BySapana Agarwal
Vaibhav Alone
705
Smita Bommera
Pramod Kamble
08-702
0808-712
08-743
Franchising is a business method that
involves the licensing of trademarks and
methods of doing business.
Owner
(franchisor),
(franchisees)
affiliated
dealers
it is one that's providing increasing
opportunities for companies and individual
entrepreneurs.
Today franchise concepts span over 70
different product and service sectors,
including such businesses as
o auto-repair shops,
o children's art centers,
o fitness clubs,
o law & consulting practices, and
o many home based businesses.
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
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
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
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
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.
Cont…
Continuing royalty payment :
1. Payment on the basis of monthly or weekly
gross income.
2. Franchise may have to pay royalty even if
business is loosing money.
3. Royalty payment is usually around 5% of
gross income.
Cont…
Advertising fees :
1. Payment
of
national
and
advertising fees.
2. Less than 3% of the gross income.
regional
Other fees : Include charges on training
additional staff, providing management
expertise
when
needed,
computer
assistance and support services.
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?
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?
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
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
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
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
DHEERAJ GUPTA- THE VENDOR OF VADAS
Entrepreneur
Company
Based In
Founded In
Industry
:
:
:
:
:
Dheeraj Gupta
Jumbo King Foods Pvt. Ltd.
Mumbai
August, 2001
Hospitality/ Service
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
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.
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.
CORE COMPETENCIES
• Quality
• Hygiene
• Size
TARGET AUDIENCE
• Urban Population
• Age Group: 18-30 YRS
• College Students
• Working People
• Executives
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.
Territory:
Training Provided:
Agreement Term:
Fast Food Retail Chain
Nationwide
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
“If a Burger can get listed, why not a VADA PAV?”
History
HH
1948 - Burt and Irvin opened six stores
1949 - co’s own productionHistory
facility opened in Burbank
1953 - hired Carson-Roberts Adevertising
1962 – First to introduce Cakes
1972 – Co went public
Baskin-Robbins
Global Presence
Local Focus
Outsourcing
Startup Cost
Franchise Fees
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
Baskin-Robbins
Fun facts
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).
Thanks…