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Franchise Know-how & The Art of Reproduction

Franchise Know-how & The Art of Reproduction. Ramon Vinay President, Francorp International. Francorp’s credentials. Created in 1976 Serving 40 countries Developer of more than 4 thousand franchise networks Consultant to more than 200 of the world’s top 500 franchises

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Franchise Know-how & The Art of Reproduction

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  1. FranchiseKnow-how & TheArt of Reproduction Ramon Vinay President, Francorp International

  2. Francorp’scredentials • Created in 1976 • Serving 40 countries • Developer of more than 4 thousandfranchisenetworks • Consultantto more than 200 of theworld’s top 500 franchises • Consultantto AMPM minimarkets, number 2 amongtheworld’s top 500 franchisesfor 2011, over McDonald’s* • *Entrepreneur 500 Franchises

  3. Francorp Middle East: • Operatingsince 2006 • Dubai, Kuwait, Kingdom of Saudi Arabia, Egypt, Jordan,Syria,Turkey, UnitedArabEmirates, Lebanon. • Over 100 franchisenetworksdeveloped in theregion.

  4. Partialclientlist International Middle East

  5. Whatis a franchise? • A license to exploit a business model and trademark, supported by the transfer of know-how on the run the business efficiently, based on the franchisor’s experience, accompanied with: • Policies and procedures • Permanent technical support and supervision • Leadership and full commitment to serve the system

  6. The players in franchising • Franchiseagreement • Trademarklicense • Training/Ops. Manuals • Operationalsupport • Marketing • Procurement • Otherservices Franchisor

  7. The players in franchising • Franchiseagreement • Trademarklicense • Training/Ops. Manuals • Operationalsupport • Marketing • Procurement • Otherservices Franchisor Franchisees

  8. The players in franchising • Franchiseagreement • Trademarklicense • Training/Ops. Manuals • Operationalsupport • Marketing • Procurement • Otherservices Franchisor Franchisees Customers

  9. The players in franchising • Franchiseagreement • Trademarklicense • Training/Ops. Manuals • Operationalsupport • Marketing • Procurement • Otherservices Franchisor Franchisees Customers

  10. The four generations in franchising • Imported foreign franchises • Local entrepreneurs start franchising in the same types of business • Local entrepreneurs start franchising in other types of business • Local entrepreneurs start exporting local franchise concepts

  11. Granting of a franchise • The franchisee pays an Initial Franchise Fee • The franchisee pays a permanent fee (royalty) to the franchisor on a weekly basis • Percentage of gross sales or fixed amount (or both) • A fee to contribute to a national marketing fund • The franchisor provides know-how and permanent advice and services • Advertising –Training –Procurement +

  12. Why do businesses franchise? • Capitalize on existing network • Capitalize on production facilities/ - -Acquire captive outlets • Enter stock market • Managebranding vs bricks • Exploit sales opportunities • Add value to trade name • Internationalize • Religion

  13. Franchisingsolvesthe 4 majorproblemsexperiencedbyevery single business, from a modest stand in a sidewalksellingfalafel, tothemonsterbusinesseswiththousands of outlets and employees.

  14. The 4 majorproblems: • 1.- Financialresources • 2.- Staffing • 3.- Competition • 4.- Timing Thesolution…

  15. OPM OtherPeople’s Money

  16. Motivations to buy a franchise • Permanent • Profits • Status

  17. Motivations • Variable • Speculative investment • Expand investment portfolio • Patrimony • Occupational therapy

  18. Motivation • Incidental • Productive use of candidate’s land

  19. Creating a franchise program of the highest professional level in 5 easy steps

  20. Franchise structure Franchise

  21. Franchise structure Strategic Franchise

  22. Franchise structure Legal Strategic Franchise

  23. Franchise structure Strategic Legal Franchise Operational

  24. Franchise structure Strategic Legal Franchise Marketing Operational

  25. Certainty: to ensure success as much as possible

  26. Define your goals • Trans-generational • Exit strategy • Market domination • Profits

  27. Certainty • Strategic • Legal • Operational • Marketing

  28. Strategic planning Every single decision is made in advance

  29. Everydecisionshouldhave a financial, organizational, logistical and politicalevaluation

  30. Legal documentation Everything you commit to -and everything your franchisees commit to- is feasible and profitable

  31. Operations Manuals • Quality assurance • Operational efficiency • Operational effectiveness

  32. Marketing campaign • The RWA factor • Ready, willing and able • Qualified candidates vs simply interested parties

  33. Step 1: Franchisability

  34. Determine franchisability • Financially viable? • Both parties should make money • Reproducibility • Every single angle of the business • Know-how transfer and services to the system • How competitive is your franchise offer in the open market?

  35. Step 2: StrategicPlanning

  36. Strategic planning • Vision, Goals and objectives • Competition • Other franchises- investment opportunities • Franchise formats • Franchisee profile • Costs • Services

  37. Franchise market • Benchmarking • Initial fee, Initial investment, Agreement term, services • Consumer market • Know yourbusiness • Know your customer • Marketing / advertising

  38. Formats to grant franchises • Joint venture • License • Master • Regional • Individual • Multi- unit • Area development • Conversion • Retro- franchise • Co-branding

  39. Franchisee profile • Age • Resources • Shares business vision • Owner- operator / absentee • Investor • Attitude

  40. Revenue sources protection program • Is the permanence of our trade name in the POS critical to our success? • If so, we should protect that permanence over and above all other considerations?

  41. Revenue sources protection program • Operational • Site selection criteria • Strategic • Business sources protection • Store • Telephone numbers • @- commerce • Client data base

  42. Territory • Boundaries • Criteria • Population • Distance • Socio – economic level • Level of sales • Stationary vs pro-active

  43. System growth • Geographical definition • Business characteristics • Computers vs food • Marketing needs • Regional/ national • Service capabilities • Distance, staffing, communications, costs

  44. Supply • Capabilities/limitations • Critical vs non-critical • Secondary • Commissary (virtual, administrative) • Time, price, quality • Designated suppliers • Authorized suppliers

  45. Pricing, promotions, discounts • Criteria • Design • Costing • Participation • Institutional • Opportunistic • Local/ regional

  46. Services to franchisees • Business plan • Site selection • Unit development • Remodeling • Soft / grand opening • Marketing • Training

  47. Operations Manual • Administration Manual • Chart of accounts • Human Resources manual • Operational /administrative software

  48. Training • Initial • Permanent • Permanent assistance • Centralized marketing • Other • Staffing to serve the system

  49. Franchise fee • Recovery of investment in franchise program • Floor value • Ceiling value • Perceived value

  50. Royalties • Percentage / flat fee • Gross sales / net sales • Incentives • (higher revenue-lower rate) • Proformas • Expenses • Re- investment

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