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Beijing franchisee wants refund from Mr Bean

She claims it has become impossible to operate her franchise business because of the stove malfunctions and pricey pancake mix. -ST
Joyce Lim

Mon, Apr 15, 2013
The Straits Times

A Beijing entrepreneur who bought a franchise in a Singaporean soya milk chain is seeking a refund after it allegedly supplied her with faulty pancake stoves and overpriced ingredients.

Ms Mia Lei wants her money back after paying to run two branches of Mr Bean in China.

She claims it has become impossible to operate her franchise business because of the stove malfunctions and pricey pancake mix - some of which was said to be close to the expiry date.

The businesswoman filed a complaint last month with China's Ministry of Commerce.

And she has now sent a letter through Singapore law firm Chia Wong LLP demanding a full refund of her franchise fee.

Meanwhile, three other franchisees in China are understood to have ceased their business operations after coming to a mutual settlement with Mr Bean.

Ms Lei told The Straits Times that she invested 6 million yuan (S$1.2 million) last year in her venture, which includes the cost of setting up and operating the two outlets in Beijing. She said Mr Bean gave her defective pancake stoves and soya milk machines that "kept breaking down". This caused her to suffer losses at her two outlets at Capital Mall, Taiyanggong, and Chaoyang Joy City, she claimed in her complaint to the Chinese authorities.

"All products we sell are made by pancake stoves and soya milk machines," she added. "Most of our revenue comes from the sales of pancakes. Failure of both machines could literally render our operation impossible."

Ms Lei claimed to have suffered a 38 per cent drop in her business on weekends due to the stoves malfunctioning and rendering the pancakes burnt and inedible. She said that on March 13 this year, they broke down completely. This meant she made only 38 yuan at the Chaoyang Joy City outlet, which she shut down in the same month.

Ms Lei - who is still running her other store at Taiyanggong - claimed that Mr Bean had supplied her with overpriced ingredients that were close to their expiry dates. For example, before opening her first outlet in July 14 last year, she was allegedly given 80 packs of pancake mix that were due to expire two weeks later. She accused the company of failing to provide operational guidance, business training and other support services.

The three other franchisees who are understood to have ceased business hold exclusive rights to operate in Hangzhou, Suzhou and Nanjing. They declined to reveal the details of their settlements with Mr Bean.

But one of them, Mr Kevin Wu, told The Straits Times that he shut down all his three outlets in Suzhou two months ago. The 24-year-old entrepreneur claimed to have suffered operational losses of close to 300,000 yuan.

Early this year, Mr Wang Bo, who started three outlets in Hangzhou, also ceased operations after six months, citing poor business and product discrepancies.

Mr Bean executive director Loh Jwee Poh denied the claims. He said that all pancake machines are tested and no other franchisees have encountered problems with them. The company sent repairmen to Ms Lei's store after receiving her complaints and offered to replace the machines, he added.

Mr Loh, 51, said the prices of raw materials are determined by the size of the order and the cost of delivery, adding: "In this case, the franchisee had just started with one store and, thus, volume was low." He said the franchise agreement recommends people open between eight and 12 outlets over two to three years, and that Ms Lei would have had training at the chain's Singapore stores.

"The China support team provided back-up with operations management and we also seconded a manager from Singapore, who has five years of experience, to help her," said Mr Loh.

Mr Bean, which started as a hawker stall in People's Park Food Centre in 1995, held a signing ceremony last year with 11 regional partners from Japan, South Korea, Malaysia, the Philippines and China in Singapore.

It plans to expand into the United States in two to three years.

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