San Francisco Coffee House: An American-Style Franchise in Croatia. Group 4 Entrepreneurship and Innovation
Group Members Mirek Kysely MA1N0228 Dacia Tucker MA1N0209 Jose Miguel Flores Diaz MA1N0227
Company overview • On the return to their homeland of Croatia following a six-year visit to the United States, Denis Tensek and Jasmina Pacek decided to open an American-style coffee house reminiscent of San Francisco’s atmosphere.
Company overview • While Croatia had many coffee houses, few had the combination of service, quality, products, and atmosphere that they remembered from their time living in the United States.
Company overview • Tensek and Pacek started with a single coffee house. From the beginning they felt that it had the potential to grow into a franchise. • Instead of purchasing a franchise from someone else, they considered creating one that had all the elements of the modern franchise chains that were available on the international market plus the adjustments needs to the local market.
Company overview • They decided to use all of their US lifestyle and professional experiences as well as understanding of habits and behaviors of the local market to create this new local concept in Croatia. • The initial coffee house became a success. The business steadily grew and operating profits had reached a satisfactory level.
Company overview • Motivated with the success of the first coffee shop in one of Croatia’s poorest regions, the couple realized that the potential for this concept was national, if not regional. • Growing organically by opening self-owned stores was costly, slow, and hard to control. They had neither the means nor the staff.
Company overview • They knew they did not want to put more capital at risk, and did not have the time to travel to various locations around the country. • Furthermore, their concept had started to garner local publicity and inquiries from would-be franchisees began to arise.
Company overview • Croatia had a small economy and changing legal system. Growing through franchising was appealing, but they only had one store, the business was young, and franchising was unfamiliar to the emerging market of Croatia.
Question 1 Should Tensek and Pacek consider franchising in Croatia? • Yes they can consider an Area Franchising Agreement (allows a Franchisor to own and operate a specific number of Franchisees in a particular geographic area). Franchising is most appropriate when a firm:
Question 2 How could Tensek and Pacek overcome the weaknesses they possessed and the environmental threats?
Question 2 However…
Question 3 How could Tensek and Pacek protect their intellectual property and business format know-how? How could they fight imitators?
Question 4 What should be the next steps? How could they become the biggest and most successful coffee house nationally or regionally?