By LU Yibei

On May 17, Henan Daily learned from the Zhengzhou market regulator that 35 MXBC bubble tea outlets had been found to have problems: chaotic management, poor storage, dirt, and out-of-date crushed peanuts. Three stores were found to have changed the expiration date of ingredients and were closed immediately. Many more told to put their house in order.

On May 15 hashtags appeared online suggesting that there were problems at MXBC, soon followed by #MXBCapologizes. An investigation quickly found problems at 11 stores.

Founded in 1997, MXBC is a low-end brand with 15,000 stores, enough to make it the top bubble tea brand in the country. It’s a low-price, low-profit business model with a unit price of less than 10 yuan (US$1.55). In 2007, MXBC began franchising and in 2014 began a national expansion, quickly doubling the number of outlets and tripling turnover.

The threshold for joining the ice cream and tea brand is not low, costing more than 300,000 yuan. MXBC requires franchisees to spend at least 90 hours in the store per month and participate in management training. The brand manages the market and the boss manages the store. A store can be opened within two weeks of a deal being reached. The single-store franchise model requires each franchise to operate alone.

MXBC makes money from franchise fees and marketing by selling materials, shop fittings and equipment, and other support. Outlet management and operation is not the overriding concern of the brand. This is a common problem for catering franchises.

In February, bubble tea brands Chabaidao, A Little Milk Tea, SWEET7 fell foul of food safety inspections.

Milk tea is easy to make and easy to standardize, highly suitable for franchising. Chinese food, on the other hand, is complex and prone to franchising problems. Chinese food chain brands such as Xijiade and Peijie Hotpot are returning to direct sales. Decisions made by the brand are difficult for franchisees to implement immediately, staffing is complex and it is difficult to manage, quality is difficult to control, and the brand takes the blame for franchisees' transgressions. These are the problems facing MXBC.