Key Takeaways:
Jewelry retailer Chow Tai Seng Jewellery announced on April 14 it will double the brand usage fee for certain gold products within its franchise system, a move that sent its shares up over 5 percent.
"The adjustment aims to comprehensively advance retail transformation, upgrade products, and empower its franchise business, thereby enhancing overall brand competitiveness," the company said in a statement. The new standard, which raises the fee from RMB12 to RMB24 per gram, takes effect April 15.
The fee increase applies to gold products priced by processing fee per gram under the core Chow Tai Seng brand and classic franchise channels. Following the news, Chow Tai Seng's Shenzhen-listed stock (002867.SZ) closed up 5.2% at RMB13.01. The positive sentiment extended to Hong Kong-listed peers, with Lao Pu Gold and Chow Tai Fook rising 6.5% and 1.9%, respectively. The company's 2025 interim report showed brand usage fees per franchise store were already up 9.6% year-over-year.
This fee hike represents a significant strategic shift to bolster revenue from its nearly 4,500 franchise stores, which saw a 56% decline in business revenue during the first three quarters of last year as direct-to-consumer and e-commerce sales grew.
The move signals a clear intent to improve profitability and brand control within its extensive franchise network. Investors will be closely watching the company's next earnings report to assess the impact on franchise revenue and whether the higher fees create friction with store operators.
This article is for informational purposes only and does not constitute investment advice.
