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FIRST VISIT 2012FIRST VISIT 2012
BackgroundBackground ConceptConcept
Sub franchise Sub franchise SystemSystem MarketingMarketing StaffingStaffing
AssortmentAssortment& Purchasing& Purchasing
SoftwareSoftware
ContractorsContractorsPreparation Preparation Next visitNext visit
ContentContent
Sub Sub franchisingfranchising
Global presence – 27 countriesGlobal presence – 27 countrieson 5 continentson 5 continents
Jordan
Bulgaria
China
Azerbaijan
Greece
Iceland
Ireland
Indonesia
Italy
Lithuania
Libya Philippines
Poland
Mexico
Peru
Qatar
Serbia
Saint Maarten
Slovakia
Slovenia
Turkey
Sudan
VenezuelaCzech Republic
France
Germany
Haiti
Northern Cyprus
BackgroundBackground
Global Global Presence!Presence!
US company Florida based:
• 1989 Launched in Spain• 1993 Europe expansion• 1997 Middle East• 2000 Caribbean• 2004 Asia• 2005 China Export Office• 2008 Expansion in Latin America• 2010 E-Commerce expansion
27 COUNTRIES27 COUNTRIESEUROPE: EUROPE: 1313
ASIA: ASIA: 4 4
MIDDLE EAST/AFRICA: MIDDLE EAST/AFRICA: 4 4
LATIN AMERICA:LATIN AMERICA: 3 3
NORTH AMERICA: 1NORTH AMERICA: 1
CARIBBEAN:CARIBBEAN: 22
UPDATE
BackgroundBackground
Global Global Presence!Presence!
EUROPE 13:
Bulgaria - France - Greece - Iceland – Ireland- Italy - Lithuania - Poland - Romania – Serbia-Slovakia-Slovenia-Turkey
UPDATE
BackgroundBackground
Global Global Presence!Presence!
UPDATE
ASIA 4
Azerbaijan China Indonesia Philippines
BackgroundBackground
Global Global Presence!Presence!
UPDATE
LATIN AMERICA- CARIBBEAN 5
Mexico – Peru – VenezuelaTrinidad – St Martin
BackgroundBackground
Global Global Presence!Presence!
UPDATE
MIDDLE EAST – AFRICA 4
Jordan – Qatar Libya – Sudan
BackgroundBackground
Global Global Presence!Presence!
Global Global Presence!Presence!
BackgroundBackground
Only Global Only Global Franchise!Franchise!
BackgroundBackground
Best Umbrella Best Umbrella Trademark!Trademark!
BackgroundBackground
China Buying Office!China Buying Office!
BackgroundBackground
2008 US OFFICE PRODUCTS MARKET•Economy in recession since third quarter ‘08• Total Market $ 162 Billion – flat or slight decline• Retail superstores particularly affected• Large dealers increasing market share
• Office Supplies: down 6% now only 27% of mix• IT consumables: up 4% now 42% of mix• Furniture: down 4% • Facilities/Coffee (FM) 15-20% of mix and growing
Industry Trends
BackgroundBackground
$ Billion Mix % Growth %
Office Supplies 46 28 - 6
IT Consumables
71 44 + 4
Office Furniture
18 11 - 4
FM Supplies 27 17 + 4
TOTAL 162 100 0
US MARKET 2008
Industry Trends
BackgroundBackground
Billion Pounds Mix % Growth %
Office Supplies 1.75 22 - 6.0
Office Furniture 0.80 10 - 9.0
IT Consumables 3.0 37 0
Visual Presentation 0.5 6 0
FM Supplies 2.0 25 +12.0
TOTAL 8.05 100 - 5.2
UK MARKET 2008
Industry Trends
BackgroundBackground
CHANNEL LANDSCAPE UK %
• Contract Stationers 13 Steady• Independents 48 Strong• Retail/Superstores 11 Down• Mail Order – Office FM 15 Down•Computer Resellers 8 Down• Direct Mail 5 Down
Industry Trends
BackgroundBackground
Big Box/Power Players phenomenon over:
• Power shifting to 300+ large US & UK dealers $50mm+• Customer intimacy allied to Logistics Suppliers
• Advantage for franchise model• Declines in average order and customer traffic• Weakness in office machines and accessories
Industry Trends
BackgroundBackground
Retail superstores in decline:• Large soulless stores are down, down and out• Private brand at 30% of total makes stores dull•Women customers have no time for store visits•E. commerce big winner
Amazon entry• Office Depot and Max closing stores in US (ODP 200 closed)• OfficeMax experimenting with mini stores and Kinko’s like services•Competition from other chains
Wal-Mart, Tesco
Industry Trends
BackgroundBackground
• Gross margins decline by 5.4% points from 33.7% down to 28.3% due to IT (however generates higher value sales).• Fastest growing market is small and mid-size companies (50-500 employees.) • Account for 65% of total market.
Industry Trends
BackgroundBackground
OF, IT and FM GREATEST POTENTIAL.
OF - Office Furniture:
• Large Dealers employ a specialist in office interiors (OIS). • Best potential for sales: Reception and Training room.• The move to full service interiors service is inexorable.• Huge shift towards lighter and brighter furniture away from the dull and dark look• Take advantage of OFFICE 1 China Export
Industry Trends
BackgroundBackground
IT Consumables:
• Fastest growing category should = 35-40% of sales. • Many OFFICE 1 masters at 20% on average.
• Fear of technology• Deterrent of low margins
• Fast growing laser printers because of color• Recession will affect growth of recyclables and
remanufactured. (17 -24% of total consumables according to Lyra research)
• Focus on MVC (most valuable clients) and your share of their IT buys?
Industry Trends
BackgroundBackground
FM: Facilities Management Supplies fastest growth: • Market in US $25 Billion and in UK $4 Bn. Exact numbers not clear.• Hygiene , janitorial, sanitary, cleaning, health and safety, maintenance, repairs and security supplies• Refreshment and catering supplies• OP has advantage with:
• 24 hours delivery•One stop shop•Free delivery•Fragmented competition•On line ordering and catalog/telemarketing•Natural Coffees experience. Espresso. In some countries key seller.
Industry Trends
BackgroundBackground
E. Everything:Ecommerce: 7 out of 10 top websites sell OP
80% of small dealers do not have a web store and 90% ask for passwords
E.marketing:• Replacing printed flyers in effectiveness and reach• Best to advise customers and personalize appeal. • Avoid looking like Spam• Low cost medium• Best time to mail: Monday and Tuesday and 11.30 am- 3.00PM also 4.30PM• Use of video demonstration 30 seconds. (70% of women view)
Industry Trends
BackgroundBackground
• E. Everything: (Continued)
– Ecommerce sales accelerating with emergence of broadband:
Company size Employees E. Sales as % of total
delivered
Large 500+ 50 - 75
Medium 100 - 500 30-50
Small 5 - 30 15 - 25
Industry Trends
BackgroundBackground
WOMEN RULE THE OFFICE:
• Focus on saving her time• 65% of women love to shop on line and love Amazon• 40% shop on line after 8PM• Best Target is: 28-45 years of age
Not secretaries only but Executive Alpha Female•Feminize marketing process:
Effect on products, colors, catalogs, advertisingIntimacy is in. Call centers are out.Sell her coffee and FMPersonalized email promotionsTelemarketing: Must gather information on behavior, authority, likes and dislikesBuild one to one relationships
Industry Trends
BackgroundBackground
WOMEN RULE THE OFFICE: (Cont.)
• 84% of office buyers are women• 75 % of women think catalogs are boring• 66% prefer matt to shiny pages• 87% prefer quality brands• 70% prefer to order on line• 67% think telephone too slow to respond• 41% of small businesses are owned by women
Source: DDB Worldwide Trendsights
Industry Trends
BackgroundBackground
• PRIVATE BRANDS PRESSURE MANUFACTURERS:
Office Depot 27% of salesLyreco 30%Corporate Express 27%Staples 35%Spicers 20%Saturation level: 40%
• Effect on commoditization of store and catalogs
Industry Trends
BackgroundBackground
-Large discount houses expanding stationery section.
Wal-Mart, Carrefour, Metro
- Effect of computer on sales to students and consumers.
- Decline in sales of “classic” Stationery Products: Paper clips, folders, lever arch files etc…
Industry Trends
BackgroundBackground
BackgrounBackgroundd
GROWTH OF B TO B SEGMENT:
- Contract dealers expanding:
Lyreco, Corporate Express
- Big Retail Chains entering markets through contract dealers and ecommerce:
Office Depot, Staples
Industry Trends
IMPORTANCE OF BRAND NAME:
• Create synergy and point of difference• Improved margins through OEM• Uniformity of look on shelves• Facilitate consumers’ pull of products• Stores are a form of advertising
• The more stores, the more advertising• Stores represent 20% of total sales yet help contract sales: Without 20% cannot sell and deliver 80%
BackgrounBackgroundd
Industry Trends
MARKET TRENDS 100% POSITIVE FOR OFFICE 1
• OFFICE 1 concept extremely timelySmall stores near customersMulti channel approach + ECommerce
• OFFICE 1 viewed as a solution for small dealersEffect on conversions of stationers and dealers to OFFICE 1
• Franchising creates personalized service• Private brand products very helpful
HOW IS AFFECTED?
BackgroundBackground
• All Office Needs Under One Roof:
Stationery-Business Machines-Furniture-Services
• Multi-Channel DistributionRetailWholesaleTelemarketingDirect MailContract SalesE-commerce
• All Office Needs Under One Roof:
Stationery-Business Machines-Furniture-Services
• Multi-Channel DistributionRetailWholesaleTelemarketingDirect MailContract SalesE-commerce
OFFICE 1 OFFICE 1 ConceptConcept
ConceptConcept
• No other global franchise
• Advantage of store mix: Large and SmallLARGE: Image - Flagship - AssortmentSMALL: Rents - Downtown Location
• Global LinksSourcing - Multinational purchasing power
• No other global franchise
• Advantage of store mix: Large and SmallLARGE: Image - Flagship - AssortmentSMALL: Rents - Downtown Location
• Global LinksSourcing - Multinational purchasing power
Why is OFFICE 1 Why is OFFICE 1 Unique?Unique?
ConceptConcept
TRAINING TOPIC:
1. SUB-FRANCHISE SYSTEM
Sub Franchising SystemSub Franchising System
• Exclusive territory: 2500 companies• Rights to OFFICE 1 trademark in
territory• Rights to OFFICE 1 system• Training• Purchasing and promotional assistance• Treated as partner and equal
• Exclusive territory: 2500 companies• Rights to OFFICE 1 trademark in
territory• Rights to OFFICE 1 system• Training• Purchasing and promotional assistance• Treated as partner and equal
Rights of sub franchiseesRights of sub franchisees
Sub Franchising SystemSub Franchising System
•An initial fee•On-going royalties
•An initial fee•On-going royalties
OFFICE 1 OFFERS THESE RIGHTS AGAINST:
OFFICE 1 OFFERS THESE RIGHTS AGAINST:
Rights of Sub franchiseesRights of Sub franchisees(Continued)(Continued)
Sub Franchising SystemSub Franchising System
• 50 m2 City center• 150 m2 Suburbs and Small
Towns• 200 m2 Small warehouse
in industrial area• 350 m2 Regional
Superstore
• 50 m2 City center• 150 m2 Suburbs and Small
Towns• 200 m2 Small warehouse
in industrial area• 350 m2 Regional
Superstore
OFFICE 1 Franchise ModelOFFICE 1 Franchise Model
Sub Franchising SystemSub Franchising System
Small, attractive, modern 50 m2•Retail and telemarketing sales•1,000-1,500 SKUs in store•High pedestrian areas•Telemarketing - Logistic Supplier
delivers orders•Exclusive territory city blocks
Small, attractive, modern 50 m2•Retail and telemarketing sales•1,000-1,500 SKUs in store•High pedestrian areas•Telemarketing - Logistic Supplier
delivers orders•Exclusive territory city blocks
OFFICE 1 Franchise OFFICE 1 Franchise ModelModel
Sub Franchising SystemSub Franchising System
TARGETTARGET
• New entrants
• Existing stationers and Service centers
• Existing dealers who want to be in retail or use
OFFICE 1 as logistics supplier
• New entrants to OP market
• Delegates, Ecommerce franchises, store in store
Sub Franchising SystemSub Franchising System
FRANCHISE FOCUSFRANCHISE FOCUS
Many modern, attractive 50 Sq.m stores
• Retail and telemarketing• 1,000-1,500 SKUs in store• 4000 SKUs through logistic partner• Highly visible pedestrian and traffic
locations• Owner + 1 or 2 Employees
Sub Franchising SystemSub Franchising System
OWNER
CASHIER TELEMARKETING
Franchise Organization 50 Franchise Organization 50 m2m2
Sub Franchising SystemSub Franchising System
70 m270 m2
70 m2
Sub Franchising SystemSub Franchising System
StoresStores!!
Sub Franchising SystemSub Franchising System
StoresStores!!
250 m2
Sub Franchising SystemSub Franchising System
StoresStores!!
200 m2
Sub Franchising SystemSub Franchising System
StoresStores!!
Sub Franchising SystemSub Franchising System
StoresStores!!
Sub Franchising SystemSub Franchising System
StoresStores!!
Sub Franchising SystemSub Franchising System
70 m270 m2
StoresStores!!
90 m290 m2
Sub Franchising SystemSub Franchising System
Store in Stores!Store in Stores!
Sub Franchising SystemSub Franchising System
Store in Store in Stores!Stores!
Sub Franchising SystemSub Franchising System
AssortmentAssortment
Sub Franchising SystemSub Franchising System
OPTION 1
• Master FranchiseeBuys Branded products+ OFFICE 1 imports and
delivers to franchisees
• Franchisee delivers to customers
OPTION 1
• Master FranchiseeBuys Branded products+ OFFICE 1 imports and
delivers to franchisees
• Franchisee delivers to customers
OFFICE 1 OFFICE 1 LogisticsLogistics
Sub Franchising SystemSub Franchising System
OPTION 2
• Master Franchiseebuys Branded products+ OFFICE 1 imports
• Logistic Supplier distributes to franchisees and customers
OPTION 2
• Master Franchiseebuys Branded products+ OFFICE 1 imports
• Logistic Supplier distributes to franchisees and customers
OFFICE 1 OFFICE 1 LogisticsLogistics
Sub Franchising SystemSub Franchising System
Delivery fromMaster Franchisee
to retail stores
Delivery fromMaster Franchisee
to retail stores
24 Hours Delivery24 Hours Delivery
OFFICE 1 OFFICE 1 LogisticsLogistics
OPTION 1
Sub Franchising SystemSub Franchising System
ClientClient
Traditional
SystemTraditional
System Traditio
nal
SystemTraditional
System
OFFICE 1 LogisticsOFFICE 1 Logistics(Continued)(Continued)
OPTION 2
Logistics Supplier
Sub Franchising SystemSub Franchising System
ADVANTAGESSTOCKLESS FRANCHISING:
Logistic Partner delivers to customers: • Lower stock• Small store space = lower rent + better
location• Focus on selling not delivering
Sub Franchising SystemSub Franchising System
TRAINING TOPICS
2. MARKETING
Marketing
• STORE CRITERIA AND LOOK• TARGET MARKET• OBJECTIVES AND STRATEGIES• COMPETITION• GROSS MARGIN AND PRICING• PROMOTION PLAN 2011
Topics
• High concentration of offices• High pedestrian traffic most hours daily• 100m2 Size• Parking - Visibility - Access - High Traffic• Rectangular - High Ceilings - Glass Façade• Near Schools or University• High Income and population 100,000 Also:
Stores outside cities in periphery
Sole Store in small town
Sole Store in manufacturing park
• High concentration of offices• High pedestrian traffic most hours daily• 100m2 Size• Parking - Visibility - Access - High Traffic• Rectangular - High Ceilings - Glass Façade• Near Schools or University• High Income and population 100,000 Also:
Stores outside cities in periphery
Sole Store in small town
Sole Store in manufacturing park
Ideal Site Ideal Site CriteriaCriteria
Marketing
Attractive eye catchingdesign of shelves and signs:
Fixtures Signs Drawings Text Specifications Budget Operations Manual
Attractive eye catchingdesign of shelves and signs:
Fixtures Signs Drawings Text Specifications Budget Operations Manual
OFFICE 1 Store OFFICE 1 Store LookLook
Marketing
Target Market
• Focus on companies
- Small to medium
- Large companies when becomes leader
• Professionals
• Multinationals
• Students and consumers
• Sometimes schools
Marketing
Competition
• Small stationers
• Dealers
• Discount Chains
• All re-sellers directed to small companies
• Direct mail houses
Marketing
Pricing
• Set prices for sub franchisees High enough to make a living
(30% gross margin is needed/ target 35%)
• Set top 100 Items at low prices• Main Assortment higher priced • Set store retail prices highest• Imported items: low prices – high margins• Professional and hobbies at high prices
Marketing
Promotion Plans
• Mix of catalog, brochures and flyers
• The objective is one piece mailed every
month except August.
• One catalog a year
• Three brochures: January, April, October
• Eight themed flyers:
OFFICE 1 branded Machines
Back to School Christmas Gifts
Furniture
Marketing
Brochure Preparation
• Develop mission statements• Develop brochure theme and colors• Compose Slogans and GM’s Message• Compose One Liners At Bottom of Page• Decide quantities and whether to charge franchisees• Keep Number of Pages controlled and Number of SKUs Below 1500.
Marketing
Gross margin between 26% - 30% depending on mix and country.
Sales percentages:Furniture: 15% Stationery: 47%Machines: 15% Toners/Cartridges 20%
Copy Center: 3%
Typical Expenses:Rent: 5% Overhead: 4% Direct Labor 8%Amortization 2% five years. Promotion 1%
Gross margin between 26% - 30% depending on mix and country.
Sales percentages:Furniture: 15% Stationery: 47%Machines: 15% Toners/Cartridges 20%
Copy Center: 3%
Typical Expenses:Rent: 5% Overhead: 4% Direct Labor 8%Amortization 2% five years. Promotion 1%
OFFICE 1 OFFICE 1 StatisticsStatistics
Marketing
TRAINING TOPICS
3. STAFFING AND ORGANIZATION
Recruitment Schedule
Staffing and Organization
• Upon Signing Master Agreement:
• General Manager• Systems Manager• Accounting• Marketing Manager• Merchandising Manager
Table of Organization
GENERAL MANAGER
ACCOUNTING /HUMAN RESOURCES
SALES /TELEMARKETING
MISITMERCHANDISE
MANAGER /BUYER
FRANCHISE MANAGER
MARKETINGDTP
STORE OPERATIONS
REGION
REGION REGION
Staffing and Organization
TRAINING TOPICS
4. PRODUCT ASSORTMENT AND PURCHASING
Research and Policy decisions
Product and Purchasing
• Study Competitive Prices 100 top items
• OFFICE 1 recommended assortment
• Your own assortment
• China warehouse assortment
• OFFICE 1 Central Warehouse Assortment
• Local retail assortment
•Decide total SKUs in brochure and in store
Product assortment and SKUs
• 4000 SKUs in catalog
• 1,000-1,500 at retail based on size
• Include furniture and machines
• Low price OEM imports from China (20% of sales)
• Two Brands/Price levels per category
• 500 SKUs = 80% of sales
Product and Purchasing
Product assortment and SKUs(Continued)
• Categories as percent of sales:
- Paper & Toners: 40% of sales at 15.0% GM- Furniture: 10.0% at 35%- Machines: 10% at 15%- Stationery: 45% at 47.5%- Average GM: 32% ???
Of the above products 20% minimum should be OEM whether local or from China
Product and Purchasing
Sourcing options
• Logistic supplier
• Local
• Imported from China
• OFFICE 1 European Warehouse
• Local Manufacturers and Distributors
• Keep under 60 vendors
Product and Purchasing
TRAINING TOPICS
5. System software
System Software
Questions to consider
• Adopt own software and tools?
• Adopt Local software provider?
• Adopt mix?
• Supporting Sub franchise Requirements.
• Decide Hardware/Network/Communications
• Establish Logistics and Flow Processes
System agenda 1st visit
• Survey Company Requirements.
• Assign Staff for MISIT.
• Survey local tax needs
• Build Organization in System.
• Configure screens, and formats.
System Software
System agenda 1st visit
(Continued)
• Accounting and statistics
• Required information by department
• Procedures for processing returns and credits
• Product codes
• Start data entry
• List of reports needed
System Software
System schedule of activities
60 Days:• Continue Data Entry all applications• Train all positions all applications.• Configure statistic formats.• Establish coding and text disciplines.• Enter vendors, items, and orders in data base, including OFFICE 1 Central Warehouse• Order forms, labels, and configure; test print.
90 Days:•Enter Customer Database.•All information in System; Developing reporting.
System Software
Software applications
POS
• Retail Sales both B2B and B2C By Ticket/Invoice; Customer/item; Tax inc.?
Software • Vendors and Orders• Items and Inventory• Customers and Orders• Accounting• Financial data of company
System Software
6. Contractors and Agents
TRAINING SECTION
Contractors
• Locate Contractors and Agents
• Fixture: Steel Multifunctional, Laminate Counter and Glass Showcases.
• Signing: Steel, Compressed Board, Vinyl.
• Printers: Forms, Shopping bags.
• Security, Delivery.
• Handyman contractor for store remodeling.
What to look for and do
TRAINING TOPIC
7. Introduction to Sub-franchising
Sub-franchising
•What is Sub franchising?
Franchise and Sub franchiseRights of Sub franchisees
•Responsibilities of Master franchisee:
1. Why is OFFICE 1 attractive to Subs? 2. Why are Subs attractive to Master?3. What is typical profile of successful Subs?
Sub franchise training
5. How does Sub franchising work?
6. How many types of Sub franchises?
7. Staff needed in Sub franchise?
8. How to attract Subs?
9. Territory definition?
Sub franchise training(Continued)
Sub-franchising
Sub franchise training(Continued)
11. Printed pieces to develop:
• Introductory folder• Application form• Sub franchise contract• Confidentiality agreement• Training manual• Margin analysis/Initial order
Sub-franchising
Sub franchise training(Continued)
12. Training program
13. Answers to most often asked questions
14. Royalties report
Sub-franchising
System whereby Sub franchises have certain rights:
TrademarkTraining and retail store set up assistanceTerritoryBuying CooperativelyBrochuresSystem Software
What is Sub franchising?
Sub-franchising
Responsibilities of Master Franchisee:
TrainIT and Web CommerceMerchandise at low priceBrochuresManuals Guidance
What is Sub franchising?
(continued)
Sub-franchising
• Synergy of common trademark• Exclusive territory and easier exit strategy• Risk reduction in joining a group• Global experience and local support• Assortment includes OFFICE 1 and low priced
imports• Buying power to improve as we get larger• Catalogs and promotional aids• Active telemarketing system and training• Software
Why is OFFICE 1 attractive to Subs?
Sub-franchising
Why is Sub franchising attractive to masters?
• Buying power
• Influence and synergy
• Visible Trademark
• Stream of income
• Quick Ramp Up
• Franchising Potential
Sub-franchising
What is typical profile of new Subs?
• Stationery store owners
• Owners of small stores
• Entrepreneurs business to business
• Recent college graduate
• Dismissed executives
Sub-franchising
• Country divided into territories• Sub franchises with multiple stores• Sub franchise Agreement• Decisions:
Gross marginInitial feeRoyaltiesRate of sign upsConverts and new
How does franchising work?How does franchising work?
Sub-franchising
How does franchising work?How does franchising work?(Continued)(Continued)
• Architecture and fixtures
• Store layout design
• Training and manuals
• On going support
Sub-franchising
HOW MANY TYPES OF SUB-HOW MANY TYPES OF SUB-FRANCHISES?FRANCHISES?
Several Types:•Typical 100m2 to 200m2•Small cash register only 50m2•Warehouse type•Large superstore 350m2+
Decisions: •Prioritizing•SKUs•Gross Margin•Royalties•Speed of ramp up
Sub-franchising
Type m2 #Firms Initial Fee US $ Staff
Typical 150 2,500 20,000 5
Small 50 1,000 10,000 1 or 2
Warehouse 300 500 20,000 5
Large 500 10,000 50,000 12
Guidelines
Sub-franchising
Staff needed
TYPICAL:
OwnerCashier/copy centerDelivery/Stock boyTelemarketingSales clerk/Copy Center
Sub-franchising
STAFF NEEDEDSTAFF NEEDED(Continued)(Continued)
SMALL STORE or KIOSK:Owner
Telemarketer Part Timer
MEDIUM STORE:Owner
TelemarketerCashier/copy center
Sales clerk/Copy Center
Sub-franchising
STAFF NEEDEDSTAFF NEEDED(Continued)(Continued)
LARGE STORE:Store ManagerOperationsCashier (s)Sales Associates, (electronics / furniture)JanitorCopy centerTelemarketing
Sub-franchising
STAFF NEEDEDSTAFF NEEDED(Continued)(Continued)
WAREHOUSE FRANCHISE or DEALER FRANCHISE:OwnerCashier/copy centerDelivery/Stock boyTelemarketingSales clerk/Copy CenterOutside salesperson
E-FRANCHISEE: Owner + Telemarketer
Sub-franchising
HOW TO ATTRACTHOW TO ATTRACT SUB-FRANCHISEES?SUB-FRANCHISEES?
• Professional recruiters• Brochure mentions• Word of mouth• Mailings• Outside agency• Franchise Fairs and OP Fairs• Advertising
Sub-franchising
Territory # Firms Professionals Total %
A 3215 31 3246 20
B 2875 97 2972 18
C 1987 231 2218 14
D 7532 127 7659 48
Total 15,609 486 16,095 100
Territory Definition
Sub-franchising
Postal code
Retailers Professionals
Firms Total
28003 124 16 1500 1640
28008 432 15 1715 2162
Total 556 31 3215 3802
Territory A
Territory Definition
(Continued)
Sub-franchising
Regional Developer
Acts as Master for a large province or region
•Converts its own stores•Recruits Sub-franchisees•Negotiates Subs contracts for Master to sign •Trains Sub-franchisees•Provides brochures•Manuals and training
Sub-franchising
Regional Developer
(Continued)
Remuneration:
Keeps 50% of Sub franchise initial feeKeeps 50% of Sub franchise royalties
(Note: Usually invoices Sub franchisee and forwards portion to Master upon receipt of payment)
Sub-franchising
Printed pieces to develop
Sub franchise introductory folder
• Four color introductory piece• Background master and OFFICE 1• Contains listing of territories• Describes conditions of franchise• Investment insert• Application form• OFFICE 1 brochure
Sub-franchising
Printed pieces to develop
(Continued)
Investment Insert:
• Type of Sub-franchise• Territory description• Staff needed• Duration of contract• Initial fee• Royalties• Product sourcing and assortment• Estimated investment and projected cash flow
Sub-franchising
Year 1 Year 2 Year 3 Year 4
Sales 100 135 150 165
Margin 30% 32 33 34
Salaries
Rental
Adv.
Projected figures typical sub
Sub-franchising
Printed pieces to develop (Continued)
• Sub franchise ContractShort version
• Application FormOne formal and a simpler one to use at fairs
• Confidentiality Agreement To include in contract or as extra
Sub-franchising
Printed pieces to develop (Continued)
Sub franchise Training Manual
Adapt OFFICE 1’s initial order
Introductory order should reflect latest brochure.
(Note: OFFICE 1 will provide initial order but it eventually may have to vary with each new brochure)
Sub-franchising
Training program
All training is on the job
•In Sub franchisee store •In master’s superstore
Day 1General meeting with entire staffTour superstoreIntroduction to system
Day 2Cash register etc.(Note: Typical training program is listed in OFFICE 1 Manual)
Sub-franchising
Answers to questions
• What does initial fee cover?• What is it based on?• Can I pay over time?• Can I open more than one store in territory?• Must I do telemarketing?• What is my investment?• What will my sales be?
Sub-franchising
Answers to questions(Continued)
• Must I sell product listed in brochure?• Can I change prices?• Can I break open boxes?• Can I sell items outside of the range?• Can I do telemarketing in another territory?• Can I sell in someone else’s territory?
Sub-franchising
Royalties Report
Company stores sales: _________Company stores royalty:________Initial fees sub-franchises:
Store 1Store 2
Royalties sub-franchises:Store 1Store 2
Total royalties OFFICE 1:Less taxes:Net Royalties OFFICE 1:
Sub-franchising
TRAINING TOPICS
8. PREPARATION NEXT VISIT
Next Visit
• Locate fixture and sign manufacturers(Get samples and quotes and schedule meetings)
• Select printer for forms• Select handy man contractor• Select equipment and vehicles• Shopping bag manufacturer• Service suppliers:
(Business center machines, stamps, etc.)
Contractors and agents
Next Visit
• Qualified programmer with web capabilities on staff•Purchase hardware work stations for all staff•Prepare website templates for both corporate and e-commerce websites•Decide on local software and install•Provide specifics to OFFICE 1 International so they can assist with bridging templates •Set up and register domains•Decide and install network and configure all peripherals
MISIT
Next visit
• Map out number of firms by postal codes nationally and develop list of territories in country• Develop recruiting material• Develop Sub franchisee training manual (Use OFFICE 1 as guide)
• Finalize Sub franchising contract• Recruit store setup team for Sub franchisees• Local software decision
Franchising
Next visit
Competition
Review key players:
• Payment terms• Pricing• Assortment B to B• Assortment retail• Number of stores and locations• Get copies of catalogs if any• Any weakness?• What is positioning and strategies
Next visit
Marketing
•Decide price strategy
•Order all printed forms (follow OFFICE 1 manual)
•Promotion plan twelve months:
Introductory flyerFirst brochureOther flyers
Next visit
Retail
•Review text of signage and adapt for local needs•Select shopping bag manufacturer and check if can get a vendor to pay for its name on bags. (HP)•Define store mission statements towards customers:
Refund and delivery policiesHow to order in brochureStore hours. Standard or by location?
•Decide store assortment•Decide business services to offer in store.
Next visit
Assortment
•Determine 100 best sellers
•Recommended initial assortment for new store
(To be prepared by OFFICE 1 based on Master’s catalog)
•Recommended assortment for catalog/brochures
•Imported assortment from OFFICE 1 CW(To be prepared by OFFICE 1)
Thank you for your attention!
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