(Yicai Global) Jan. 19 – Chinese Starbucks contender Luckin Coffee has resumed recruiting franchisees in the wake of the epic financial fraud scandal that prompted its delisting from Nasdaq Stock Market as competition in the sector brews up a storm.

Prospective franchisees are eligible to apply if they are aged between 25 and 45, lack criminal or dishonest debtor records, and plan to open a coffee shop with a usable area of at least 30 square meters, according to a recruitment plan the Chinese coffee chain posted on its official WeChat account yesterday.

Ever more rivals have waded into China's no-frills coffee market of late. McDonald’s China will open 4,000-plus McCafé coffee stores in the country by 2023, it said in November. Canadian chain Tim Hortons, which entered the country in 2019 and in which tech titan Tencent Holdings invested, announced it was to open 1,500 stores in the country within 10 years at that time.

Internet coffee brand Coffee Box and China Petroleum & Chemical set up Easy Joy Coffee last month. Sinopec's huge network of convenience stores will position the JV to open 3,000 outlets within three years.

All future Luckin franchisees must lay out between CNY350,000 (USD54,000) to CNY370,000 (USD57,000) before their stores start operating. That sum includes CNY110,000 to CNY130,000 for decoration, about CNY190,000 on equipment, and CNY50,000 (USD7,710.4) as a deposit.

Luckin will waive all franchise fees and support marketing, it pledged. New outlets must be located in Guangdong, Hubei, Zhejiang and other 19 provinces or autonomous regions, and are barred from the first-tier cities of Beijing, Shanghai, Guangzhou, Shenzhen and Wuhan, the company said without explanation.

The company initiated its franchise business in 2019 but suspended it last year due to “the pandemic's impact.”

The coffee chain aims to own 4,800 to 6,900 direct-sales venues by 2023. Its store count had fallen to 3,898 from 4,507 as of Nov. 30, its most recent data show. Over 60 percent of existing stores were profitable by November and Luckin's management expects all to be this year.

Luckin was delisted from the Nasdaq on June 29 and fined by watchdogs in both China and the US after confessing to falsification of all financial data following its April IPO. It is still subject to future class-action suits by North American investors and other administrative penalties.

Editor: Ben Armour, Xiao Yi