CHJ Jewellery Allows Third-Party Sourcing: What an Approximate 8% Brand Usage Fee Means for Franchise Costs

Procurement arrangements are changing for CHJ Jewellery franchise stores. A report published by Sina Finance on 6 November, citing the company’s conference call minutes, said the brand had allowed franchisees to source goods from third-party suppliers since March 2026, charging a brand usage fee of around 8%. For those considering China’s franchise market, the significance lies not just in wider sourcing options, but also in how licensing fees affect store operating costs.

Third-party sourcing comes with a brand usage fee

Under the arrangements described in the report, franchisees can buy from third-party suppliers while paying a usage fee to the brand. This means product procurement and brand licensing no longer have to be tied to a single supply route.

However, permission to source from third parties should not be taken to mean that franchisees can choose suppliers without restrictions. The report outlines the sourcing arrangement and an approximate 8% fee, but does not establish whether the same terms apply to all products. Nor can that percentage alone be used to calculate the final cost for each store.

Prospective franchisees should confirm supplier approval requirements, eligible products, the basis for calculating the fee and payment arrangements in the formal franchise documentation.

Growth in service revenue does not mean higher store profits

The same report states that CHJ Jewellery’s revenue from franchising and other services rose by 46.15% year on year in the first half of 2026, with a gross margin of 96.46% for that revenue category. These figures describe the performance of the brand’s relevant business activities, not individual franchise stores.

Crucially, ‘franchising and other services’ is a business category, so its growth cannot be attributed entirely to the third-party sourcing arrangement. The brand’s high gross margin in this category also does not mean franchisees enjoy the same margins when selling gold jewellery.

Assessing store profitability still requires a combined calculation of purchase prices, brand usage fees, rent, staffing costs and working capital tied up in stock. Comparing supplier quotations alone risks overlooking the actual cost once licensing fees are included.

Alongside procurement changes, the brand is adding new customer touchpoints

The report also notes that CHJ Jewellery opened its Global No. 1 Store at Yuyuan and introduced ‘Intangible Cultural Heritage Craft Galleries’ in prime shopping districts. Online, the brand has brought heritage craft workshops into livestreams, emphasising craftsmanship and cultural content.

Together with the procurement changes, these initiatives offer an indication of the brand’s direction: adjusting franchise sourcing routes while using store displays and online content to highlight distinctive product features.

However, additional display and promotional channels do not, in themselves, prove that footfall or sales have improved at any particular franchise store. Prospective franchisees should establish what specific store-level support these investments provide, and whether that support is included in the franchise agreement.

Due diligence should focus on fees and responsibilities

Third-party sourcing adds another factor to franchise comparisons. Operators need to look beyond product prices and clarify how responsibilities are divided across procurement, licensing and after-sales service. Key questions include product quality checks, returns and exchanges, changes to suppliers, and arrangements for remaining stock when the franchise relationship ends. More sourcing options should not be mistaken for an automatic reduction in risk.

Practical tip: before signing, request written procurement rules and a complete schedule of fees from the brand. Then compare the total cost of different sourcing routes using the same proposed product selection. The approximate 8% fee is only the starting point: how it is calculated, and where each party’s responsibilities begin and end, will determine its impact on store operations.