-
es.
Wang’s openness and fairness avoided
legal disputes and, even better, won the trust
of most of his sub-franchisees. They convert-
ed themselves to Adidas retailers, demon-
strating their full confidence in Wang’s lead-ership as together they made the transition
from multi-brand to single-brand retailing.
Gradually, Wang and his company recov-
ered from hardship: sales volumes increased
continuously and he found himself setting
new sales records. Although he was no
longer operating under the franchise model,
Wang credits his experience with The
Athlete’s Foot Inc. as a core part of his cur-
rent success, saying, recently:
I still believe in the franchising model—it is a
very good growth model. When it plays out prop-
erly, you can grow your business tremendously. It
is regretful that changes in the market hurt my
operation, and these changes prevented the system
from sustaining profitability.NOTES- According to Athlete’s Foot, Inc., the FitPrint
System is a proprietary state-of-the-art com-
puterized technology that measures pressure
points at different phases of a customer’s gait. - http://www.theathletesfoot.com, accessed July,
2005. - Ye-Sho Chen, “Franchise China: She is
Ready, Are You?,” http://isds.bus.lsu.edu/
chen/Franchise.htm, accessed July 2005. - Franchise: The International and Management
of Franchise,Xinhua Press, Beijing, 2003, pp.
181. - Ibid.