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 Franchising, Franchising

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Mavik
post Jun 26 2006, 02:34 PM

Patience is a virtue
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Elite
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QUOTE(NaiveLady @ Jun 26 2006, 02:03 PM)
Found this in McDonald website

"The costs for starting an entirely new McDonald's restaurant can be anything between RM1.5 million to RM3.5 million. The costs also depend on the restaurant size and type, its location, style of décor and landscaping."  shocking.gif

Any recommendation for a win-win franchise around ? (Cost not too high of course)
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The franchising license itself is RM180k++ if I am not wrong. The rest of the cost is usually related to the setting up of the place, infrastructure and hiring of workers. Those machines in McDonalds ain't cheap smile.gif
Mavik
post Jun 26 2006, 03:45 PM

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Elite
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QUOTE(alqa @ Jun 26 2006, 03:04 PM)
the smartest way to deal with a franchise (for those without a truckload of cash) is to go thru certain specific financial institutions. If you're a bumiputra, go to PUNB (Perbadanan Usahawan Nasional Berhad), if you're not  bumiputra go to banks (SME Bank, BCB, RHB, etc).

there are two stages to this application:

Stage 1. The Franchisor
must ensure that the franchisor is registered with Malaysian Franchise Association (MFA) and that the business model is approved by the specific institution that you apply from.

Stage 2. The Franchisee
must ensure that the applicant have at least 10% of the total project cost and.... you must have at least one of the following:
i. Collateral up to 25% of the project cost
ii. Skills and paper qualification for the said field of business/operation
iii. certain number of years worth of experience managing this particular operation/field

other terms and conditions may be imposed and pplied by the franchisor / financier. best is to check MFA website and the banks' / institutions business credit dept.
*
Hey man,

Good explanation, I will see if I can get the mod to pin this part up. thumbup.gif
Mavik
post Jun 27 2006, 11:21 AM

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Elite
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Joined: Jan 2003



For more information about Franchising:

QUOTE
Footsteps to Franchising.

Step 1: Self and Business Audit


ARE YOU PSYCHOLOGICALLY ready to turn your business into a franchise? This is the most crucial question an entrepreneur should ask before jumping into franchising.

Some of the questions that you should ask yourself are: 'Am I willing to commit myself to it?' or, 'Am I willing to share the business with a partner (franchisee)?' In other words, before starting a franchise you should 'know' what you are getting yourself into. And furthermore, you should realize the risks and problems that come with franchising a business.

When starting a franchise, you need the right attitude and behaviour because you are going to set the example for franchisees to follow. For instance, you should be able to show them that you are a highly motivated and confident person who believes in hard work and discipline in order to succeed. There should not be any room for negative attitude in franchising.

A business owner must also audit his or her business standing. Is the business physically fit to become a franchise? Do I have to employ experts? Do I have the resources and technical know-how to concentrate on developing a franchise business? Do I need to create a new franchise department for the company?

A franchise department can stand on its own. But, it would be most effective when it is managed under the marketing department of the business. The reason is because franchising as an intermediary between the manufacturer and the consumers, somewhat similar to retailing.



Step 2: Developing the Business Model

DEVELOPING A BUSINESS model should be the next step in starting your franchise. A business model is just like a blue print of the franchise.

A market research must be conducted in order to define the competition, target market, political or social surroundings, as well as the economic and legal environment. The results will serve as beacons for the business so it can be steered safely towards a successful end.

The blue print must touch on every aspect of the business including how the business should be conducted, right down to the nitty-gritty details, like how the personnel should smile when greeting a customer or client, or how the windows and floors should be cleaned.

The reason behind this is because the business model will serve as the franchise's Operation Manual if they are unsure of any procedure or process.

However, like any other scientific theories, the business model has to be tested before proven valid. There may be some major flaws that are overlooked in the business model at this stage, and testing the Operating Manual will be the best method to pick them out and make the necessary rectifications before proceeding.



Step 3: Test the Business Model

THIS IS THE STAGE WHERE your theory is tested. A real franchise outlet is put into operation. Here is where all the procedures and process, including the nitty gritty details are implemented in real life.

As expected, there will be problems in the business which are not stated in the operating manual. Thus, problem-solving and evaluation is the major activity at this stage. Corrections made should be documented in the operation manual. This process will usually take about 18 to 24 months in order for the Operation Manual to be stabilized and perfected.



Step 4: Marketing the Franchise

AFTER AT LEAST TWO YEARS, or when your prototype has been proven valid and successful, it is now time for extensive marketing. A well developed marketing strategy should be the to success at this stage. Perhaps a grand launching by a prominent political or social figure will give the business the boost it needs.

Attractive remunerations must be highlighted to catch the attention of franchisee-to-be. For example, the low capital investment needed to start the franchise business, or a guaranteed monthly income for the first few months.

But, what is more important is that the franchisor is ready to answer any enquiries from the public regarding the business. A disclosure of documents and legal agreements should be prepared before the marketing begins. Bear in mind that marketing does not end after you have successfully launched your franchise.



Step 5: Selection of Franchisees

THIS IS A PROCESS WHICH cannot be taken lightly by the franchisor. A franchisee-to-be might have all the resources, but do they have the makings of a successful business owner.

Similar to the first step, the franchisees must be physically and psychologically fit to become a franchisee. Checklists and written tests are one way to find out. But, an effective method of selection is by putting them through training. McDonalds for example, train their franchisee-to-be by putting them in outlets where they start from sweeping the floor to managing the outlet. If they were to give up during the process, they are automatically rejected as they do not have the commitment and drive to manage the business.

Note that the training modules and processes should have been developed and tested during the second and third steps to franchising.



Step 6: Managing the Franchisees

MANAGEMENT PROBLEMS would not be a major problem if the selection process is effective. However, problems do crop-up and solutions must be found immediately in order for the business to run smoothly.

The relationship between franchisor and franchisee, it needs to be rejuvenated time and again as quarrels and disputes will occur.

Disputes that arise among the franchisees must be settled within 24 hours to prevent it from getting worse. Franchisors are recommended to provide training, hold meetings or gatherings and discussions with franchisees to ensure effective communication, as well as developing good ties with them.#

Source: BPG Development Centre, Malaysian Franchise Magazine.


Source obtained from the Malaysian Franchise Association website.


Membership Application Process
http://www.mfa.org.my/xtext.php?view=yes&tag=273

Training from the MFA (Malaysian Franchise Association)
http://www.mfa.org.my/xtext.php?view=yes&tag=276

This post has been edited by Mavik: Jun 27 2006, 11:22 AM
Mavik
post Jun 27 2006, 03:09 PM

Patience is a virtue
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Elite
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QUOTE(alqa @ Jun 27 2006, 12:40 PM)
Good copy-pasting Mavik..... unfortunately those are for people with an existing and proven business model who want to convert the existing business model into a franchise so others can adopt. in other words, that's the steps to become FRANCHISOR.... not franchisee
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This information also helps people to prepare themselves to be a franchisee as well. If you read throughout the quotes there are useful tips there.

But of course this is a more general statement and provide as much information to both parties who are interested in becoming a franchisee or a franchisor themselves.

Trying to provide as much information so that it can be pinned up for future reference rather than being lost in the forums.

This post has been edited by Mavik: Jun 27 2006, 03:12 PM
Mavik
post Jun 27 2006, 03:13 PM

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Elite
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Taken from
http://www.gov.my/MYGOV/BI/Directory/Busin...tem/Franchisee/

QUOTE
Franchisee

A franchisee is a person who is granted a franchise.  You can forward your application to the Franchise Division, Ministry of Entrepreneurial and Co-operative Development using the Franchisee's Profile Form (Malay version).

Requirements to Participate as a Franchisee
1.  Bumiputera.

2. An individual (Application from a company will be considered provided that at least 70% of the company's equity is held by the applicant).

3. At least 30% from the project cost is funded by the applicant without using money from loans.

4. A suitable and strategic site or location.

5. Has a business plan for at least three years.


 

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