Summary of Key Issues
Fan Wenhua has rapidly expanded her business to 7,000 stores using a franchise model, just over a year away from her goal of reaching 10,000 stores. However, behind this growth lies several hidden challenges: the brand has been listed on the National Medical Products Administration's blacklist four times (for illegal addition of hormones), there are price discrepancies between online and offline sales, franchisees face significant profitability pressures, and consumers have complained about issues such as difficult refunds and aggressive marketing practices. These problems present both competitive opportunities and management challenges. To achieve long-term success, the brand must shift its focus from simply pursuing scale to building trust with customers.
1. Franchise Expansion: The Double-Edged Sword of Rapid Growth
Fan Wenhua's franchise model— featuring small stores (up to 15 square meters), low investment requirements (starting at 60,000 yuan), and a large chain network—has helped her grow from 2,000 to 7,000 stores in just a few years. While this approach is attractive due to its low entry barrier and appeal to women looking to start businesses, it also has significant drawbacks, such as weakened control over individual stores. Franchisees may engage in aggressive marketing or provide inconsistent service quality. Moreover, the rate of new store openings has slowed (from a 50% annual increase to 14%), indicating that the initial benefits of franchise expansion are diminishing, and relying solely on quantity is no longer sufficient for sustained growth.
2. Quality Control: A Time-Bomb Looming Large
Over the past decade, Fan Wenhua has been cited by the Medical Products Administration four times for product quality issues:
- In 2016, two products were found to contain unregistered sunscreens and one facial mask contained the hormone clobetasol propionate, which can cause skin thinning and redness if used long-term.
- In 2021, the sunscreen labels lacked essential ingredient information.
- In 2025, the essence produced by the brand's own factory did not match the listed ingredients; a whitening agent was added without being disclosed.
Ironically, Fan Wenhua established her own research institute and factory in 2017, claiming to achieve 100% independent research and development. Yet, quality issues persisted, indicating that the problem lies with the brand's internal quality control system—weaknesses ranging from formula development to production and labeling. These issues may not be immediately apparent, but over time, they can lead to a complete loss of consumer trust.
3. Price Disparities: Hurting Consumers Through Confusion
Fan Wenhua combines online marketing with in-store experiences. However, the prices on platforms like Douyin and Meituan (around 100 yuan for group purchases) differ significantly from the regular prices at stores (500–800 yuan for 10 treatments for new customers, or 2,000 yuan for advanced treatments). Consumers complain that they are misled into making purchases at stores only to find cheaper options elsewhere. Such price discrepancies not only drive away potential customers but also damage the brand's reputation.
4. Trust Crisis: A Chain Reaction Starting with Products and Service
Common consumer complaints include:
- Difficulties obtaining refunds for prepaid purchases when stores close.
- Aggressive marketing, with staff constantly recommending additional treatments.
- Produkts failing to deliver the promised benefits (for example, customers spending 16,000 yuan with no visible improvement).
- Poor service, with employees being dismissive or even removing customers from communication groups.
These issues may seem minor when there are only a few stores, but with 7,000 stores, they can become major crises. For instance, a single negative review can affect many customers, and a refund dispute at one store can cast doubt on the entire brand's reliability.
5. The Key to Breaking the Cycle: Moving from Scale to Trust
To reach 10,000 stores, Fan Wenhua needs to address these issues:
- Franchise System: Shift from focusing on quantity to quality, ensuring that each store is profitable. This can be achieved by optimizing store operations (customer flow, repeat purchases, service efficiency), and helping franchisees compete against emerging brands like "Facial Cat."
- Quality Control: Fix the flaws in her own factory by strictly controlling every aspect of production, from formula development to labeling.
- Price Consistency: Standardize prices both online and offline. Core services (such as basic cleansing and hydration) should have the same price across all channels to reduce customer confusion and create a unified brand experience.
- Marketing: Move away from relying on short-term trends (e.g., associating products with celebrities for publicity). Instead, highlight the product's real benefits, such as using AI data for personalized skin analysis, and build trust through scientific evidence rather than mere marketing gimmicks.
In summary, while having 7,000 stores is a significant advantage, whether Fan Wenhua can achieve her goal of 10,000 stores depends on the trust of consumers and franchisees. Trust is not built by sheer numbers but through the quality of products and the consistency of service provided.
Final Conclusion: Fan Wenhua's business relies on more than just the number of stores; it ultimately needs to win customer trust through the quality of its products and the integrity of its services.