Meiyijia Faces "Fake Cigarette Scandal": The Dilemma of Rapid Expansion Without Proper Controls and the "Lian Er Bu Suo" Situation in 40,000 Stores

Ask AI · Why Meiyijia’s “light franchise” model failed under tobacco regulation?

21st Century Business Herald reporter Tang Weike

The fake cigarette incidents in multiple locations of Meiyijia exposed by the 3·15 Gala are tearing open the governance blind spots behind the rapid expansion of local convenience stores.

According to Guangdong 315, during covert inspections of 10 Meiyijia stores in Guangzhou, Foshan, and Dongguan, all 10 were found to have problems with cigarettes. The total number of problem cigarettes seized was no less than 854 packs. In some stores, genuine and counterfeit cigarettes were mixed and sold, cross-regional diversion and selling off inventory was becoming a rule of thumb, and privately purchasing goods from non-licensed channels had also become commonplace. As of 15:00 on March 15, the Guangdong Provincial Tobacco Monopoly Administration had inspected 6,325 Meiyijia stores, handled 306 cases, and seized nearly 1.4 million illegal cigarettes.

This “king of convenience stores,” with more than 40,000 outlets, used a low-threshold franchising approach to lead on scale, yet it suffered a systemic breakdown in a highly regulated category. The incident not only tests the governance capability of a single brand, but also points directly at the underlying differences between the two models—direct operation and franchising—along with cost structures and the boundaries of control, sounding an alarm for the entire chain convenience store industry.

Unlike 7-Eleven and FamilyMart, which adopt strong-control models with deep headquarters involvement in daily store operations—rigid standards from product display to fresh-food spoilage—Meiyijia is more like a “supply-chain wholesaler + brand landlord,” relying on delivery price differentials and logistics fees for profits, with very little day-to-day operational intervention in stores.

This incident began with an on-site undercover inspection during the 2026 Guangdong 3·15 Gala.

The investigation shows that all the stores involved were franchised stores, and the directly operated stores did not appear on the problem list. Store owners generally admitted that tobacco is claimed by the store itself through local tobacco monopoly permit channels. To reduce costs and increase profits, some choose to purchase from outside wholesale departments, transfer stock between stores, and even directly buy counterfeit cigarettes.

Third-party testing results show that multiple indicators related to the tobacco smoke of the cigarettes involved were abnormal; their addictive potential and cancer risk are higher, seriously infringing on consumers’ health and rights.

After the exposure, Meiyijia’s headquarters, on March 15, issued an apology statement, admitting a lack of management, shutting down 10 stores involved in the case, and launching a nationwide “sweep” inspection of more than 40,000 outlets. The three departments—Dongguan’s market regulation, public security, and tobacco—jointly interviewed Meiyijia’s headquarters, requiring a full withdrawal of noncompliant cigarettes,落实主體责任 (to implement the principal responsibilities), and establish a long-term compliance and control mechanism.

It is worth noting that Meiyijia’s official supply chain provides uniform delivery for all product categories except tobacco. This institutional design directly leaves a gap for franchised stores to buy in privately, becoming a key cause behind this incident.

Meiyijia’s rapid expansion mainly rests on a lightweight, low-threshold franchise model.

A former Meiyijia franchisee in South China calculated a real set of numbers for the reporter. Taking a community store of 40 to 50 square meters as an example: it charges an upfront franchise fee of 25,000 yuan, plus a deposit of 30,000 yuan, which is refundable at the end of the cooperation term with no breach. The monthly brand usage fee is fixed at 1,000 yuan. Renovation costs range from 40,000 to 100,000 yuan. Equipment investment covers categories such as cashier stations, cold display cabinets, and monitoring, totaling 30,000 to 120,000 yuan. The first batch of payment for goods needs 80,000 to 100,000 yuan. The total initial investment is between 250,000 and 350,000 yuan, not including rent and labor. Its core advantage is that it does not extract store sales revenue streams or participate in profit-sharing; the headquarters’ main earnings come from the franchise fee, deposit interest, supply-chain price differentials, and monthly management fees, which is extremely attractive for small and micro entrepreneurs.

“Franchises are very friendly to small entrepreneurs—just a couple can run it. But tobacco is handled by applying for the monopoly permit yourself, placing orders yourself, and managing it yourself; the headquarters doesn’t take care of it. That’s also the root cause of what went wrong later,” the former franchisee told the reporter of 21st Century Business Herald.

Within the industry, there are significant differences across brands in terms of models, costs, and control methods.

A person with experience working in South China for a Japanese convenience store chain with a 7-Eleven background told the reporter of 21st Century Business Herald that 7-Eleven adopts a consignment and franchise model. The initial funding per store is 500,000 to 1,000,000 yuan. The headquarters earns revenue through a high ratio gross profit split of about 30%, and it has very strong control capabilities. It implements end-to-end management and delegation in practice. Tobacco is handled through unified headquarters connections and managed with full traceability. Lawson operates with a tight franchise plus “back-in-table” model; the initial store funding is 350,000 to 650,000 yuan. The headquarters relies on a supply-chain markup of 5% to 8% to profit, with relatively strong control, implementing unified procurement and unified distribution; tobacco is handled through a unified channel with system monitoring.

FamilyMart, meanwhile, mainly uses a consignment franchise model. Initial store funding is 400,000 to 700,000 yuan. Headquarters revenue comes from gross profit sharing and supply-chain profits, and control is also very strong. It builds closed loops for fresh food and quality control, with tobacco managed uniformly and strictly prohibiting external procurement.

The fundamental differences between these two models are clearly evident. Meiyijia follows a route of light assets, fast expansion, low control, and low extraction, trading scale for market share, making it more suitable for lower-tier markets and community coverage.

Brands such as 7-Eleven choose a path of heavy assets, slow expansion, strong control, and high profit-sharing, building brand barriers with standards and quality control. The key dividing line between the two is whether the headquarters deeply intervenes in store operations, whether it controls the right to purchase inventory, and whether it strongly ties the interests of franchisees to headquarters’ interests.

The fake cigarette incident at Meiyijia is a typical collapse of the franchising model in a highly regulated category, bringing the industry multiple crucial takeaways.

The speed of expansion must match control capacity. “Light franchising” absolutely does not mean running stores as hands-off managers. When the number of stores exceeds 10,000, the allocation of supervisors, the frequency of inspections, and the compliance training system must expand and upgrade in parallel. If stores’ number of openings is used as the only core performance indicator, quality control and compliance will inevitably collapse across the board.

Earlier, some franchisees directly told the reporter of 21st Century Business Herald that during operations, in some regions the headquarters supervisors do not actually check very frequently. They mainly inspect displays and hygiene, while tobacco categories barely get involved in verification. Franchisees naturally pursue maximizing profits. The profit space for counterfeit cigarettes and diversion is larger. Once outside-procurement channels become smooth and accessible, it becomes easier for someone to take risks.

In some other brand systems, however, franchisees are subject to strict screening and long-term training. High-risk items such as fresh food and tobacco are monitored systematically end to end. Abnormal ordering and high-frequency, large-amount shipments trigger automatic alerts. For violations, the contract is terminated directly and the deposit is confiscated—franchisees therefore dare not cross the red line.

High-risk categories must be subject to strong control through special management. For highly regulated categories such as tobacco, alcohol, and infant and children’s food, they should be separated from the ordinary franchise system, with 100% unified procurement and unified distribution by the headquarters. This should be paired with triple safeguards: smart cigarette cabinets, traceable codes, and real-time data monitoring. If any violation occurs, the contract is terminated immediately and the deposit is confiscated, and the case is also added to an industry blacklist.

A retail industry analyst in East China told the reporter of 21st Century Business Herald that the industry needs to rebuild the community of interests between headquarters and franchisees, reduce reliance on one-time franchise fees, increase the share of compliance rebates and performance/fulfillment rewards, and raise the proportion of unified procurement by headquarters—thereby compressing the space for off-book circulation from the source. At the same time, the industry should use digital means to replace manual inspection patrols, enabling automatic alerts for high-risk behaviors such as abnormal orders and high-frequency, large-amount cigarette purchases.

Looking at long-term development, mixed models may become the optimal solution. In core cities and high-quality commercial districts, direct operation should establish standards. In lower-tier markets, strong-control franchising should enable rapid replication. For high-risk categories and sensitive areas, direct operation should serve as the safety net. This approach maintains expansion efficiency while firmly guarding the brand’s bottom line.

Convenience stores are the retail format closest to people’s livelihood, and scale and trust should go hand in hand. Yet recently, whether it’s traditional convenience store brands or other physical retail supermarket brands, they are treating community stores as the main competition outpost for the “last mile.” Meiyijia’s “fake cigarette incident” proves that franchising can be light, but control cannot be light; expansion can be fast, but the bottom line cannot be fast. For the entire industry, the lesson of 40,000 stores is precisely the turning point from “scale first” to “quality first.”