Are You Prepared for International Franchising? Phi Nguyen International Franchise Summit 2015 Kuala Lumpur March 2015

Transcription

1 Are You Prepared for International Franchising? Phi Nguyen International Franchise Summit 2015 Kuala Lumpur March 2015

2 Before we start In which country outside of North America are drive-throughs the most popular?

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4 Before we start Which food product has now been consumed more than kimchi in South Korea?

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6 Before we start What did Phi have for breakfast at KFC - Guangzhou train station at 6AM on November 26, 2013?

7 Century egg porridge

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9 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

10 Are You Ready? Growth vs. Survival Strategy

11 Network Growth Why International?

12 Franchise and Company-owned Outlets at 10 Leading Operators 2013 Domino's Pizza Inc Darden Restaurants Dunkin' Brands The Wendy's Co Starbucks Corp Burger King Worldwide Seven & I Holdings Doctor's Associates Yum! Brands McDonald's 0% 20% 40% 60% 80% 100% Company-Owned Outlets Franchised or Licensed Outlets

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14 Why International? Brand & Enterprise Value

15 Enterprise Value - ASEAN Region 100% 80% 40% 32% 48% 49% 23% 2% 1% 32% 60% 3% 7% 5% 5% 65% 3% 2% 2% 3% 10% 8% 40% 50% 58% 2% 1% 47% 46% 75% Global 50% 20% 32% 0% Malaysia Singapore Indonesia Philippines Thailand Vietnam GLOBAL "UNDISCLOSED VALUE" DISCLOSED GOODWILL DISCLOSED INTANGIBLE ASSETS (exc GOODWILL) TANGIBLE NET ASSETS 15

16 Cash-flow Why International?

17 Why International? Yum! Brands Statement of Income In millions USD Revenues 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

18 Why International? Network Growth Brand & Enterprise Value Cash-flow

19 What Are You Getting Into? Growth Strategy: Opportunities vs. resources Roadmap Market research

20 INDONESIA IN 2030

21 What Are You Getting Into? Business modeling Regional & local differences: target consumer profiles & needs Buying power Consumption occasions

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23 What Are You Getting Into? Business modeling Regional & local differences: Product / Service Offerings Pricing Operations: SOPs, training Design & concept

24 Catering to local palates 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).

25 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.

26 What Are You Getting Into? Business modeling Financial modeling: Supply Chain COGS Labor Rent Operating expenses Franchise fee structure Profitability

27 What Are You Getting Into? Analysis: - COGS - P&L - Cash-flow - Break-even - ROI

28 What Are You Getting Into? Business modeling Growth models: developed vs. developing markets Franchise vs. chain Develop & Re-franchise Partnership

29 What about strategic markets such as China?

30 What about strategic markets such as the GCC?

31 What Are You Getting Into? Business Modeling: Regional & local differences Financial modeling Growth model

32 What Are You Getting Into? Franchise support structure & culture Marketing People & Training Operations Development Legal Finance

33 What Are You Getting Into? Partner recruitment & selection Market entry strategy & market development plan

34 What Are You Getting Into? Business Modeling Growth Strategy Franchise support structure & culture Partner recruitment & selection Market entry strategy & market development plan

35 Which Franchise Model? Master Franchise Agreements, Area Developer Agreements or Unit Franchising? Most commonly used: MFA, ADA Model selected may be determined by nature brand and development objectives. Consider different models for different markets depending on geographical, financial or socioeconomic factors.

36 Important Legal Considerations? There is no substitute for Good Legal Advice relating to: Franchise Agreements Marks and Intellectual Property Company Structure Franchise Regulations in Your Market Laws & Franchise Regulations in Prospective Franchise Markets

37 Avoid These Common Pitfalls Stick to your development plan Never compromise on your vision and values. Choose your franchise partners carefully Don t assume your franchise partners know how to manage a multiunit franchise business. Ask for explanations and justifications before modifying your systems and standards.

38 Thank you & wishing you every success with your international expansion! Phi Nguyen