Model Reinvention: Rongchang Service Strength Becomes the "Apple" of the Laundry and Dyeing Industry

On May 9, 2012, the 14th China Franchise Conference themed "Innovation for Change, Steady Development" opened in Beijing, with leaders from relevant domestic and international departments, experts, and many well-known chain entrepreneurs participating in the conference.
At the meeting, Wu Guohua, Deputy Director of the Department of Circulation Industry Development of the Ministry of Commerce, Guo Geping, President of the China Chain Store & Franchise Association, and other leaders delivered keynote speeches. Addressing the current issues faced by China's franchise chain industry, the conference initiated thematic dialogues such as "Reconstructing Thinking, Returning to Fundamentals—Seeking Breakthroughs and Development in Franchise Chains Amid Stagnation." Zhang Rongyao, General Manager of Beijing Rongchang Technology Service Co., Ltd. (hereinafter referred to as Rongchang Service), along with several leading figures in the chain industry, participated as special guests to conduct in-depth discussions on this topic.
In the on-site dialogue, Zhang Rongyao, General Manager of Rongchang Service, stated that the current Chinese economy is generally favorable, and the demand for service industries is on the rise. However, the development of chain enterprises still remains at the level of increasing the number of chains, without substantial breakthroughs in chain connotation. Overall, rising rents, increasing labor costs, and loose chain management are becoming bottlenecks for the growth and strengthening of chain enterprises. In addition, due to the small production scale of single stores, blind expansion of equipment stores leads to redundant construction and difficulties in environmental approvals, all of which restrict the growth and strengthening of the laundry chain franchise industry. Zhang Rongyao pointed out that this is a "fatal flaw" commonly found in the business models of many chain enterprises.

Zhang Rongyao, Chairman of Rongchang·Ilsa Chain Group, interviewed by China Central Television

In fact, as the only designated laundry service provider for the Olympics, the National and Beijing "Two Sessions," Rongchang Service has long been planning and acting not only on laundry quality but also on shaping chain connotation and solving the "connected but not locked" problem. Zhang Rongyao explained that for chain enterprises to truly achieve "connected and locked" status and obtain sustainable development, they must create sustainable value for franchisees and customers, binding headquarters and franchisees together through shared interests, helping franchisees shorten investment payback periods and improve return on investment. The traditional business model, mainly based on equipment sales, makes it difficult to form a lasting alliance between headquarters and franchisees. Therefore, "connected but not locked, connected but not strong" is the pain point of the business model, and breaking the traditional business model is imperative. Through years of continuous thinking and innovation on the business model, Rongchang Service has launched the "One Belt Four" and network card business model, achieving a disruptive transformation of the traditional laundry chain industry business model.

The so-called "One Belt Four" and network card business model means that within a certain range around a laundry equipment store, the headquarters sets up four collection points. The clothes collected at these points are picked up, delivered, and cleaned by the nearby equipment store. Meanwhile, the headquarters issues network cards to further gather customers. Under the "One Belt Four" business model, the franchise store's business sources, based on self-operation, are supplemented by the business support brought by collection points and network cards. The business support from headquarters' collection points quickly increases the franchise store's revenue, shortening the franchisee's investment payback period by more than 30%. This sustainable growth value brought to franchisees undoubtedly forms a true alliance based on shared interests between franchisees and headquarters, tightly locking franchisees to headquarters with common benefits, greatly increasing franchisees' sense of belonging and recognition to headquarters, fundamentally solving the "connected but not locked" problem.

Zhang Rongyao participating in "Reconstructing Thinking, Returning to Fundamentals—Seeking Breakthroughs and Development in Franchise Chains Amid Stagnation"

In the new business model, the network card is an innovation that cannot be ignored. The introduction of the network card frees stored-value card customers from the restrictions of one location, one person, and one store. Currently, Rongchang·Ilsa laundry network cards can be swiped and used at Rongchang and Ilsa stores nationwide. "For consumers, the network card brings great convenience, making Rongchang·Ilsa's laundry network card a practical gift for friends, family, and employee benefits. At the same time, network consumption greatly reduces customers' stored-value risks. For headquarters and franchise stores, network card users are an important business source provided by headquarters to franchise stores, further strengthening the relationship between headquarters and franchisees," said Zhang Rongyao.
The benefits brought by the network card do not stop there. In Zhang Rongyao's view, consumers using the network card are "mystery shoppers" for Rongchang Service. Through these "mystery customers," Rongchang Service can supervise and grasp the operating status of franchise stores at any time, promptly discovering and solving problems that arise in franchise stores.
Zhang Rongyao introduced that in the future, Rongchang Service will further increase the number of directly operated stores nationwide, especially collection points. To this end, Rongchang Service has formulated the "1831" corporate development plan, which means opening 3,000 new stores in 18 cities nationwide and providing 10,000 jobs. "By increasing the number of collection points, we will enhance brand competitiveness and influence, bringing greater convenience to customers while increasing franchise store revenue," said Zhang Rongyao. "In addition to increasing the number of stores nationwide, Rongchang Service will also increase the sales of network cards nationwide, further expanding franchise store revenue channels."
Regarding the birth of the "One Belt Four" and network card business model, Zhang Rongyao believes its innovation is like "Apple" in the electronics industry. "This business model breaks any previous development model in the laundry and dyeing industry and is revolutionary. With this business model, the interests of all nodes in the Rongchang Service industry chain are maximized. Rongchang is no longer just a provider of laundry equipment, just as Apple is not merely a product provider."
In addition to striving to provide greater value to franchisees, Rongchang Service is also fully improving infrastructure levels to provide comprehensive services to franchisees. This includes informatization, institutionalization, and standardized implementation between headquarters and franchise stores, brand image building, brand marketing, and more. Rongchang Service hopes to provide strong and unified support in infrastructure, management, and branding to all franchisees, relieving their worries so they can fully focus on operating "laundry."
While meeting franchisees' development needs, Rongchang Service is also making strong efforts on the client side to enhance customer value and increase customer stickiness. To this end, beyond laundry services, Rongchang Service continuously expands its business scope. Rongchang Service has introduced comprehensive housekeeping services and value-added services and products to fully meet customers' growing household service needs. "In the future, we will gradually build ourselves into a household service integrator, focusing on household cleaning needs," Zhang Rongyao described Rongchang Service's future development positioning. "Currently, Rongchang's luxury goods care business, the 'Luodi' luxury professional care brand, has been launched. Relying on Rongchang Service's 22 years of leather cleaning experience and integrating advanced Italian technology, the Luodi brand has strong market competitiveness. In addition, Rongchang Service's value-added channel products and logistics 'last mile' projects are also underway. We are willing to work with more partners to fully explore and leverage channel value, providing more convenience and better services to customers, achieving win-win and sustainable development for customers, franchisees, partners, and Rongchang."