Courier franchise outlet sold for RMB 4 million as delivery fee cuts squeeze last-mile operators

A courier franchise outlet handling around 40,000 inbound and 20,000 outbound parcels a day changed hands for RMB 4 million ahead of China’s Singles’ Day shopping festival on 11 November. According to a report published by 36Kr on 12 November, its operator, identified by the pseudonym Wang Bing, told National Business Daily that a further RMB 0.05 cut in the delivery fee paid by headquarters per parcel had prompted his decision to leave. The transaction highlights a practical issue for courier franchise operators: substantial parcel volumes do not necessarily translate into healthy profit margins.

From a family start-up to an RMB 4 million sale

According to the report, Wang’s mother paid a franchise fee of RMB 20,000 in 2005 to secure the first local operating rights for an unnamed franchised courier brand. Starting with one tricycle and three couriers, the business grew into the area’s third-ranked outlet, with operating premises, automated equipment, a transport fleet and 65 couriers.

Rather than waiting until the Singles’ Day peak season to make his decision, Wang completed the handover roughly two months beforehand. Asked why he had not used the peak season to generate more business, he told the reporter: ‘The more we deliver, the more we lose.’ The report did not identify the outlet’s brand or provide a full breakdown of its income and expenditure, so it cannot be used to assess the profitability of all franchisees within any particular network.

The RMB 4 million figure was the transaction price, not the operator’s net proceeds. Nor can the initial franchise fee and the outlet’s sale price many years later be used on their own to calculate an investment return: substantial operating investment, equipment purchases and staffing costs came in between.

Why a five-fen cut per parcel prompted an exit

For outlets that depend on high parcel volumes, small changes in per-parcel payments add up. Wang’s case illustrates why assessing a business requires more than looking at how many parcels it handles each day. It also means checking whether revenue per parcel covers sorting, transport, delivery and associated management costs.

The report attributes the pressure on last-mile outlets to factors including changes to delivery fee pricing, tougher service performance requirements and rising employment compliance costs. When these pressures coincide, higher parcel volumes may not produce a proportionate increase in profit.

However, the available information does not establish the precise scope of this delivery fee cut, the full settlement terms or how long it applied. Simply multiplying RMB 0.05 by all inbound parcels would therefore not establish the outlet’s actual losses. For other franchise operators, reviewing their own settlement statements is more useful than applying this case directly to their businesses.

Several courier networks are restructuring

The sale took place against a backdrop of changes across franchised courier networks. Public figures cited in the report show that, over the preceding year, STO Express recorded a net reduction of 38 outlets to 5,044, while YTO Express recorded a net reduction of 83 to 4,944. Yunda’s number of first-tier franchisees fell from 4,744 to 4,267, a net decline of 477.

The same report states that J&T Express’s Chinese network lost 300 network partners, leaving 5,100, while its outlet count fell by 400 to 6,300.

These figures cover different categories — outlets, first-tier franchisees and network partners — and cannot simply be added together to produce a ‘total number of franchisees exiting’. A smaller network also does not mean that every departing business closed because it was making losses. Wang’s outlet was taken over by a new operator, illustrating the distinction between a transfer of operating rights and an outlet ceasing service.

Check earnings and liabilities before taking over an outlet

For those considering a courier franchise, the lesson is not that larger businesses are inherently riskier. It is that even an established outlet requires careful scrutiny of its revenue and cost structure. Premises, equipment, vehicles and an existing customer base provide the means to operate, but they are no substitute for evidence of sustainable profitability.

Prospective buyers should focus on recent, verifiable settlement records, delivery fee adjustment clauses, deductions linked to performance assessments, and labour and transport costs. They should also establish whether headquarters approves the transfer and how responsibility for historic debts and outstanding compensation claims will be allocated. Existing operators should examine collection and delivery income and costs separately, rather than judging performance solely by total parcel volumes.

Practical tip: before signing a franchise agreement or completing a transfer, use verifiable statements to calculate earnings per parcel and clearly document each party’s handover responsibilities. Both matter more than chasing peak-season volumes.