Building BIG Brands in Asia
Pacific
Henry Saliba
Director of Development
China
Agenda
 YUM Brands / YRI – who we are
 Asia Franchise Business Unit (AFBU)
 Our business philosophy
 Our franchising model
 How we engage
Page 10
We are the largest restaurant company in the world!
34,880 restaurants as of Dec 2009
5,377
16,143
11,681
We are also the largest retail developer in the world
1700+ gross builds a year in 2009!
266
US
YRI
569
CHINA
898
YRI’s asset base is vast…
Over 13,000 restaurants, of which 83% are franchised
250 294
5,158
8,248
As of Q1 2010
4000+ restaurants in Asia Pacific alone!
LARGEST
contributor toYRI’s
Operating Profit
AFBU covers 14 countries ; 29 franchisees and all 5 brands
Pacific
South East Asia/HK/Taiwan/Korea
Sales
Stores
:
:
$1.5+ billion
2500+
Hong Kong
Korea
Sales
Stores
:
:
$150MM+
150+
Countries
:
Franchisees :
Taiwan
2
13
Japan
Sales
Stores
Countries
:
Franchisees :
11
15
:
:
$1.5+ billion
1500+
Countries
:
Franchisee
:
(Sub-Franchisees :
1
1
108)
Strong growth since spin-off – 1998 to 2009
AFBU
Units
System Sales ($MM)
Operating Profit ($MM)
Added 2000+
Double Digit CAGR
4x
Page 16
KFC is the “800 lb gorilla”!
Japan
Asia Franchise (ex-Japan)
A&W
LJS
Taco Bell
PH Company
Pizza Hut
PH Franchise
KFC Japan
Franchise
KFC
% of Sales
KFC Company
% of Sales
Our
business
philosophy
Page 18
Our
business
philosophy
Page 19
Our
business
philosophy
Page 20
We are about ACCELERATING THE
BUILDING OF BIG BRANDS
How our business is organized
Support
Core Functions
Functions
Brand
Restaurant
Product
Asset
Development
Excellence
Excellence
Development
Franchise Excellence
Organization Excellence
Building
Providing
Developing
Building
Brand
Maniacal
Great
Great
Equity
Customer
Products
Restaurants
Service
Finance
Excellence
Our franchising model
GLOBAL FRANCHISE PARTNERSHIP (GFP)
WORLD-CLASS
FRANCHISOR
 Consumer proposition
 Business system
 Commercial terms
 Culture
WORLD-CLASS
FRANCHISEES
 Alignment
 System discipline & process
 Ready for growth
 Constructive engagement
Roles & responsibilities
Dallas RSC
– Globalization of Best Practices
– Defining Operating Standards
Business Units & Franchisees
– Creation of Best Practices
– Execution
The partnership works!
• Dominant Brands
• Dominant Market Share
• World Class Assets
• World Class Teams
And our partnership has a bold future…..
YUM = 1,700 openings per year - 4 restaurant
openings per day!
Asia at almost an opening every day!!
YUM = 2,500 remodels per year - 7 remodels per
day!
Asia at 2 remodels per day!!
• Best looking, branded restaurants in the world
• More powerful brands
Our franchisees make this possible
New Net Openings
924
Company
17%
852
780
785
'05
'06
900
Equity
Franchise
83%
FZ
'07
'08
09
27
Our GROWTH & LEADERSHIP mindset is key
Market penetration drives
Scale advantages
– Supply chain
– Media efficiency
– Convenience
– Awareness
– Market Share
Competitive Advantage
– Raises barriers to entry
– Builds credibility with developers/landlords
– Assets that separate us from the competition
Our Franchising Model
 Franchisee gets:
– License to use our Trademarks for a defined
term
– A business system
 Franchisor gets:
– Fees
– Growth of System,
goodwill
 Dynamic relationship
Franchisee/Franchisor Relationship
 There is no agency or partnership
 YRI and Franchisee are independent parties
 Both parties should be sensitive to information on which the other party
may seek to rely
Franchise Agreement
 Key Terms
–
–
–
–
Right to Use the System, System Property, and Trademarks
Confidentiality protection
Protection of System Property & Goodwill of System (non-compete)
Renewal Criteria
 General Principles
– Site-Specific License: no territorial exclusivity or radius protection
– No Sub-Franchising
Franchise Agreement
 Trademarks and System Property
– The Franchise Agreement includes
comprehensive provisions aimed
at protecting our Trademarks and
intellectual property rights
 Confidentiality
– The franchisee’s obligation of confidentiality extends from the terms of the
Franchise Agreement and Manuals to all other information concerning the
System or YRI’s business and affairs
Franchise Agreement
 Principal Operator
– The franchisee is required to appoint a Principal Operator
to be primarily responsible for the management of the
business and for dealing with YRI
 Guarantee
– The Franchise Agreement requires a guarantee to be
obtained from appropriate parties
Franchise Policies Manual
 Contains operational details
 May be amended by YRI any time by notice to franchisees in
response to operational changes
 Formalizes franchisee notification/receipt systems for annual
updates
 Is incorporated into and forms part of the Franchise Agreement
Non-Compete
 During the Term, YRI must approve any franchisee
involvement in any competitive food concept or
business anywhere in the world
 Approval may be withheld for concepts/ businesses in
which chicken, pizza/pasta, Mexican, or beef/chicken
burger products represent a certain % of the product
mix
Development Agreement
 General Principles
– Applies where franchisee is granted the right to develop stores in a specified
Development Area
– Franchisees are not given territorial exclusivity. A first right of refusal is a form
of territorial protection
– Development rights subject to compliance with global Expansion Criteria
Page 36
WHY is Development so important?
Our Goals
Building of
Big Brands
Build & Rebuild
Units
Build World
Class Designs
Build Profitable
Restaurants
Build People
How we engage - Top 6 Franchisees ranked by System Sales
Country
Brand
Franchisee
Ownership
Japan
KFC/
PH
KFC Japan
Public Listed
(majority : Mitsubishi)
Malaysia/
Singapore/
Cambodia
KFC/
PH
QSR Brands/
KFC Holdings
Public Listed
(majority : Kulim)
Indonesia
KFC
PT Fastfood
Indonesia
Public Listed
(family controlled)
HK/ Taiwan/
Vietnam
PH
Jardines
Public Listed
(family controlled)
Philippines
KFC
High-Flyer Food
Hong Kong
KFC
Birdland (HK)
Private
Private Equity
(Navis)
AFBU Partner Engagement Model
TYPE
PROCESS / METHODS
STRATEGIC
1. HWWT2 Action Planning Meetings  One APM with each partner per
2. Partners Council
year. Strategic / troubled
3. Franchise Convention
markets have more
 Partner’s council held once a
year
 Franchise Convention once
every other year
BUILDING KNOWHOW
1.
2.
3.
4.
DRIVING RESULTS
(ONGOING BUSINESS
SUPPORT)
1. Organization structured
functionally & by brand to
provide markets ongoing support
Yum Colleges
Conferences & Workshops
Best practice visits
Champs Challenge / Champions
Club
DETAILS
In 2010:
 2 Yum colleges held
 1 workshop held
 4 conferences held
 7 Best practice visits arranged
 2 events held
 Marketing, Operations – by
brand
 Development, Finance, SCM,
QA, R&D, HR - Shared
Page 40
Our current franchising needs?
Interested?
Contact Henry Saliba: henry.saliba@yum.com
More than a restaurant company……
…….a global leader in Franchising