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FRANCHISING

FRANCHISING. By- Sapana Agarwal 08-702 Vaibhav Alone 08-705 Smita Bommera 08-712 Pramod Kamble 08-743 Neha Vyas 08-757.

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FRANCHISING

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  1. FRANCHISING By- SapanaAgarwal 08-702 Vaibhav Alone 08-705 SmitaBommera 08-712 PramodKamble 08-743 NehaVyas 08-757

  2. Franchising is a business method that involves the licensing of trademarks and methods of doing business.  Owner (franchisor), affiliated dealers (franchisees) it is one that's providing increasing opportunities for companies and individual entrepreneurs.

  3. Today franchise concepts span over 70 different product and service sectors, including such businesses as • auto-repair shops, • children's art centers, • fitness clubs, • law & consulting practices, and • many home based businesses.

  4. Historical background of franchising The oldest franchise system- “Pub Network” McDonald's founder – Ray Kroc During Roman occupation of Britain, Major supplier of food, drink, accommodations – Church Two days food and lodging – Free Resulted in growth of commercial enterprises

  5. Contd… Institutions of common standards Establishment of monitoring system Birth of Franchising Recognition of need to secure market share Beginning of Franchising in United States - 1840

  6. Contract Parameters Construction Specifications & Supervision Training Continuing Services Performance & Standards Monitoring Field Support Operational Research & Development Marketing, Advertising & Promotion Specialist Support The Operations Manual Term of agreement License Agreement Termination

  7. Non contractual considerations of buying a franchise – Financial Analysis Estimating the startup cost / Initial Investment Calculating Profit & Loss / Income Statement Constructing a balance sheet Cash-flow projections

  8. Costs associated with buying a Franchise Initial Franchise fee : Varies depending on Franchisor. Capital Requirements : Include costs of, 1. Buying Real estate 2.Constructing a building 3. Purchase of initial inventory 4. Obtaining business license.

  9. Cont… Continuing royalty payment : Payment on the basis of monthly or weekly gross income. Franchise may have to pay royalty even if business is loosing money. Royalty payment is usually around 5% of gross income.

  10. Cont… Advertising fees : Payment of national and regional advertising fees. Less than 3% of the gross income. Other fees : Include charges on training additional staff, providing management expertise when needed, computer assistance and support services.

  11. Factors determining Franchising decision Why do you want to own a franchise? Are you willing to take orders? Franchisors are typically very particular about how outlets operate? Are you willing to be part of a franchise “system” rather than an independent businessperson? How will you react if you make a suggestion to your franchisor and your suggestion is rejected? What are you looking for in a business? How hard do you want to work?

  12. How willing are you to put your money at risk? How will you feel if your business is operating at a net loss but you still have to pay royalties on your gross income? Who is the Customer? Is the customer reachable? Can the business achieve 20% market share? Can the business grow at an aggressive annual rate? Find out how other franchisee are doing?

  13. Franchisor’s perspective Enter global markets with low investment and low risks Get information regarding markets, culture, customs and environment of host country Learns more lessons from experiences of the franchisees. e.g. McDonalds Control of location Faster growth ,expansion Lower capital requirement Advantage of franchise Franchisee’s perspective Proven Business formula Early start of business with low risk Established and proven product and operating system Benefits of R &D with low cost Established and recognized brand ,low marketing expenditure Franchisor finds the suitable location

  14. Franchisor’s perspective Reduced control Profit sharing Leakage of trade secrets Friction with franchisees Differences in required business skills Reputation at stake if d franchisee doesn’t live upto expectation of quality Disadvantage of franchise Franchisee’s perspective Loss of independence and creativity High initial fees High royalties and advertising allowances Contractual restrictions Termination clauses Not receiving promised help Unsuitable products Lack of competitive advantage

  15. DHEERAJ GUPTA- THE VENDOR OF VADAS

  16. Entrepreneur : Dheeraj Gupta Company : Jumbo King Foods Pvt. Ltd. Based In : Mumbai Founded In : August, 2001 Industry : Hospitality/ Service

  17. The Journey… • 23rd August 2001 – First Outlet was opened • 23rd August 2003 – 2 outlets existed • 23rd August 2004 – Jumbo King reached to a figure of 6 outlets • 23rd August 2005 – 15 outlets were in the operation mode • 43 stores in Mumbai &1,50,000 vada pavs are sold every day • JumboKing Plans to Open 250 Store This Fiscal year

  18. IDEA GENERATION • Grandfather built a business of vending stall. • Later built the restaurant and hotel business. • Decided to set up his own business of selling packaged Indian sweets in 1998. • Set up a company called Manali Foods. • When he was tapping the export market & made a trip to London came in the contact of a person who was a Burger King franchisee.

  19. Worked in a McDonald’s for ten days. Start the largest fast food chain specially VADA PAV. Borrowed Rs 200,000. Set up an outlet, which the family owned, near Malad station and called it Chaat Factory. The name JUMBO KING came into existence. Used the western models in the Indian food industry.

  20. TARGET AUDIENCE CORE COMPETENCIES • Urban Population • Age Group: 18-30 YRS • College Students • Working People • Executives • Quality • Hygiene • Size

  21. SCOPE • Jumbo King Foods Pvt Ltd plans to open around 500 food joints across the country by March 2011. • Aims to increase its turnover 10-fold to Rs200 crore. • The projected turnover for the current financial year is Rs25 crore.

  22. Territory:Fast Food Retail Chain Training Provided:Nationwide Agreement Term:Initial Franchisee Certification Programme for 2 days and then continuous up gradation Number Of Units:Initial Terms 9 years, to be renewed every 3rd year of operation. Units Outside Country:Presently 45 Franchisee Investment Required:Plan to operate internationally in future 5, 00,000.00 to 1, 00,00,000.00 Business Established: 2001 Franchising Commenced:2004 Qualifications Required:Business Experience of 4 to 5 years; preferably in food and beverage industry; Time commitment of 10/12 hours in a week; Minimum graduate, with knowledge of Local and English Language

  23. “If a Burger can get listed, why not a VADA PAV?”

  24. HH History History History • 1948 - Burt and Irvin opened six stores • 1949 - co’s own production facility opened in Burbank • 1953 - hired Carson-Roberts Adevertising • 1962 – First to introduce Cakes • 1972 – Co went public

  25. Baskin-Robbins • Global Presence • Local Focus • Outsourcing • Startup Cost • Franchise Fees

  26. Fun facts • Baskin-Robbins "31®" stands for a different ice cream flavor for each day of the month. • Pralines 'n Cream ice cream was created by Irvin Robbins and his wife Irma in their California home kitchen in 1970. • Baskin-Robbins has created more than 1,000 delicious and unique ice cream flavors in its 62 year history. • Baskin-Robbins Franchisee, Cohen, currently holds the Guinness World Record for scooping the most ice cream cones in one minute (19 cones). Baskin-Robbins Fun facts

  27. Thanks…

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