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May 14, 2021

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90 held as milk tea franchise scam busted

More than 90 suspects have been apprehended for allegedly running a milk tea franchise scam, Shanghai police said yesterday.

The suspects profited over 700 million yuan (US$108 million) from the alleged scam.

Police started investigating last December after finding that a number of milk tea franchises in Songjiang District under the same brand name were closed shortly after opening.

One of the shop owners was a man surnamed Wang who closed his “Chazhilan” milk tea shop after only three months.

In May 2020, Wang saw an online advertisement about franchising a famous milk tea chain, and contacted the agency. Wang was told the advertised franchise program had no more slots for newcomers, and was introduced to the “Chazhilan” milk tea brand — said to be owned by the same company as the famous brand.

“Chazhilan” was advertised as a promising brand, and the agency promised full supply, training and advertising services for franchises.

Wang paid the agency 100,000 yuan for the franchise and opened his milk tea shop. However, the agency failed to deliver the promised services and dismissed Wang’s complaint, citing his bad business decisions.

In their probe, police discovered the “Chazhilan” franchise was a hoax.


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