FRANCHISING | Staff Reporter, China

Luckin Coffee dusts off franchise plan

It paid a US$180 million penalty to settle accounting fraud charges last month.

Embattled Luckin Coffee, whose accounting fraud scandal made headlines across markets last year, has resumed its franchise plan.

Caixin Global first reported that the Chinese company, which was delisted from the Nasdaq Index in June, said in a social media post that it was launching a “new retail partner” recruitment plan, which is essentially a franchise plan.

Entities joining the new program did not have to pay a franchise fee, Luckin said, but needed to set aside about 350,000 yuan to 370,000 yuan (US$57,000) for equipment, store renovations and deposits to start up, according to a proposal that accompanied the post.

U.S regulators said in December that Luckin agreed to pay a US$180 million penalty to settle accounting fraud charges for “intentionally and materially” overstating its 2019 revenue and understating a net loss.

“This settlement with the SEC reflects our cooperation and remediation efforts, and enables the company to continue with the execution of its business strategy,” Jinyi Guo, chairman and chief executive officer of Luckin Coffee said in a statement during that time.

“The Company’s Board of Directors and management are committed to a system of strong internal financial controls, and adhering to best practices for compliance and corporate governance,” Guo added.

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