Tue, Feb 10, 2009 - Page 12 News List

New store subsidy plan begins

FRANCHISE FUNDS President Chain Store’s Lillian Lin said that each of the firm’s stores cost at least NT$1.5 million and the new subsidy would not alter its plans

By Elizabeth Tchii  /  STAFF REPORTER

The Ministry of Economic Affairs yesterday began a subsidy program for people wishing to launch their own franchise or chain store business, with each successful applicant being granted a NT$50,000 (US$1,472) start-up fund.

The ministry’s department of commerce, which processes the applications, said yesterday that it had received numerous phone inquires about the subsidy.

The program, aimed to combat rising unemployment by providing more employment opportunities nationwide, would run until April 8, the commerce department said.

With a total budget of NT$25 million in the first phase, 500 stores will be able to benefit from the program. The department hopes the scheme will create 4,000 stores and 20,000 to 30,000 jobs nationwide in the next two years.

“Applicants who have completed company registration for a franchise retail service business need to show proof of new products, new technologies or new marketing ideas in order to qualify for government aid,” commerce department head Wang Bo-po (王鉑波) told reporters yesterday. “Moreover, for each franchise holder looking to expand, there is a limit of 10 new store openings, or a total subsidy of NT$500,000.”

Statistics show that opening a chain or franchise store has a success rate of 60 percent, Wang said. On the other hand, the success rate for independent retail stores is only about 30 percent to 40 percent, which is why the ministry decided to assist franchise and chain store investors.

The commerce department also plans to help independent retail investors later this year when it rolls out phase 2 and phase 3 of the subsidy program in April.

Statistics from the Association of Chain and Franchise Promotion, Taiwan (台灣連鎖加盟促進協會) show that 3,000 new chain and franchise stores are opened each year. Therefore, the ministry’s NT$25 million first-phase subsidy falls short of the potential for NT$150 million applications, suggesting that applicants should act quickly in order to receive the benefit.

Industry players, however, yesterday remained skeptical on the program’s effectiveness, saying that many retail franchise businesses require a hefty amount of initial capital investment, much higher than the government’s NT$50,000 subsidy.

Lillian Lin (林立莉), manager of public relations at President Chain Store Corp (統一超商), said yesterday that each of the chain’s new stores cost at least NT$1.5 million, so the government subsidy would have no impact on its store expansion program.

“For a typical investor, we make sure they go through three months to six months of hands-on training before they join us, because most of them are using their life savings,” Lin said.

In addition, a sharp increase in franchise store openings would no doubt exacerbate competition and put existing stores out of business, creating another round of unemployed workers.

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