Are you prepared for international franchising?
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Transcript of Are you prepared for international franchising?
Are You Prepared for International
Franchising?
Phi Nguyen International Franchise Summit 2015
Kuala Lumpur March 2015
Are you ready to franchise? 1. Proven Business Model 2. Uniqueness of products / services 3. Brand 4. Easily duplicated 5. Easily learned 6. Franchising support structure & culture
Are You Ready?
Growth
vs. Survival Strategy
Why International?
Ø Network Growth
0%# 20%# 40%# 60%# 80%# 100%#
McDonald's#
Yum!#Brands#
Doctor's#Associates#
Seven#&#I#Holdings#
Burger#King#Worldwide#
Starbucks#Corp#
The#Wendy's#Co#
Dunkin'#Brands#
Darden#Restaurants#
Domino's#Pizza#Inc#
Franchise#and#CompanyQowned#Outlets#at#10#Leading#Operators#2013#
CompanyQOwned#Outlets# Franchised#or#Licensed#Outlets#
6
KEY FACTS AND FIGURESW H Y A S E A N M A T T E R S T O U SASEAN policy to form an Economic Community with free movement of goods, services, labour and capital by 2015
ASEAN FDI inflows overtook China in
2013
2020
2018
4
US$4
5.6% 5
TRILLION
LARGESTEXPORTER
timeslarger
by (roughly that of Germany in 2013)
of the world’spopulation
LARGEST ECONOMY
Asean’s economy could exceed
and nearly
2030
%
5th
by
Home to nearly
Will rank as
Annual average growth of
for the N E X T YEARS
More than double the USA, triple that of the EU
the region’s labour force will expand
EXPONENTIALLY
(adding 28m new workers).
Demographics are positive and hugely advantageous to growth – young labour force.
AND
BY
Between
2014
3rd
1.7%2018
Will be the world’s
BY2018ASEAN consumerism
is set to grow
Middle Class
Productivity is creating a giant middle class.
Middle class households
will morethan double
retailers, luxury market, manufacturers, auto industry, IT industry, healthcare, financial services and more
BY 2018 80mTO
Significant opportunities for
BY
Why International?
Ø Brand & Enterprise Value
Why International?
Ø Cash-flow
Why International? Yum! Brands Statement of Income
In millions USD
Revenues 2013 2012 2011 Company sales $11,184 $11,833 $10,893 Franchise and license fees and income
1,900 1,800 1,733 Total revenues 13,084 13,633 12,626
Why International?
Ø Network Growth
Ø Brand & Enterprise Value
Ø Cash-flow
What Are You Getting Into? Ø Growth Strategy:
² Opportunities vs. resources
² Roadmap
² Market research
INDONESIA IN 2030
What Are You Getting Into?
Ø Business modeling ² Regional & local differences:
ü target consumer profiles & needs ü Buying power ü Consumption occasions…
What Are You Getting Into?
Ø Business modeling ² Regional & local differences:
ü Product / Service Offerings ü Pricing ü Operations: SOPs, training… ü Design & concept
• KFC’s India added spicier versions of its chicken, including a Fiery Grill flavor that mimics the red hue and hot spice of traditional tandoori, and Curry Chicken, modeled after popular local curries.
• fried vegetable strips and burger patties made of either potato or vegetables.
• pricing strategy: launched a Streetwise branded menu targeted at students who typically have very little income with items starting as low as Rs25 (US$0.40).
Catering to local palates
© Euromonitor International 2015
McDonald's: Dominant the World Over, Yet No Two Markets Alike Datagraphic | 01 Nov 2012
The world's number one foodservice chain by some distance, the global McDonald's brand nonetheless conceals a great deal of diversity. Effective localisation has become an increasingly important component of strategy over the last ten years, encompassing everything from locally-relevant menu items to customised formats, like dessert kiosks or the fast-growing McCafe in-store coffee shop addition.
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What Are You Getting Into?
Ø Business modeling ² Financial modeling:
ü Supply Chain ü COGS ü Labor ü Rent ü Operating expenses ü Franchise fee structure ü Profitability
What Are You Getting Into? Analysis: - COGS - P&L - Cash-flow - Break-even
- ROI
What Are You Getting Into?
Ø Business modeling ² Growth models:
ü developed vs. developing markets ü Franchise vs. chain ü Develop & Re-franchise ü Partnership
What about strategic markets such as China?
What about strategic markets such as the GCC?
What Are You Getting Into? Ø Business Modeling:
² Regional & local differences ² Financial modeling ² Growth model
What Are You Getting Into? Ø Franchise support structure & culture
² Marketing ² People & Training ² Operations ² Development ² Legal ² Finance
What Are You Getting Into?
Ø Partner recruitment & selection Ø Market entry strategy & market
development plan
What Are You Getting Into? Ø Business Modeling Ø Growth Strategy Ø Franchise support structure & culture Ø Partner recruitment & selection Ø Market entry strategy & market
development plan
Which Franchise Model?
Master Franchise Agreements, Area Developer Agreements or Unit Franchising? Ø Most commonly used: MFA, ADA
Ø Model selected may be determined by nature brand and development objectives.
Ø Consider different models for different markets depending on geographical, financial or socioeconomic factors.
There is no substitute for Good Legal Advice relating to:
Ø Franchise Agreements
Ø Marks and Intellectual Property
Ø Company Structure
Ø Franchise Regulations in Your Market
Ø Laws & Franchise Regulations in Prospective Franchise Markets
Important Legal Considerations?
Avoid These Common Pitfalls
Ø Stick to your development plan Ø Never compromise on your vision and values.
Ø Choose your franchise partners carefully
Ø Don’t assume your franchise partners know how to manage a multi-unit franchise business.
Ø Ask for explanations and justifications before modifying your systems
and standards.
Thank you & wishing you every success
with your international expansion!
Phi Nguyen [email protected]