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Investigating and Evaluating Small Business Franchising Options

Info: 8003 words (32 pages) Dissertation
Published: 10th Dec 2019

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Tagged: BusinessSME

 Task 1

Franchising is a long-term cooperative relationship between two entities a franchisor and one or more franchisees that is based on an agreement in which the franchisor provides a licensed privilege to the franchisee to do business. The franchisor grants the franchisee the right to use a developed concept, including trademarks and brand names, production, service and marketing methods and the entire business operation model, for a fee. The franchisee then provides the time, capital, and desire to utilize the brand and services provided by the franchisor to build a thriving business.

Franchisor The company that allows an individual (known as the franchisee) to run a location of their business. The franchisor owns the overarching company, trademarks, and products, but gives the right to the franchisee to run the franchise location, in return for an agreed-upon fee. Fast-food companies are often franchised. Franchisee A franchisee is an individual who purchases the rights to use a company’s trademarked name and business model to do business. The franchisee purchases a franchise from the franchisor. The franchisee must follow certain rules and guidelines already established by the franchisor, and in most cases the franchisee must pay an ongoing franchise royalty fee to the franchisor. Franchise A privilege or right officially granted to offer specific products or services under explicit guidelines at a certain location for a declared period of time. Linked individual enterprises The franchisor is linked to the franchise and any other franchisee. Agreed business terms Documents for franchise contract for setting up a term and relations to tell both parties what they must do. Offer standardised products / or services You must have Operational Manual, and you must follow this exactly to produce the goods and service. Specified areas we can only sell in your territory. Mutual marketing and selling strategies Some of the marketing which you share with other franchises and some of marketing you done yourself. Types of business franchises, Integrated business operation it is type of business operation, the businesses come out negotiating the provision of services or products to other business and will not be directly in touch with consumers. Single product or service operations In this type of franchise the franchisor will provide the brand name or trademark together with relevant equipment, uniforms and marketing material in order for the franchisee to sell the products or deliver the services to an established standard and reputation. Manufacturing and wholesale The franchisor products are manufactured and distributed by the wholesaler acting as a franchisee. Manufacturing and retail in this type of franchise format, the franchisor’s product is sold directly to the public by the retailer acting as a franchisee. Wholesale and retail in this type of franchise format, the retailer is acting a franchisee buys products from the wholesaler of franchisor. Retail product in retail product franchise, the franchisee sells the franchisor’s product directly at the retail level at a particular location under the franchisor’s brand name. Retail service in retail product franchise, the franchisee sells the franchisor’s service directly at the retail level at a particular location under the franchisor’s brand name. Ideas in this process of franchising the franchise comes up with and an idea of a unique product. In which he remains the owner of the idea and outsources the idea to a franchisor that develops the product from the idea and markets the product. The franchise gets the payment for his idea in terms of loyalty. Intellectual property this franchise includes rights to Trade Mark, trade names, logos, patents, trade-secrets and know-how of a business. It includes a license to use the business system, an obligation to share developments and improvements, and the right for the franchisor to determine how the business operates. These can be divided into the “common name leg,” which gives trademark permission, the “fee leg,” stating how much must be paid to begin operations, and the “operations and marketing leg.” All internal systems must be standardized inside the franchise. They take longer and cost more to set up than licenses.

Business idea, The market for fast food is huge in New Zealand, but the intense competition can make it difficult for start-up fish and chip shops or burger bars. To compete successfully with large chains and established smaller food businesses, entrants to this market need a considered plan, knowledge of the industry and the right training. The population is growing and as people’s lives become busier there are plenty of people who don’t want to cook after a day’s work. The alternative is to visit a fast-food outlet. Selling food is obviously one of the oldest forms of commerce, and it will never exactly go out of fashion. Fish and chip shops have been around since the late 19th century. Demand for fast food is robust but the market is saturated and people must be mindful that feeding people isn’t an easy career option. Evaluate its suitability for franchising ability based on the following criteria: Site selection assistance (VERY IMPORTANT),Training: Corporate location-3 to 4 days,
On site including grand opening, Continued operational and marketing support (National Public Relations Firm).  Discounts on purchase of hard/software as well as commercial fry machines. Kitchen training (video plus instructional manual): Carefully chosen, privately labelled (logo) fish. Carefully chosen, privately labelled (logo) chip, Resale of logo-designed T-shirts, sweat shirts, package paper. Opportunity to receive promotional new computer programs at no cost. Proper menu pricing and protocols (opening, closing, store maintenance, cash register, etc.), Home page hosting provided for franchisees.

Approved for SBA (Small Business Administration) assistance, Generally, we want to prevent our franchise from needless research as well as repeating mistakes in setting up your store.

Resources, financial and human resources used during the creation of the piece as free of costs to be included in the cost structure, as expenses. The resources are come from the franchisor and we pay 1% of total profit per week. Benefits and rights included in the costs Legal, contractual, financial and accounting are some of the benefits and rights that are included in cost structures. With the cost-benefit analysis, the company will be able to calculate the rights and benefits included in the costs. The inclusion of these elements will ensure that the balance between the cost structures has arrived. Ongoing Training, Guest shopping from head office staff,  telephone hotline, staff payment and newsletters. Payments and liabilities for products and / or services The additional requirements for specified liability loss treatment contained in IRC Act, 1986 do not apply to product liability expenses. There is no supply come from the franchisor, but you have purchase from some regular brand of companies. Goodwill is an accounting concept meaning the value of an entity over and above the value of its assets. The term was originally used in accounting to express the intangible but quantifiable “prudent value” of an ongoing business beyond its assets, resulting perhaps because the reputation the firm enjoyed with its clients with its book value. There is no payment for goodwill. Royalties, Payment made for the use of such property, as a franchisor, trademarks, patents, sheltered workshops and other resources is called royalties. The amount is usually a percentage of revenues derived from its use. Based on the terms specified in the contract, the company will pay a specified amount for the use of the trademark. Royalties are 2% of sale over $50000 dollar.

Responsibilities of franchiser in Supply of products / and or services depends upon the franchisee agreement and franchisee preferences that what he/she needs to be done in the whole process of contacting suppliers and franchiser for gathering a product or raw material for the outlet. They are not allowed to purchase any product from outside, but they may purchase extra service. Business training support depends on the agreement or the experience franchisees have in similar field but franchiser had to provide a small training on what to do or not to do according to the company operational manual. This is provided by the franchisor normally at start-up. Marketing and promotional support As franchisee is new in field so he/she might not able to generate profit in early days just because they don’t have any ideas to promote their product in area and how to run  promotions in outlet on the products in this condition franchiser’s main responsibility toward franchisee to promote product in area. I’m going to provide generic marketing for the franchise. For example: website, letter box , wall poster. Provision of financial information on overall performance the goal of this investigation was to identify whether boards of trustees that proactively adopt theoretical and normative guidelines for the financial oversight process are more likely to achieve their better financial performance. Market information, franchise distribution, common financial problems about all other franchise. Financial and statistical services to the franchisee. The franchisee may be ready to start a new business, but may not have enough experience in running a business and therefore cannot be too comfortable with from scratch. Most new businesses have a fairly high failure rate  so, to support and strengthen the company, the franchisee, the franchisor must have access to financial services and global statistics to help the franchisee to achieve its objectives within the agreed period of involvement. As franchisee is new in a field he/she may not able to run their franchise outlet as good it has to be so risk of failure is higher than the chance of getting success. About eighty percent of them fail in their first three years. Franchising reduces the effect of the curve. One of the main responsibilities of the franchisor to provide support for risk management for the company to ensure that name is not destroy by poor management and performance. The franchisor must have a support system that allows him to contribute substantially to the growth of the franchise business. Legal and regulatory compliance assurance, The franchisee must receive information and documents by the franchisor before the franchise agreement was signed. The Franchising Code of Conduct requires that the information provided by the franchisor to the franchisee. Under the Code, the franchiser is required to give clients the following legal documents are; Disclosure Statement, Franchise Agreement, Term of the agreement.

Responsibilities of franchisee are Capital requirements the cost of opening each new franchise will vary depending on the size of the leased space, equipment costs, leasehold improvements, utility deposits, and other various costs that will be influenced or determined by the geographic location of the outlet. Actual cash requirements will fluctuate based upon the net worth and credit worthiness of each individual applicant. Form and term of payment to the franchiser, It depends upon the franchisee agreement between franchisee and franchisor on their own terms and conditions which suitable to both of them and these conditions are applied to all the payments such as royalty payments, goodwill cost, cost of raw material of additional support and services, costs related to mutual efforts, and other. Royalty payments A payment to an owner for the use of property, especially patents, copyrighted works, franchises or natural resources. A royalty payment is made to the legal owner of a property, patent, copyrighted work or franchise by those who wish to make use of it for the purposes of generating revenue or other such desirable activities. In most cases, royalties are designed to compensate the owner for the asset’s use, and are legally binding. Royalties are 2% of sale over $50000 dollars. Personal work commitment Franchisee has to meet the franchisors requirements for running the outlet. These requirements could be as followed dress, assigned POPs, other hygiene instructions. I will be full time with 4 weeks paid holiday per year. Operational requirements are those statements that “identify the essential capabilities, associated requirements, performance measures, and the process or series of actions to be taken in effecting the results that are desired in order to address mission area deficiencies, evolving applications or threats, emerging technologies, or system cost improvements. 3 Full time staffs, 2 part time staffs, 7 days a week between 8:00am-8:00pm. marketing requirements Franchisee need to know about the market and the ways to attract the customers by using different market strategies. To highlight the brand name in local area franchisee need to use different marketing ways like paper media, electronic media, flayers, broachers, hoardings, posters, but most important ways to do it is word of mouth and your actual behaviour with the customers when they pop in to the doors and these 2 ways totally depend upon the 5 things which are services, quality, relationship, ease, value. We use people’s letter box and local club to help the marketing advertisement. Also provide discount voucher in the same suburb. Reporting the management reporting requirements will differ from one franchise to another, depending on the type of industry, size of network, and complexity of the system. The franchiser needs to keep up-to-date with the progress of each franchise unit, making detailed reporting necessary. In addition, franchisees may institute their own internal reports to suit their own needs. Have to meeting with head office at least once a month to discuss the operating issues. Term of involvement, The franchisee agreement shows all the terms and conditions on which the franchisor and franchisee meets and only on those terms they able to engage in and this agreement set all the terms and conditions on  franchisee that how he/she going to operate the business and what advantages he/ she have while they are using franchisors name and brand. Normally 3-5 years and depends on the stability.

 

 

 

Task 2 Report

Table of Contents

Franchise concepts ………………………………..8

Franchise Support Principles………………………….8

Range, availability and qualty of products, services, ideas and intellectual property in relation to similarproducts in the market…..9

Structure of the franchisor organistation and the number of franchisor outlets to be established…..9

Capacity of the business venture to support franchise outlet……….9

Quick analysis on tip top ability to establish new franchise outlets…..10

Performance of previously established franchise outlets…………11

Business performance of competing business and franchise operations is research and evealuated…..11

Resources, expertise and benefits to be provided by the franchisor are determined in relation to the needs of the proposed franchise operation…..12

Resources, business background, expertise and benefits required by the franchise are determined in relation to the needs of the proposed franchise operation …..12

Franchise business plan is evalulated in terms of business establishment, operation and development strategies3

Operation manual for franchise operations are evelauated in terms of adequacy for the nature of the operations and the franchise abilityto achieve operational standards and targets3

Nature and extend of marketing and promotional resources4

Communication needs4

Site selection parameters are obtained and reviewed for their ability to meet franchise performance projections4

 

 

Need for strong and durable business franchise concepts in terms of potential to establish a positive business image and viable franchise operation.

 

The purchase of strong business franchises at attractive prices offers the greatest opportunity for superior long-term investment returns with minimal risk of permanent loss of capital. Unlike most companies whose products or services are mere commodities, a few rare privileged companies occupy competitively advantaged positions in industries with growing demand. By virtue of their privileged positions, these companies earn high returns on equity and grow their earnings power over time with reasonable predictability, persistently creating value for their owners that will eventually be reflected in their stock prices. Given that stock prices fluctuate around a company’s intrinsic value over time, when such companies are purchased at a reasonable discount to that intrinsic value, an investor reaps the combined benefit of growth in the business’s value and the reappraisal of its market price while enjoying protection against loss. The challenge lays both in recognizing such valuable business franchises and finding ones offered at an attractive price.

Franchise Support Principles

Company culture is defined as the pervasive or common attitude among the employees and managers. Whether in franchising or in the corporate world, it is this same attitude or culture which sets the tone for company policy, communications, personnel decisions, resource allocations, marketing campaigns, public relations, and the development of an effective franchise support organization. Some franchise support how to manuals and publications focus mainly on tactical issues, such as a basic field-support-to-franchisee staffing ratio, or the quality of collateral marketing materials, or the array of functionality on the company’s intranet system. All of these tools or tactics pale in comparison to the organizational culture which truly believes in, before anything else, the bottom-line mission of franchisee success that is individual unit profitability. While the company culture indeed sets the tone for the effectiveness of franchisee support, there are several other fundamental principles which also play a major role in the ultimate success or failure of a franchise support organization. The principles of maintaining strong franchise relations, of embracing the never-ending process of organizational development, and the commitment to best practices in field support techniques are all equally important factors in the development of an effective franchise support organization.

 

 

Range, availability and quality of products, services, ideas and intellectual property in relation to similar products in the market place

Requirements of any such franchise are the brand recognition. If the franchisor has already established a customer base and reputation in the market niche and if there is a market potential within the region, then it is already given assumptions that even though there are other readily available products or services within the vicinity, loyal customers would eventually opt for the brand favorite.

 

 

 

Structure of the franchisor organization and the number of franchisor outlets to be established

Even though there is no singular answer for the “best” organizational structure specifically suited to support a franchise organization, there are many common elements found in most successful companies in the industry. Normally, a single unit or department will be dedicated to Franchise Support Services and within this group are found the common positions of Field Support Rep, Senior Franchise Consultant, and “inside” or “help desk” support personnel. Other less common positions might include members of the accounting team, a Real Estate Specialist, Compliance, Staff members, Administrative Support and other operations-related positions.

Beyond the Franchise Services group, many franchise companies will also dedicate their Marketing Department and sometimes an Information Technology (IT) Department as part of the support organization structure. Marketing personnel, including graphic artists, production assistants, and other staff members will manage and deliver a variety of collateral materials intended specifically for use by franchisees to uphold brand identity objectives, as well as promote active sales growth. Most successful franchise organizations also dedicate a Franchise Development Department toward the objective of selling new franchise units. This department is also an integral part of the support organization since it is dedicated to the process of screening, qualifying, and selling new franchise units. Without a top quality and successful development effort most franchise organizations cannot sustain all their other support objectives.

 

Capacity of the business venture to support franchise outlet

It is essential that the franchisor provide the franchisee with the operational manual, but the copyright and the rights remains with the franchisor, provide the franchisee staff with training, provide franchisee with reasonable continuing assistance and advice and advice on loan requisition, as well as marketing and advertising advice.

Given a wide variety of products and services being delivered by franchise organizations within their respective market segments, it is difficult to narrow down the industry support standards into a one-size-fits-all format. For this reason, there tends to not only be a wide variation of standards within similar organizations, but also a tremendous amount of variation among different types of franchise concepts, particularly between service-oriented businesses and retail or product-based organizations. In the end, franchise support “standards” are driven by both the business concept, as well as by the culture adopted by the parent organization.

Following provides a quick analysis on Tip top ability to establish new franchise outlets

Criteria Analysis/Implications
Previous business performance Tip top has 31 years of history and a customer base (approximately 2 million customers). The company has a healthy 13.3 per cent of the Australian bread market, which is quite significant considering the intensity of competition. This clearly shows that the company has performed very well and has a strong market presence and brand.
Organizational and financial structure Tip top, more than 700 affiliates worldwide, making it one of the world’s largest franchise systems in the bakery, and there are more opportunities ahead. The worldwide revenues for the year 2010-11 were $ 571 million and this figure will grow by 4-5%, which is more than $ 600 million. This shows that the Tip top, as an organization is strong enough to capitalize on the resources and the basic position of the company is healthy.
Business life cycle stage Tip top is now growing, and there’s a good amount of features, such as openness, to produce more products to target segments of greater access to new markets and diversification, etc. The company plans to increase already its number of members to 150 in the coming year. Despite fierce competition, the market is large, growing, and there is plenty of room for expansion.
Organisational capacity to support more franchise outlets He has more than 700 franchisees worldwide, making it one of the world’s largest bakery franchises, and there are more opportunities ahead. At this stage, can lead to serious tip top is expanding its horizons of trade, which may include the hiring of new staff, increased office space to work or invest in equipment to deal with a wider customer base. Total sales of the company for the year 2010-11 were $ 571 million and this figure will grow by 4-5%, which is more than $ 600 million. This shows that the tip top, as an organization has its own strengths sufficient resources to your advantage
Business life cycle stage Tip top is currently at it growth stage and there are several windows of opportunities open such as, producing more products to target more segments, entering new markets, diversification and so on.   The company is already planning to increase its number of franchisees by 150 in the coming few years.  Apart from the competition the market is large and there is a large way for expansion.

Performance of previously established franchise outlets

I have utilized the example of Bakers Delight in order to explain this particular abstract. The company is looking to recruit 50 new franchisees across NZ network and will also hire 160 apprentice bakers to help facilitate this growth. The market for fresh bread continues to grow in line with the trend towards healthy eating at home. Bakers Delight currently holds a 13.9 per cent share of the New Zealand market. (Roy Morgan Single Source Data March 09). The fresh bread market in NZ is currently worth NZ $1.2 billion. Bakers Delight’s expansion plans in 2009 will see it look for franchisees for new and existing sites across the network. Opportunities include 20 across Auckland and Wellington, 10 in Christchurch, 18 across Otago and other area. The company trades under COBS Bread. Bakers Delight has been a major corporate partner of the Breast Cancer Network for eight years, raising almost $2.7 million within this time. Through its bakery network, the company donates approximately $143 million in bread to charities each year.

 

Business performance of competing businesses and franchise operations is researched and evaluated

Every successful enterprise is going to have competition of some kind. Patents, trade secrets and other efforts may offer some protection from the head to head direct competitor who has exactly the same product or service. Even in those situations there is competition. Substitutions for your product or service exist. They maybe not exactly what you have to offer, but in the eye of the customer are viable replacements. Your competition is constantly trying to make their customers your customers. The competition may come from the business across the street or from anywhere around the world. In many businesses location is no longer a consideration for a competitor. Components for everything are manufactured in one location shipped to another location for partial assembly, and on to another location for final assembly and then to yet another location for customer use.

Resources, expertise and benefits to be provided by the franchisor are determined in relation to the needs of the proposed franchise operation

Franchising primary benefit is risk minimization. Starting a new business is risky. Most studies show that over 90 percent fail within three years. The primary reason that the failure rate is so high is because the owners have to go through the learning curve of operating that specific type business. Franchising reduces that curve substantially. Another reason to buy a franchise is that a franchise investment can be thoroughly researched before any significant expenditure is made. Existing franchisees offer a wealth of information about the business so that new franchisees can try the business on before they buy to make sure it’s a good fit for them. Franchisers sell a defined, proven business format or method of operation, offering a product or service that has sold successfully. An independent business is based on both an untried idea and operation. The experience of the franchiser’s management team increases the potential for success. This experience is often conveyed through formal instruction and on-the-job training. Franchisees can often buy lower-cost goods and supplies through the franchiser, resulting from the group purchasing power of all the franchises. Established franchisers offer national or regional name recognition. While this may not be true with a new franchiser, the benefit of starting with one is the potential to grow as its business and name recognition grow.

Resources, business background, expertise, and benefits required by the franchisee are determined in relation to the needs of the proposed franchise operation.

I have used Tip Top resources, business background, expertise, and benefitsconcept to explain this particular point. To set up a franchisee of tip top an investment of about $ 380,000 in New Zealand (NZ $) is not necessary. Potential franchisees should not be a baker, and do not need any experience, education or business experience. Tip top has 16 weeks, according to the skills that the training program includes an extensive internal education and practice in writing, by cooking, production management, marketing, purchasing and accounting and inventory management practices. However, franchisees need to show the quality or performance: building and team leadership, excellent communication skills, have a desire to achieve, are ready to follow the system of tip top, good communication skills, discipline and perseverance, high capacity organization, willingness to learn and integrity.

 

Franchise business plan is evaluated in terms of business establishment, operation and development strategies

A franchise business plan is a formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals. Business plans may also target changes in perception and branding by the customer, client, taxpayer, or larger community. When the existing business is to assume a major change or when planning a new venture, a 3 to 5 year business plan is required, since investors will look for their annual return in that time frame. Business plans may be internally or externally focused. Externally focused plans target goals that are important to external stakeholders, particularly financial stakeholders. They typically have detailed information about the organization or team attempting to reach the goals. With for-profit entities, external stakeholders include investors and customers. External stake-holders of non-profits include donors and the clients of the non-profit’s services. For government agencies, external stakeholders include tax-payers, higher-level government agencies, and international lending bodies such as the International Monetary Fund, the World Bank, various economic agencies of the United Nations, and development banks.

Operations manual for franchise operations are evaluated in terms of adequacy for the nature of the operations and the franchisees ability to achieve operational standards and targets

The operation manuals of a franchise system are the written documents that provide the franchisee with all the details to duplicate the business model. It is the proven operating system defined in writing. Critical success factors are identified and communicated so that franchisees can consistently duplicate success. Depending upon the maturity of the franchise, there may be one general manual or, more typically, the document extends over a series of different manuals. A manual for management may be separated from a manual for employees. A pre-opening manual will often outline how to find the right location and how to build the physical store with typical licensing requirements and build-out processes. An advertising or marketing manual will provide all details regarding the use of the trademarks and provide standardized advertising formats.Operation manuals will vary in details and to what degree they outline the business model but strong franchise systems will leave nothing to chance.

 

 

 

Nature and extend of marketing and promotional resources

I have used Tip Top marketing and promotional resources concept to explain this particular point. Tip top offers resources and marketing support to its franchise. It offers marketing services such as product development, design, research, marketing planning, public relations and advertising. The services offered by the concept of branding to help tip top of the affiliates are provided with branding as a marketing strategy and the very recognizable brand. Other resources offered by Tip top include human resources, asset management and finance. Tip top actively invests in various marketing programs such as, sports events, local community programs to help its franchisees make a difference for in the eyes of the community. Besides this, Tip top also offers its continuous support and participation in mutual marketing campaigns and activities. All these services offered by Tip top assist in strengthening its market position and brand identity, creating positive and favorable customer-based brand equity while creating the differential effect of the brand knowledge in relation to consumer response in marketing of the brand, and gaining favorable consumer response. Overall, the above discussed nature and extent of marketing support and resources offered by Tip top are highly likely to help the franchise to meet its marketing goals including the franchise’s brand concept

Communication needs

Franchises depend a lot on trust. Like any relationship, they require open, honest communication. A good franchise relationship is a valuable business asset to be nourished and developed. By providing consistent, quality communication and field support, the franchisor creates a reservoir of good will.  The ability to tap into this reservoir when something new or difficult comes along can be invaluable.  The successful franchisor places great emphasis on structuring the relationship in a way that supports the needs of the franchisee consistently. As a franchise grows, communication, especially with geographically distant franchisees, can make or break the relationship.  Communication with franchisees should be clear and consistent.  Reach out by phone, e-mail and in-person on a regular basis to share ideas and identify issues before they become larger problems

 

 

Site selection parameters are obtained and reviewed for their ability to meet franchise performance projections

Site selection has to be done carefully because the success or failure of a franchise depends to a great extent on its location. A careful assessment of franchise sites by an experienced professional is necessary. Franchisors maintain a real estate department staffed with site selection experts. The franchise company also has its pooled experience to guide it. Given the importance of location to most franchise operations, the availability of expert advice is important. Franchisor requires disclosure of important facts in a single document either the Basic offering circular or the Uniform Franchise Offering Circular. The disclosure required by this section concerns the selection or approval of a site for the proposed franchise outlet and the time frames for such activity, based on the franchisor’s experience in the preceding fiscal year. The methods used by the franchisor to select the location of the franchisee’s business are required to be disclosed whether the franchisor selects the site or approves an area within which the franchisee selects a site.

 

 

Task 3

 

Evaluating franchise proposals

 

Points The coffee guy Cafe2U
Attractiveness and viability New Zealand’s number one mobile coffee company. The Coffee Guy franchise opportunity is simple, fun and flexible. It is the largest mobile and portable coffee franchise system in New Zealand with 55 espresso vans around New Zealand. Cafe2U was Australia’s first and is now the world’s largest mobile espresso coffee van franchise. Cafe2U provides opportunities for small

business entrepreneurs who deliver great coffee and food to businesses,

events and functions

Resource levels and cost The investment is $98,950 plus GST, which includes the customized mobile espresso unit. Each week you pay a set Franchise Levy Fee of $125+GST and a Marketing Levy of

$25+GST.

Cafe2U franchises cost $125,000.00 (+GST) which includes the customized mobile espresso unit. The Franchise Fee is set at $175.00+ GST per week and a Marketing Levy of $25+GST.
History of franchisor and ability to support the franchise The coffee guy started our first mobile coffee van franchise in January 2006 and our first coffee capsule franchise in December 2010.

Since then, our proven franchise system has delivered successful, profitable businesses right around the country.

Cafe2U got its start on the northern beaches of Sydney, Australia, when an entrepreneurial surfer decided that he wanted to be able to enjoy an espresso without straying too far from the waves. He came up with an inventive solution, squeezing a full barista bar into the back of a van, as well as a

gasoline- generator to power all the equipment, a water tank for water storage and brewing, and the best coffee beans that

he could buy. Cafe2U began franchising in 2005

Resources expertise and benefits provided by franchisor to franchise The coffee guy provides comprehensive barista training so you’ll be totally confident on your espresso machine before you sell your first flat white. No cafe experience is necessary. We give you hands-on help to get your business up and running, from administration to securing regular customers. Franchisees also receive a unique territorial customer list, professional mapping of customers. Cafe2U franchisees go through a 4-week training process. A fully fitted van You will also receive uniforms, loyalty program cards, a PR release to local media, business cards and menus, a unique corporate email address, a dedicated page on the Cafe2U website, business letterhead, Cafe2U coffee, Cafe2U chocolate, Cafe2U cups, Cafe2U syrups, Cafe2U sugar sticks, chai, stirrers and cup lids. Franchisees also receive a unique territorial customer list, professional mapping of customers.
Financial and business capacity of franchise Founded in 2006 in Auckland, NZ, The Coffee Guy mobile coffee franchise has grown into a thriving brand with a presence all over New Zealand. The first New Zealand store opened in June 2005 and within 5 years had 55 units across the country and is the market leader in mobile coffee franchising in NZ Cafe2U began franchising in 2005, the company has expanded from 12 mobile coffee vans all in Sydney’s northern beaches area to more than 230 Cafe2U vans throughout

Australia, New Zealand, the United Kingdom, the United States and South Africa.

Financial and business capacity of franchisee

 

The Coffee Guy still has plenty of opportunities for new franchisees. The

Purchase price of $35,000 +gst includes full training and support, and the only thing not included in the purchase price is the custom-fitted, sign written van itself. ‘That can be financed or leased through a number of options to make The Coffee Guy franchise very affordable.

New Cafe2U franchise, including your fully equipped Mobile Espresso Van starts at $104,396.

It is important that they have a passion for the products they sell and be confident in their ability to learn new skills in order to deliver that product. They must be people focused and understand the importance in providing the consumer with value for money. They must be ethical, open and honest with their customers, Cafe2U and themselves.

Previous business performance reviews of franchiser Founded in 2006 in Auckland, NZ, The Coffee Guy mobile coffee franchise has grown into a thriving brand with a presence all over New Zealand. The first New Zealand store opened in June 2006 and within 5 years had 55 units across the country and is the market leader in mobile coffee franchising in NZ The Cafe2U business model is based around high gross profit products combined with minimal operating costs. Franchise Partners have no wages or rent costs which in traditional business absorb over 50% of your turnover.  Cafe2U is able to provide a net return to the Franchise Partner of between 40% and 55% depending on your finance arrangements.
Provisions of parties Franchisees are usually granted a five (5) year initial franchise term together with an option to renew for a further (5) years Cafe2U currently offers new Franchise Partners a 10 year term. This is comprised of a 5 year term with an option of a further 5 years.
Provision of sale Franchisees may wish to approach a broker to assist them or attempt to vend their store by themselves. RFG offers a free of charge service to existing franchisees allowing them to place their resale store advertisement on the RFG website resale’s page this allows them to have 24/7 access to online browsers that may be interested in purchasing an existing store.  Franchisees are able to place their contact number or their broker’s number on the web site. A Franchise Partner may offer their business for sale at any time during their 10 year term. As with any franchise system a potential buyer must be formally approved by Cafe2U head office to ensure that they have the capability to operate the business and that the standards will be maintained. The franchisor does have first right of refusal to purchase the business back from the Franchise Partner. Cafe2U cannot unreasonably withhold the sale or transfer of a franchised business, however may do if the purchaser is placed is a position of disadvantage, or is not capable of operating the business
Provision of rights of franchiser and franchise The franchise must buy the products from the suppliers assigned by the franchisor to maintain the highest standard. There are a core range of products that will always remain non-negotiable as part of the franchise, our franchise system does allow for local flair within each franchise. If a Franchise Partner wishes to sell a product that is deemed to be a good fit for the local consumers and the coffee guy brand, approval to sell the product may be obtained from the franchisor. Suppliers are in place to provide our Franchise Partners with products for use within their business all the franchise must buy the product from the assigned supplier in order to maintain the standard at highest level.

 

 

 

 

Conclusion:

as per the evaluation of the coffee guy and cafe2u it’s clearly defined that both are neutral on so many aspects but as the beverage industry is growing and so many others about to take the market away from the existed companies and due to this analysis and a general conditions of the market I want to stay with my decision of starting a business with the coffee guy as its affordable and giving a better output as compare to the strong competitors in the market.

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SME is an acronym for Small and Medium-sized Enterprises. SMEs are businesses with a staff headcount and/or turnover below certain limits. In national economies, SMEs often employ many more people than large corporations.

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