Regional eyeglasses retailer Mao Yuan Chang is leveraging its franchise system to bolster revenues and support margins in a fragmented market

image credit: Bamboo Works

Key Takeaways:

• The company's revenues rose 6% last year while net profit more than doubled after a move to extend a franchise levy to more of its stores
• The 160-year-old brand, specializing in prescription spectacles and premium vision-care services, faces a challenge from low-cost retailers

Around 160 years ago, a Chinese merchant who started out selling spectacles from a roadside stall realized that rising literacy rates would boost demand for eyeglasses.

The business founded by Mao Sifa has survived to this day and is now eyeing up a listing on the Hong Kong stock market, looking to expand its store network, promote its vision services and invest in optical processing facilities.

Typically, eyewear stores derive most of their profits from mark-ups on frames and lenses, with eye checks acting as a sales incentive. But Zhejiang Maoyuanchang Eyewear Co. Ltd. places more value on professional eye exams and lens fitting, to charge a service premium.  

According to the IPO application, its chain comprises 78 self-operated stores and 194 franchised stores. The self-run shops are the main income source, at about 74% of revenue, while online channels account for just 0.7%. As for products, prescription spectacles make up nearly 80% of revenue, underscoring the company's focus on optometry services.

The business remains largely a regional enterprise, highly concentrated in Zhejiang, where the firm began, and Gansu province. Based on 2024 offline sales, it holds an 8.8% market share in Zhejiang and about 10.2% in Gansu through its Keda brand.

A model that relies heavily on physical stores and product sales is coming under pressure with the rise of retailers using short-video platforms, group buying and online marketing to sell in bulk at lower prices. Mao Yuan Chang has also tried this approach, which can reap short-term rewards but risks undermining per-item income and diluting the brand value.

The company began scaling back these promotional efforts in 2024, trimming its short-video and group-buying channels, removing discounts and introducing unified pricing. Revenues fell 8% to 250 million yuan ($36 million) that year, while profits more than halved to 18.05 million yuan.

Moving away from a traffic-driven strategy, the optometry chain is now looking to maximize the value of its franchise system. While self-run stores bear rent and labor costs, the franchise model shifts most fixed expenses to the store operators while Mao Yuan Chang controls branding and supply chains.

Leveraging the franchise

The number of franchised stores fell from 205 in 2023 to 194 in 2025. But fees from franchise management, which had stayed roughly flat at around 2.35 million yuan during that period, jumped sharply to 10.21 million last year after the company expanded the charges to cover more stores.

Fees of 6% of gross revenue were levied on 165 franchised stores in Zhejiang in 2025, compared with just 46 stores previously, as the company sought to extract more value from its franchise network.

The change began to show up in its results for 2025, when revenue rose 6% to 265 million yuan, while profit more than doubled to 41.18 million yuan and gross margin climbed 4 percentage points to 61.1%, supported by the higher returns of the franchise business. But that growth came from broader fee coverage rather than a larger store base, leaving its sustainability open to question.

The IPO application outlined plans to invest the proceeds in expanding the company's store network, promoting its specialized eye care services, and building support facilities such as a processing center and warehousing.

China's fragmented eyewear market is dominated by regional businesses, although it does include some listed companies such as Doctorglasses Chain (300622.SZ). The Hong Kong equity market lacks store-based eyewear retailers and providers of optometry services, with companies such as Arts Optical (1120.HK) mostly involved in lower-margin manufacturing.

If Mao Yuan Chang succeeds in going public, it would become one of the few listed firms offering a hybrid of optometry services and retailing. As franchise income rises, the company is beginning to show some platform-like characteristics, but its brand appeal and store network have yet to reach national scale. Whether its capabilities can be replicated across regions remains uncertain.

Mao Yuan Chang's valuation will depend on how the market interprets its business model. If it can continue to monetize its franchise system to generate consistent revenue streams, it could earn a premium. Otherwise, investors will apply the valuation framework for traditional retailers.

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Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.