Jiuzi Holdings, Inc. (NASDAQ: JZXN)

Jiuzi Holdings, Inc., a company listed on the Cayman Islands, operates in the new energy vehicle retail industry in China through its PRC Operating Subsidiaries. The company's business model is centered around franchising, providing a comprehensive operating system, brand recognition, and financial support to its franchisees. Jiuzi Holdings has established a strong presence in third- and fourth-tier cities, with a network of 72 operating franchise stores and two company-owned stores.

The company generates revenue primarily through the sale of new energy vehicles (NEVs) in its company-owned stores and through supplies to its franchisees. Additionally, it earns initial franchise fees and ongoing royalties from its franchisees. The initial franchise fee is RMB 4,000,000, or approximately US$575,500, which is payable over time based on the performance obligations of the parties. The ongoing royalties are based on 10% of the net incomes from the franchisees.

Jiuzi Holdings' unique business model sets it apart from traditional automobile dealerships. Franchisees operate under a franchise agreement, which provides them with a comprehensive operating system, brand recognition, and financial support. The franchisees are responsible for securing the lease on the land and building for the store location, operating and managing the business, and providing capital to develop and open new stores.

The company sources vehicles through cooperation with various parties, including manufacturers, battery factories, and 4S stores. Jiuzi Holdings enters into letters of intent (LOIs) for cooperation on sales and services of NEVs with automobile manufacturers, which become binding when the deposit is paid. The non-exclusive LOI usually has a one-year term and can be extended as negotiated by the parties.

Jiuzi Holdings focuses its marketing efforts in third- and fourth-tier cities in China, where the NEV market is still relatively unexplored. The company builds its brand image by connecting the concept of NEVs to its brand name, focusing on a broad selection of brands and affordable pricing. Jiuzi Holdings uses online advertising platforms to promote its brand image, such as WeChat, Weibo, and Tik Tok.

Jiuzi Holdings competes in the new energy vehicle retail industry in China, where it has a strong competitive advantage. Its unique business model, focus on third- and fourth-tier cities, and comprehensive operating system have enabled it to establish a large network of franchise stores and generate significant revenue. The company has a large number of franchisees and strong customer demand, which add to its leverage over supply chains in terms of selections and pricing. Additionally, its franchise stores have more space compared to its competitors, and it has a wide range of business partners, both of which help it provide better customer experiences.

Jiuzi Holdings' customers are primarily individual consumers who are looking for affordable and environmentally friendly transportation options. Its franchisees cater to a wide range of customers, including those in small cities and towns, who are looking for a convenient and easy shopping experience.

Jiuzi Holdings' trademark "Jiuzi New Energy" was registered with China's trademark Bureau on June 28, 2018, under international category 12 (vehicles, electrical vehicles, etc.) and international category 37 (vehicle maintenance service, vehicle cleaning services, etc.), and international category 39 (transportation, driver services, car rental, etc.). The trademark will be valid for ten years until June 27, 2028. Jiuzi Holdings also has 13 software copyrights that are registered with China's National Copyright Administration.

Jiuzi Holdings operates in a highly regulated industry in China. The company is subject to various laws and regulations, including the Catalogue for the Guidance of Foreign Investment Industry, the Foreign Investment Law, the M&A Rules, and the Regulations on Information Security and Privacy Protection. The company is also required to comply with the negative list for special administrative measures concerning foreign investment.