Draft strategy presentation for happy learning (1)

Draft strategy presentation for Happy Learning Center

January 2014

Principal Consultant: Mr. Gaurav Marya

Consultant: Mr. Shashwat Prakash Francorp India Advisors Pvt. Ltd.

Confidential

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Table of Content

S. NO. TABLE OF CONTENTS Status

1 Background of the Project

2 Approach to the Happy Learning Center franchise business model

3 Happy Learning Center current business snapshot

4 Mapping the Education System in India

5 Case Studies to analyze the Home-based Franchise System

6 Competition Assessment & Benchmarking in Education & Training Franchise for Other Segments

7 Assessment of Opportunity for Happy Learning Center

8 Franchisee Business Format

9 Franchisor – Unit Franchisee Relationship

10 Franchise Acquisition Strategy

11 Marketing Need of the Business

12 Way Forward

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1. Background of the project

Objectives of the study

Project scope of work

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Objectives of the study

To assess the market opportunity in the Private Coaching Education industry

To develop comprehensive strategy to capture market share in different field

To analyze the current franchised model

To Develop a Franchise model & Franchisee Proposition

To set out a roll out plan

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2. Approach to the Happy Learning Center franchise business model

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The Intent is to standardize the franchise offerings in the market..

Ideally companies venture into newer markets through a mix of company owned and franchisee units. So, Happy Learning Center has initiated penetration into the key markets through a mix of both the franchise and company owned outlet

The brand has aggressive growth plans and intends to approach through a standardized and benchmarked franchise proposition. Standardization will ensure:

• A sustainable format for future growth

• Ease of operations, faster growth and a large brand presence

Thus, we have approached the business through a standardized franchise strategy on the basis of industry norms Penetration

Saturation

Growth

Roll Out

Life

cycl

e

Francorp View “Happy Learning Center is a new education training institute brand which need to be established and performed well. Now its time to cross the penetration phase get into fast track growth phase”

Happy Learning Center strategy for the next 5-10 yrs

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Hence, we have outlined the business plan with a Phase wise approach for Happy Learning Center..

Phase I Phase II Phase III

Diagnosis of current stores

Analysis of the franchise model Benchmarking

Recommendations and Strategies for future franchising and growth

The stage wise approach has been formulated with the objective to create more realistic approach to franchising for the Happy Learning Center business

Though issues faced by different markets may differ, the model must be standardized!

Critical reasons for above mentioned phase wise approach:

Understanding of the current model essential to chart out future course of action

Specific recommendations in the franchise offerings !

Independent strategy for growth

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3. Happy Learning Center current business snapshot

Snapshots of the business

Management Team

Company USP

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Name of the Company Happy Learning Center Education Private Limited

Years in establishment From 2006

Registered Office 401/402, Jamuna Niketan, Manav Mandir Road, Neapensea Road, Mumbai, Maharashtra, India 400006

Industry and Segment Education & Training

Brand Name Happy Learning Center (HLC)

Marketing Medium Distribution of Pamphlets, Facebook advertisements, Quikr Billboards,

advertisements in newspaper, Stalls in social functions etc.

Courses Preparation for competitive school exams and all classes tutorial

Target Group Only premium customers who wants good quality education at any cost and want guaranteed results.

Company Required

High profile investors initially, Doctors, lawyers, CAs, Teachers, Principals, Business men, pre-schools, Hotels owners, Politicians, Rotary club members, Social workers, ladies in kitty party, MLM leaders in the area, HR Trainers, Bankers, Jewelers, Senior Police officers

Snapshots of the client’s business operation (1/3)

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About the Company

• Happy Learning Center is a home based K12 tutorial institute. • It help children to increase the mental strength by several innovative ways. • It is the most highly rated tutorials were people come from 15 km distance to

study • Every teacher can teach 4 kids per batch for 1.5 hours and 0.5 hours is for

Meditation and Goal Visualization and Food break , i.e. 2 hours per batch timing

Vision

• To create an Education System based on creating Scientific, Creative, Inventive, Innovative & Entrepreneurship Qualities, to be financially independent at an early age

Mission

• To Create world number one kids. Every kid is infinite potential..

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Objectives

• Company want to save children from mental pollution.

• Improve current school education which needs better methods of teaching

• To eliminate useless commercial tutorial business methodology of study.

• Change the Attitude of parents towards children to study.

• Improve the children performance in studies.

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Name Designation

Ms. Richa Kumar Director Trustee of HLC

Mr. Anil Kumar Director Trustee of HLC

Ms. Binnu Mathur Trustee of HLC

Mr. Yogesh Mathur Trustee of HLC

Ms. Girija Anirudhan Trustee of HLC

Management Team

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Company USP

Daily Practice of Meditation & Goal visualization.

Students Teach back session.

Video recording of teaching for Revising lessons at home in laptops.

Offer delicious food after every 1.5 hrs study as strategy break time like IPL matches.

Daily /weekly feedback from Quality Departments regarding progress and issues to be dealt with the child.

Concentration and learning cycle analysis.

There is no studies to be done at home only systematic revision and work sheet sent on mail regularly.

Daily /weekly Reminder for revision of chapter on mails. Quality Department monitors the tracking of errors by students.

Weekly/Monthly Error reduction analysis.

Company Teachers help students with problems in meditation (concentration).

Company follow the book Think and Grow Rich by Napoleon Hill for Goal visualization.

Company refund fees in case of poor performance.

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4. Mapping the Education System in India

Structure of India Education System

Industry Analysis

Projected Demand

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Structure of the Indian Education System

K12 (Kindergarten to 12th)

Pre school

Private tutoring

Professional courses

Diploma courses

University education

Distance education

Private tutoring

Vocational training IT / ITES

IT training

Corporate training

Hardware and networking training

Language Training

Other segment specific training

E-learning and online tutoring

Formal Non - Formal

Schools

Higher Education

Skill Development

Falls under the purview of MHRD with regulations

Segments are free from any regulations

Education system category based on regulations governing

Edu

cati

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sys

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ca

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ba

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typ

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Industry Analysis (1/2)

Industry Size: India rating expects the Indian education sector’s market size to increase to INR 602,410 crore

by FY15 due to the expected strong demand for quality education. Indian education sector’s market size in FY12 is estimated to be INR 341,180 crore.

The private education segment alone is expected to cross US$ 45 billion mark by 2015 from the present US$ 35 billion, according to a research report prepared by Investor Relation Society, affiliated to US based Global Investor Relations Network.

FY 2005 FY 2012

CAGR 16.5%

Private Education Industry Growth Rate- 2005-2012

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Industry Analysis (2/2)

Education Franchisee: Today Education and Training accounts for around 30% share of Indian Franchise Industry, and there

are more than 50,000 franchise education outlets in the country while there are only 2200 company-outlets (approx.) operational by education franchisor in all.

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India’s education system has undergone significant capacity expansion over the last decade. Most of it has been in the higher education and K12 space. As per ASSOCHAM The current size of the private tuition or coaching industry in India is about $23.7 billion (INR 1,41,416.33 crore) and is likely to touch $40 billion (INR 2,38,677.36 crore) by 2015.

A survey by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) has revealed that a whopping 87 per cent of primary school and 95 per cent of high school students in metros receive private tutoring.

In the last six years (2006-2013), the number of primary school children taking private tuitions increased by 100 per cent, while the number of high schools students enrolling in tuitions increased by 92 per cent.

Private tuition industry grew by 35 per cent in the last six years, ASSOCHAM stated in a publication, “Business of Private Coaching Centres in India”.

Source: ASSOCHAM Survey, June 2013

Key Facts on Private Tuition Market

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Preference to Private Tuition

A survey conducted by ASSOCHAM across 10 cities — Bangalore, Delhi NCR, Mumbai, Kolkata, Chennai, Hyderabad, Lucknow, Ahmedabad, Jaipur and Chandigarh which reveal

the preference or reason for the private tuition

A majority of the middle-class parents have been spending

one third of their monthly income on

private tuitions for their wards to do better in

their examinations and prepare them for

competitive entrance exams for professional

courses.

The desire to score well has resulted in

more and more school children going for private tuitions.

Many teachers of reputed schools and

colleges have left their jobs to take up private

coaching, for the reason that the monthly

income of tutors is equal to the annual

salaries of school teachers.

Parents rely on tuitions due to lack of time or because they

are ill-equipped to teach their children.

Working parents have to spend a whole day

away from home, making it difficult for

them to pay due attention to their

children.

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Value Proposition for Consumer

Fewer distractions. In a classroom setting, noise and other interruptions from peer groups can hugely affect child's performance. Private one-on-one tutoring is a much more controllable environment, small batches and therefore far less susceptible to interference. Confidence and self-esteem. These are extremely important factors to learning any subject. Children will feel more confident in smaller batches which means they will be able to grasp complicated concepts much more easily.

Focus on specific areas. A private tutor is able to focus on specific areas that your child may be having problems with. A school teacher will only be able to give limited private attention to students as they are constrained by time and tough targets for subject coverage.

Coverage. A private tutor is able to cover a lot of detail in a short time. Every child is different and a good tutor should be able to identify and adapt to the individual needs and capabilities of the student.

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Value Proposition for Investor

Eight years of experience in running and managing Private

tuition

Requires Low investment

The profit will start coming in first year itself.

Very high return.

A well designed and researched curriculum.

Guidance and support for advertising, Marketing &

promotion.

Extensive training and ongoing skill up gradation program.

Staff hiring, screening and training.

Scheduled visits from Support Executive.

Meetings, teleconferences and workshops designed to

keep informed and ahead of market needs.

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5 (1). Case Studies to analyze the Education & Training based Franchise System

Bansal Tutorial

Kota Tutorial

IIFT

i360 Staffing & Training Solutions

Mexus

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Company Details

Company Name Bansal Tutorials

Business Categories Education

Address 65, Kalu Sarai, Sarv Priya Vihar, Hauz Khas, New Delhi-110016

Country India

Website www.bansaltutorials.com

Business Overview • Bansal Tutorials was established in the year

1991 to provide coaching to the students preparing for India’s Premiere Engineering colleges, the Indian Institutes of Technology.

• The institute was founded by a former IIT lecturer, Dr. T.K.Bansal. It currently claims of having around 11 centers in different parts of the country.

• Bansal Tutorials has recognized the potential of market penetration to tap talent from smaller towns.

Franchise Model

Franchisee Requirement Franchise offering

• Investment Required - INR 15-18 Lacs • Area Required-1000-1500 Sq.Ft. • Royalty to franchisor: 10-15% • Should have a complementary retail neighborhood with

books shops, stationery shops, educational institutes.

• Payback from the first year itself. • Franchisee Coordinator: You will be assigned a

coordinator who will act as your main contact person • Regular checks, feedback & business development • Updated curriculum, course content and test series on

regular basis • Marketing and advertising - creative support

Bansal Tutorials

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Company Details

Company Name Kota Tutorials


Address 14/145, Mandi Sayeed Khan, Near St. Peter's College, Sanjay Place, Agra

Country India

Website www.kotatutorials.com

Business Overview

• Kota Tutorials is a Agra based education coaching institute.

• Kota Tutorials is an educational group spreaded all across the country to impart quality education students preparing for IIT-JEE/Medical competitive examination.

• Kota Tutorials has been showing remarkable performance in preparing and guiding IIT JEE & Medical aspirants.

Franchise Model


• Investment Required - INR 5-10 Lacs • Area Required-1500-2000 Sq.Ft. • Sound Financial Background • Royalty to franchisor: 15%

• Payback from the first year itself. • Recognition & Goodwill of 9 Years. • Nationally Renowned Coaching Institution • Complete Centre Development Guidance • Well Researched study Material for Students. • Unique Teaching Methodology

Kota Tutorials

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Company Details

Company Name International Institute of Fashion Technology


Address H-12, South Extension Part - I, New Delhi

Country India

Website www.iiftindia.net

Business Overview

• International Institute of Fashion Technology (IIFT) was established in India in 1990 by Mr. Ratnadeep Lal – a Leading fashion technologist.

• IIFT also has a tie-up with over 500 companies and has trained more than 50,0000 professionals, who are currently working in various countries as well as in India.

• IIFT has 70+ franchisee center in India

Franchise Model


• Area: 1500-2500 Sq. Ft • Investment: 5-10 Lacs • Franchise Fees: 3 Lacs • Royalty: 20% • Franchise Term: 3Yrs.

• Marketing Support • Set up support • Administrable Support • All kind of support which require to run a center

International Institute of Fashion Technology

http://www.iiftindia.net/

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Company Details

Company Name i360 Staffing & Training Solutions

Business Categories Education & Training

Address 33, 1st Floor, DLF Industrial Area, Najafgarh Road, Moti Nagar, New Delhi

Country India

Website www.i360training.in

Business Overview

• i360 Staffing & Training Solutions is a vocational training institute started in 2008 with the aim of reducing the gap between employers’ expectations and the available talent pool, by providing necessary training to improve employability.

• i360 is a fast paced Training Solutions Company, offering industry specific custom designed courses to the students and corporate.

Franchise Model


• Area: 700-1000 sq. Ft • Investment: 6-10 Lacs • Royalty: 25% • Franchise Term: 3 Yrs.

• i360 organizes induction programmes for new Business Partners and their staff

• i360 takes Marketing & Advertising campaign creation initiatives at a national level

• Onsite and Offsite support periodically

i360 Staffing & Training Solutions

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Company Details

Company Name Mexus Education Pvt. Ltd.

Business Categories Education & Training

Address Mexus Education Pvt Ltd. 612, Midas, Sahar Plaza, J.B Nagar, Andheri(E), Mumba

Country India

Website www.mexuseducation.com

Business Overview • Mexus’s focus on Combining engaging

educational content with technology creating futuristic educational models for children of different age groups.

• It derives its futuristic outlook from its dynamic mix of intellectual professionals, managerial team, enterprising investors and an experienced advisory board.

• It’s key endeavour are towards creating futuristic technology-based models for education.

Franchise Model


• Area: 300 sq. ft. • Investment: 13-15 lakhs • Franchise Fee: 2 lakhs • Royalty: 15%

• Marketing Support • Set up support • Administrable Support

Mexus

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5 (2). Case Studies to analyze the Home-based Franchise System

Jymka

Beehive DataSoft

Maid2Clean

Multi Link

Genieforyou.com

Rajdhani Data Center

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Company Details

Company Name Jymka

Parent Company Fit Kids

Business Categories Kids fitness

Country India

Website www.jymka.com

Business Overview • Jymka is an subsidiary of Irish company,

KidFit, which is established in 2003.

• It teach many sporting skills and other activities and offer specialized gymnastic and sport class programmes.

• Expert instructors use state-of-the-art equipment to provide a safe platform for children to learn movement & gymnastic skills, tumbling & agility obstacle courses, multi-sports & skills and fun active.

Franchise Model

Franchisee Requirement Franchisee Revenue

• Area required should be 1500 sq. ft. • Franchisee fee Rs. 3,00,000. • Investment requirement is 13 – 15 Lac • Franchisees must have the use of a Car, laptop with

broadband, MP3 player and speakers, printer and have a Cert in First Aid course.

• Revenue based on the enrollment of the student . • Payback Period would be 1 year • Rate of return for the first five year would be around

152%.

Jymka

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Company Details

Company Name Beehive DataSoft

Parent Company Bindu infotech Solutions

Business Categories Home Based

Address 1st floor,behind vakkaligara kalyana mantapa, Doddaballaur, Bangalore , Karnataka – 561203

Country India

Website www.binduinfotech.com www.beehivedatasoft.com

Business Overview • Beehive DataSoft is a Bangalore Based

Company and operate in all fields like data entry projects, pcb design, engineering.

• Company has about 10 years experience in electronics and data entry domain.

• Company offer home based work of data such as image to doc conversion by typing and provide payment upto 70% to 100% accuracy.

Franchise Model

Franchisee Requirement Franchisee Revenue

• Should be any firm or a company with small space and

staff with good communication skills. • Franchisee fee Rs.10,000/- for 6 months. • Minimum sales are 5 projects per month.

• On every sale, Franchisee will get Rs.1000/- up to 5 Sales.

• 6th to 15th Sale Rs.1500/-. • 16th Sale onwards Rs.2000/-. • Bonus and Extra benefits shall be considered on

performance

Beehive DataSoft

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Company Details

Company Name Maid2Clean

Business Categories Domestic Cleaning

Address Caidan House, Canel Road, Altrincham, Cheshire

Origin Country UK

Website www.maid2clean.co.uk

Business Overview • Maid2Clean, a core service provider for

domestic cleaning company of UK.

• It start in 1993 and offering franchise from 2003.

• Presently, the brand has 160 franchise centres in the UK, Ireland, Canada and Australia

Franchise Model

Franchisee Requirement Franchiser offering

• Area required should be 150-300 sq. ft. Or home based. • Franchisee fee Rs. 12.75 Lacs (For Area franchise) • Investment requirement is 15 – 20 Lac • Target Cities: Hyderabad, Mumbai, Kolkata, Delhi,

Chennai and Bangalore

• The USP of business is the faster pay back period and the quick break even point.

• Pre-post Lunch Assistance, Stationary, Training Module, Operational Support, Marketing Knowledge, Technology Support is given by the company.

Maid2Clean

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Company Details

Company Name Mos Utility Pvt.Ltd

Business Categories E commerce solution

Address 3-3-50&50/1 Amrutha Arcade Kachiguda Hyderabad 500027

Origin Country India

Website www.multilinkworld.com

Business Overview • Company offer business in box service.

• Company provide complete travel or

ecommerce website with best fares.

• Company provide the maximum commission on any booking of ticket, package or any other deal.

• Company expand their horizon through franchise model.

Franchise Model


• Minimal area required or an operate from home based. • Franchisee fee Rs. 7,000 • Investment requirement is Rs 20- 25 thousand. • Franchisee must have Computer, Laser Printer, Internet

Connection, Bank Account, Basic Computer knowledge

• Travel Startup Kit • Your Own Website (100% Online) • Banner 06Ft x 03 Ft • Operation Manual • Indian Railways as authorized agent • Multilink Online Services Partner Certificate

Multi Link

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Company Details

Company Name Genie Communications

Business Categories Web Based Creative Studio

Address Level 9, Raheja Towers 26-27, Mahatma Gandhi Road Bangalore 560 001


Website www.genieforyou.com

Business Overview • Company provide web technology based

marketing, branding and media solution in various domain to SMB customer in India and across the world.

• It also offer consulting services in the same domain.

• It is situated in Bangalore, Chennai, Gurgaon, Hyderabad, Kolkata, Mumbai, Nagpur, New Delhi and Pune.

Franchise Model


• Minimal area required 50-150 sq.ft., SOHO set up (Small Office Home Office).

• Franchisee fee Rs. 1.25-1.75 Lac for 2 year contract. • Franchisee must have Computer, Laser Printer, Internet

Connection, Bank Account, Basic Computer knowledge

• 20% to 30% gross profit. • Payment is directly credited to the franchisee’s bank

account before 7th of every month. • Offer Training and other required support.

Genieforyou.com

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Company Details

Company Name Rajdhani Data Center Private Limited

Business Categories Hosting Services and Web Development

Address Rajdhani Data Center Private Limited Siker Road, Jaipur Rajasthan


Website www.rajdhanidatacenter.com

Business Overview • RDC- Rajdhani Data Center is an Data center

established in Jaipur Rajasthan by the name www.rajdhanidatacenter.com .

• This Data Center provide with all services they are Shared Web Hosting for Linux and Windows, Dedicated Servers, Virtual Dedicated Servers, Server Co-location Services and SEO services.

Franchise Model


• No area required, word of mouth business, need good contacts in the city

• Franchisee fee up to Rs 50,000. • Franchise Term would be 10 Years.

Average Monthly Income Assurance- • For Master Franchise- This will be Rs 21000/- monthly

(i.e. Net Approx. Rs 50 Lacs in the Franchise Period) • For Franchise- This will be Rs 4000/- monthly ( i.e. Net

Approx. Rs 10 Lacs in the Franchise Period.)

Rajdhani Data Center

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Company Details

Company Name Amway India Enterprises Pvt. Ltd.

Business Categories Hosting Services and Web Development

Address First Floor, Elegance Tower, Plot No. 8, Non Hierarchical Commercial Centre Jasola, New Delhi - 110 025

Country India

Website www.amway.in

Business Overview • Amway India was established in 1995.

• It commenced commercial operations in May 1998.

• It has emerged as the country’s largest Direct Selling Company.

• The Company has provided income generating opportunities to over 550,000 active Distributors also known as Amway Business Owners

Amway Sales & Marketing Plan (ASMP)

• Retail Profit Margin: Distributors buy Amway products at Distributor Acquisition Price (DAP) and may resell products at a retail price, not to exceed the maximum retail price, as published.

• Commission on Personal Purchases: Under Amway’s Performance Bonus Schedule (6% - 21%) a Distributor may earn commission on the volume of the Distributor’s individual purchases of Amway products during the month.

• Commission on Group Sales: A Distributor may recruit a sales group and based on the success and productivity (as defined by product sales) of the sales group, a Distributor may earn commissions. It is important to note that a Distributor only earns commissions on the volume of Amway products actually sold in accordance with Amway’s Performance Bonus Schedule.

Amway

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6. Competition assessment and Benchmarking in Education & Training Franchise for Other Segments

Benchmarking Analysis in Education & Training franchise system in Other Segments

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Snapshot of other franchise offerings in the small investment bracket..

Brand name Vs the franchise offerings

Food sector: Yum brands with its YO kiosks

CCD with its smaller format CCD express

Semi precious jewelry store franchised formats

Peter England franchise stores

Area 50 -100 60 -100 sq ft Kiosk 300 -500 400 -500

Total Investment

500,000 Under multi unit franchise contracts

Security deposit model 5 lacs; 80% refundable and 20% goes as non refundable

20 -25 lacs (1300 psft) 15 -20 Lacs (1500 psft)

Brand penetration

Low High Medium High

Choice of retail location

Malls/ Hi street

High footfalls locations Malls/ Hi street Mid market malls / Hi street locations

Franchise fees 5 -10 % of project cost

NA 5 -10 % of project cost 2 Lacs

Margins offered

Not applicable

Not applicable 30- 35% 30 -33% on Outright 13 -15% on consignment

Royalty (if any) 7% 20% None None

Marketing fund (if any)

None None None 2% of sales

Estimated Pay back period

1 year 1 year 1 -1.5 years 1.5 -2 years

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Entering into franchise model indicating management vision and realization of company potential.

FOFO (Franchise owned Franchise operated) models is the most preferred way of expansion

Employment of Professionals’ indicates they want to communicate clearly who they are to the target population.

Investment indicates capital intensive and strays away non-serious people in the franchise business.

WHY WERE THEY SUCCESSFUL?

• Early move to franchise model, thereby gaining first mover advantage in the particular industry.

• Unit and Multi-unit franchises strategies are used to penetrate deeper into the market.

• Additional revenues to Happy Learning Center obtained through franchise fees and royalty.

• Pan-India expansion once the operations are established in Central India.

Learning's from the Benchmarking study of Industry Players

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Thus, it is recommended to follow the best practices of the Industry for the franchise business model.. (Home Based Model)

Recommendations for Happy Learning

Center

Average area (sq ft)

Investment (Lac)

Construction cost (per sq ft)

Average Sales (lacs)

Marketing cost (%)

2 Rooms (Home based)

2.5-3.5 lakhs

NA

1 – 1.5 lakhs

2-4%

Average break even (years)

Franchise fees (Lac)

Within 1 year

INR 50,000 - 1 lakh

Royalty (%) 15%

Key recommendations

● The ideal size of centre/premise should be as per the volume and can be managed premise being home based.

● Royalty should not be more than 15% bringing revenues to both Franchisor and Franchisee

● Commission of 30-35% should be given to given to the Part-time faculty.

● Also, for affordable home based education & training brands, the construction cost will be minimal with a minimal cost on equipment

● We recommend charging fixed royalties of 15% of gross sales on a monthly basis & a central marketing fund of 2% of gross sales each.

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Thus, it is recommended to follow the best practices of the Industry for the franchise business model.. (Centre Based Model)

Recommendations for Happy Learning

Center

Average area (sq ft)

Investment (Lac)

Construction cost (per sq ft)

Average Sales (lacs)

Marketing cost (%)

200-500

5-6 lakhs

300-350

2.5-3.5 lakhs

2-4%

Average break even (years)

Franchise fees (Lac)

Within 1 year

INR 1 - 2 lakh

Royalty (%) 15%

Key recommendations

● The ideal size of centre/premise should be 200-500 sq. ft.

● Royalty should not be more than 15% bringing revenues to both Franchisor and Franchisee

● Commission of 25-30% should be given to given to the Part-time faculty and 15% to Full-time faculty.

● Also, for affordable home based education & training brands, the construction cost will be minimal with a minimal cost on equipment

● We recommend charging fixed royalties of 15% of gross sales on a monthly basis & a central marketing fund of 2% of gross sales each.

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Risk & Remedies

Associated Risk

Confidentiality in Business

Starting Business on Own

Customer Satisfaction

Substantial Business

Generation

• Confidentiality in Business: Confidentiality of content, customers, pricing etc. needs to be maintained by signing a robust agreement with the Trainer/Teacher and should be a mandate.

• Starting Business on Own: Clause will be mentioned in the Franchise Legal Agreement to safeguard the interest of Franchisor.

• Customers Satisfaction: All Franchisee Owners will share compete customer and sales data with Franchisor. Feedback form filled and signed by customers should be submitted by Franchisee on an weekly basis and Franchisor should call the customers to ensure their satisfaction.

• Substantial Business Generation: Need to incentivize the business and also need to replace the non-performing franchisee and should be a part of agreement.

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7. Assessment of Opportunity for Happy Learning Center

Franchise capability test

SWOT Analysis for Happy Learning Center

Strategies for business model

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Feasibility 12 point Analysis

Criteria Current

Model

Franchise

India

Model

Credibility 3 4

Refined and successful Prototype Operations 3 4

Market Trends and Conditions 4 4

Differentiation 4 4

Documented Systems 3 4

Capital 3 3

Transferability of Knowledge 3 4

Affordability 3 3

Commitment to Relationships 4 4

Adaptability 3 4

Return of investments 3 3

Strength of Management 3 3

Score for the Company 39 44

Not Franchisable 0-15

Moderately Franchisable 16-35

Definitely Franchisable >35

Franchisable in the current

Indian Market

The opportunity is ripe to tap the phenomenally growing Private tuition and coaching business.

Currently, the organised market stands with less competition in private K12 tuition.

We feel, with the sporadic demand coming from all sectors of society and increased focus on Scoring high marks, Happy Learning Center should develop deeper reach and a PAN India growth chart.

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Feasibility 12 Point Analysis

Criteria Description

Credibility Happy Learning Center is already an established name in the areas it serves. The franchised

model will also bank on the credibility previously built.

Refined and successful

Prototype Operations

The company has one outlet on board and is doing fair in terms of revenue generation and

business profitability. The unit will serve as the business prototype suitable for franchisee

Market Trends and

Conditions

The business is growing phenomenally. The demographics is shifting in favor of such segments.

Differentiation Happy Learning Center an Innovative concept catering to small kids to youngsters. However,

with larger expansion plans in mind, the company will have to evolve as a best education

services institute which offer best education under one roof for school level to university level.

Documented Systems Franchise documents for the business operations are already developed by the company.

Francorp is in the process of vetting all the information, creating the detailed documents at par

with international standards.

Capital The business would demand low amount of investments. However basis the company’s

expansion plans we have devised the unique business models for moderately low rental

location.

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Feasibility 12 Point Analysis

Criteria Description

Transferability of

Knowledge

If experienced human resources are hired, moderately simple to transfer knowledge. Retailing is

a science that requires ‘basic intelligence’, ‘taste for good life’, ‘aesthetics’ and ‘general

managerial abilities’ which can further be groomed through systematic training. Every

prospective franchisee will have basic understanding of the retail business and thus ‘training’

will not be a major challenge. However, training the technicians and retaining them is one of

major issue .

Affordability The business is relatively affordable for a franchisee due to low overheads/ low cost of delivery/

larger spend ticket size and give good returns after reaching a certain mass. The business is bit

expensive on the HR front, with employees requirement costing with part-time employees with

high revenue sharing.

Commitment to

Relationships

Backed by the clean corporate philosophy exhibited at all levels, Happy Learning Center possess

high level of commitment towards happiness of business associate.

Adaptability Indian consumer is open to novel business formats, future looks promising!

Return of investments Sustainable and attractive growth at Unit franchisee level. Break even in the first or second year

is very lucrative for the franchisee.

Strength of

Management

The company has high experience of decent technical/operational knowledge, likely to bring in

best practices to franchisee business as well.

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SWOT Analysis for Happy Learning Center

STRENGTH WEAKNESS

Growing regional Brand with Unique Business Proposition Less affected by recession. Efficient supply chain management High margins business after reaching a critical mass Backed by vast experience and industry knowledge Ability to manage & train faculty; Management involvement in all areas of operations

Cost of acquiring customers is high initially High operating costs in up market locations Pricing Pressure

OPPORTUNITY THREAT

Private tuition & coaching industries are on a growth curve in India.

Sizzling growth in tier II and tier III cities. Increasing competition and willingness to grow among

youngsters.

Intense competition (although fragmented) from unorganized players

Rising real estate costs Pricing pressure from peers Low entry risk.

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The strategy should be to gain position & selectively push for market share

According to an ‘India rating’, the size of the education sector is expected to above US$ 100 billion by 2015 with the rise in government expenditure along with an increase in middle-class income .

There exists a large customer base ready to be served with innovative services, as well as corporate/institutional sector which can be tapped by group discounts.

Happy Learning Center can leverage its position as one of the first few players in the industry with a first movers advantage.

Ideally, Happy Learning Center should try and gain position through both up sell and cross sell to its existing customers, innovative marketing strategies, impeccable services and high focus on key fashion trends.

Happy Learning Center should also work on further building its brand image and brand recall to tap both a larger customer base and investors through franchising.

Embryonic Growing Matured Ageing

Dominant

Strong

Favorable

Tenable

Weak

Industry Life cycle stage

• Rare. Often results from a near monopoly or protected leadership.

Dominant:

• A strong business can usually follow a strategy without too much consideration of moves from rivals.

Strong:

• Industry is fragmented. No clear leader among stronger rivals.

Favorable:

• Business has a niche, either geographical or defined by the product.

Tenable:

• Business is too small to be profitable or survive over the long term. Critical weaknesses.

Weak:

Competitive positions

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The success of the business model will demand a high market penetration and development activity

The market in India, is unorganized, growing, and dynamic in nature, so are the services and products offered.

It can be observed that customers are willing to spend in even tier I and tier II cities, and a market exists, however trends vary from conservative to unconventional depending to the size of the city

Current New

Current Penetrate Market Dev

New Product Dev Diversify

Market

Pro

du

ct

Market Development:

Current - The metros enjoy a customer base in sync with the latest trends and support all types of services and products. The service spectrum can be expanded here as well as more outlets can be launched to tap the ever increasing market

New - A reduced service line can be offered at tier I and tier II cities, smaller formats with lower number and less qualified staff may also be employed initially.

Product Development:

Current – successful products and services at large format metros may later be introduced at tier I and tier II cities.

New – successful products, services and trends overseas may be introduced at large format outlets. Customer feedback may be incorporated and key global technologies and techniques may be employed depending on their financial feasibility.

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The franchise offerings for Happy Learning Center

Area As per Volume

Total Investment INR 2.5-3.5 lakhs

Brand penetration Focused marketing efforts needs to channeled

Choice of retail location Location with good visibility, ideally at a residential property

Franchise fees INR 1 lakh

Royalty (if any) 15% royalty is recommended keeping the industry standards in mind

Marketing fund (if any) We recommend a total of 2% central marketing fund contribution, wherein 2% would be contributed towards local marketing.

Marketing collaterals To be provided by the franchisor on cost basis

Term of business relationship (years) 3 years

Therefore the final terms & conditions for Happy Learning Center would be as follows: (Home Based)

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The franchise offerings for Happy Learning Center

Area 200-500 sq. ft.

Total Investment INR 5-7 lakhs

Brand penetration Focused marketing efforts needs to channeled

Choice of retail location Location with good visibility, ideally at a residential property

Franchise fees INR 1.5 lakhs

Royalty (if any) 15% royalty is recommended keeping the industry standards in mind

Marketing fund (if any) We recommend a total of 2% central marketing fund contribution, wherein 2% would be contributed towards local marketing.

Marketing collaterals To be provided by the franchisor on cost basis

Term of business relationship (years) 3 years

Therefore the final terms & conditions for Happy Learning Center would be as follows: (Centre Based)

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For an ideal franchisee profile, Happy Learning Center should franchisee through the FOFO..

Franchise Owned and Franchise Operated

● Franchisee brings all the investments both for the initial capital and also the working capital costs.

● Since the franchisee has invested a large amount of money in the business, he has vested interest and stake in the business.

● Will bring in more efficiencies, better control; thus likely to have a profitable business venture

● Limited training & man power costs to the franchisor

● The Franchisee pays royalties to the franchisor

● This FOFO business model is expected to the bring sustainability and independent scalability to the franchisee.

Francorp’s recommendations: We feel there exists high opportunity for the better services in the given segment and there is a shortage of such concepts which are customized as per end consumer needs. However, the model is most suitable with the Franchise owned and Franchise operated model targeting the metros and Tier-I & Tier –II cities in the initial phase.

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8. Franchise business format

Franchise business format requirement for the deal making

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Franchise Model - Options

Option

of

Alliances

Master Franchisee

Unit Franchisee

Multi Unit Franchisee

Area Franchisee

Zonal Franchisee

Considering the ‘Happy Learning Center’ business model and industry,

possible options are Unit or Multi-Unit Franchise. Again considering the

risk factors of the business and operational effectiveness;

Consultants recommend UNIT Franchise as a feasible option at this growth phase and option of Multi-

Unit Franchise can be considered at the penetration phase of newer

markets. Property should be ideally a room at

residential place/apartment.

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Franchise Fee and Royalty Approach

The methodology for fee determination calls for Franchisors to look to their franchise fees primarily as a cost recovery tool and only secondarily as a profit center. However, would obviously like to maximize its franchise fee revenue. Royalty is generally based on education franchise format.

COST PLUS APPROACH

• The cost-plus approach is one way to determine the "floor" level above which a franchise fee should be set. To establish this floor, the Franchisor calculates its total marketing, training and initial support costs involved in selling a franchise and add a reasonable markup.

COMPETITIVE APPROACH

• Francorp recommends a "ceiling" price for the franchise by considering what the market will bear.

PERCEIVED VALUE

APPROACH

• Francorp uses this approach to determine where a franchise fee should be set above the "floor" price.

• Note: Some franchisors will intentionally price above the ceiling price to establish the "EXCLUSIVITY" of the franchise offering, while others will price well below its assumed costs in an effort to saturate the market.

Francorp recommends franchise fee of INR 1 Lac for 3+3 year term with renewable option fee of INR 50,000 payable after agreement tenure with royalty of 15% on gross sales.

For Centre based Franchise, we recommend a Franchise Fee of INR 1.5 lakhs with 50% of the amount as renewal fee.

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Franchise Profiling(1/2)

Any opportunity for a franchisee can be assessed on the basis of the several parameters. The below

radar chart portrays the impression that a franchisee will have a training classes like ‘Happy Learning

Center’. We have rated the following 10 parameters on a 5 point scale.

Investment capacity.

Ability to run the business.

Teaching Experience.

Ability to manage faculty.

Space and Location.

Network strength.

Educational Qualifications.

Experience in educational training.

Comfort level with franchisor.

Passion for education.

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Franchise Profiling: Primary Shortlist (2/2)

INDICATORS FRANCHISEE

REQUIREMENT EXISTING OWNERS OF

TRAINING CENTERS HOUSEWIVES EXP FACULTY

Investment Capacity 3 5 3 2

Ability to Run the Business 4 4 5 3

Teaching Experience 2 2 3 4

Ability to Manage faculty 4 2 4 3

Space and Location 4 4 5 3

Network Strength 3 3 4 4

Educational Qualifications 3 2 2 4

Experience in Educational Training 4 2 3 4

Comfort level with Franchisor 3 3 3 2

Passion for Education 5 3 5 5

TOTAL 35 30 37 34

1st 3rd 2nd

Preference Ranking

High profile investors like Doctors, Lawyers, CAs, Teachers, Principals, Business men, Pre-schools, Hotels owners, Politicians, Rotary club members, Social workers, ladies in kitty party, MLM leaders in the area, HR Trainers, Bankers, Jewelers, Senior Police officers shall also be targeted.

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Identifying other appropriate franchise profiles

Investor Types

Government employees who

have taken VRS & Senior Citizens

Bankers and New set of CAs, IFAs,

DSAs Insurance Agents Real estate Brokers Pure investors

Degree of Appropriateness

Remarks They probably would like to use their time constructively, and possibly get into a business with ample of time and cash reserve.

Already have huge clientele and typically have under utilized facilities which may not be profitable with the current set up but the fortune wheel can be reversed by getting into franchise set up with Happy Learning

Profile’s good wrt the network that an agent bring in along with the existing insurance clientele. The one concern would be heavier focus on insurance due to comfort with the product line.

Existing customer base, already possessing a facility however would like to diversify their business.

Though this profile offers good options in terms of financially healthy investor but the worry is participation in the store operations on a daily basis and the business bent of mind

Model Type Can be definitely considered for FOFO (Home-based)

Good option for Centre based FOFO

Good option for being a FOFO (Both models), provided they have sufficient capital.

Should be considered for FOFO (Centre based)

Should be considered for multi-unit

Most appropriate franchise for the type of format Scale Least appropriate franchise for the type of format

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SOMF Analysis for Potential Market(1/2)

Financial

Fit

Marketing Fit

Operational Fit Strategic

Fit

TO DRIVE THE REVENUE AT THE CENTER, IT IS ESSENTIAL TO UNDERSTAND THE ATTRIBUTES OF THE

STUDENTS THERE BY DRIVING THE SUCCESS OF THE CENTER.

ATTRIBUTES OF POTENTIAL CUSTOMER

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SOMF Analysis for Potential Market(2/2)

Strategic Fit

Is the city viable for setting up training center?

Market penetration

• Increase in market share

• City profile

Operational Fit

Will it possible to operate the center in the particular shortlisted city?

• Set up cost

• Social conditions

Marketing Fit

Is the center economically viable to market ?

• Marketing cost

Financial Fit

Do all the cities make a financially viable plan ?

• Yield per sqft

• Efficiency per centre

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Roll Out Strategy (1/3)

Selection of rollout cities were based on:

Target Customers

Target customers for the ‘Happy Learning Center’ business will be Kids. At initial rollout phase, ‘Happy Learning Center’ has to target such population in the tier 1 and tier 2 cities, specifically Mumbai during initial phase, then as Western India in 2nd phase. After setting and running up profitably in these areas, the services might be rolled out as PAN India. However at each stage of expansion cluster approach is considered on the basis of population, premium residential colonies/apartment etc.

Market Size

Most of the near by tier1 cities of country have a potential for minimum 30-40 centers and the tier 2 cities have a potential of minimum 20-30 centers. Tie-ups with schools, colleges and corporate is a huge market with ready and continuous customers.

Brand Image

For initial phase of franchise operations, as mentioned above will target western India, since being a known brand and for operational effectiveness. As the business is influenced by reference and word of mouth which leads to increase in brand value company will enter in newer markets.

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City Demographics

Franchisee centers will require minimum of 150 Sq. Ft. preferably in a residential property area near premium residential places within the city premises.

Competition

After making its stand in nearby states, company will enter in competitive markets on the basis of its quality offerings and proven track records.

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Phase 1 • Western India

Phase 2 • Central India

Phase 3 • PAN India

Francorp recommends cluster approach at

each stage considering the population etc.

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9. Franchisor - Unit franchise Relationship

Obligations of the subjects

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Franchisor’s Obligations

Training programs on a regular basis for the Unit Franchisees, as well as additional training for sales stuff and marketing team.

Provision of all administrative forms & formats.

Provision of all forms, formats, Cash Sheets, Sales Sheets and Monthly report sheets.

Provision of informative material, presentations, reference books and other required notes.

Assistance in organizing of local promotional activities and events.

Printed material like Brochures, Pamphlets and Flex Banners on cost basis

Assistance in monitoring and managing the business to make sure that the best business practices get implemented at the franchisee end to run it on profit. Step wise training programs (start-up phase, the operating phase and the growth phase.)

Happy Learning Center will also take care of quality of services to be delivered at the franchisee end as well as to the end customer (Thorough candidate feedback, regular check candidate profiles etc.)

Provide course structure to be delivered by the franchisee during business operations for the Unit franchisee

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Unit franchisee Obligations

Center- Site Selection (In case it is a commercial property)

Fit-outs of the office as per the company’s specifications

Pre-opening purchases of required equipments, software's etc.

Full involvement in opening launch promo

Attending initial and ongoing training individually plus key staff

Payment of fees to the franchisor on monthly basis

Compliance with standards and policies/operating guidelines

Compliance of the customer service standards as set by Happy Learning Center

Be adequately insured

Proper maintenance of books and accounts

Follow timely reporting structure of database developed at the franchise end

Will have to ensure smooth flow of business at all times

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Pre-Opening Franchise Support extended to the unit franchisee

Comprehensive turn-key assistance from site selection to setup and start operations

Layout and design; architectural support

Pre-opening purchasing assistance

Assistance in organizing of launch promotions

Training:

• A comprehensive training is provided to all the Franchisees on service operations, Each and every standard check up procedures, accounting, inventory control etc. Employees from all verticals are being trained on a regular basis which helps to continuously groom and enhancing operating efficiencies of employees.

The franchisor can provide following assistance to its franchisees during this period:

• Ordering of all equipments for the center

• Negotiation of suitable terms and organizing of lease

• Monitoring of fabrication of the center

• Daily/ weekly assistance in the service operations.

All the franchisees are put through a highly focused support system which educates them on utilizing their entrepreneurial skills to become highly efficient and happy franchisees.

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Post Opening Franchise Support extended to the unit franchisee

Operations Guidelines

Franchisee Coordinator

Ongoing R & D, marketing and customer service and other related market development initiatives

Advertising & local promotion:

• The franchisor will organize events specific to marketing/ branding for Happy Learning Center business at the national level. This will include participation in the related retail expos/ sponsoring such events, tie ups with magazines/ newspapers etc and much more in collaboration with its business partners to promote its each Franchisee outlet.

Control and check the job conversions ratio

Operational support:

• Day to Day operations, Technical & Administrative advices.

Regular advices on inventory control and administrative issues.

Frequent official visits, audit, advices on local promotions programs etc.

Structured Marketing Ideas to suit a location

PR support:

• Regular PR coverage at national as well as regional

• Centralized Brand Building through all media - Print, Outdoor, Web, Retail, Electronic.

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10. Franchise Acquisition Strategy

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Franchise Acquisition Strategy

• The use of some franchisees in only certain markets and with company-owned units in other markets. This strategy is used where a strong local or regional company wishes to expand in remote markets.

Target Market Strategy:

• The use of company-owned units to develop a presence in specific markets for the purpose of creating a franchise demand.

Spiking Strategy:

• Sell franchisees at the moment and at the place the opportunity arises.

• Let the franchise operators suggest potential business locations and open new units when good sites have been identified.

Opportunistic Strategy:

• Explore each market by searching for favorable locations and develop a portfolio of potential locations. Develop only the most promising sites.

Projected Performance

Strategy:

Unit Franchise : Target Market Strategy along with the Opportunistic strategy (specific for phase approach to the roll out cities)

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Franchise acquisition process

Franchise Application signed. Agreement Process initiated. Rollout Plan.

Franchise meetings, further scrutiny of the prospect.

Email Blasts to prospects Advertisements in The Franchising World & website Franchise Exhibition Franchise kits & Communication design Information/training to all regions by Francorp

Basic Information provided to all Inquiries. Expression of Interest generated Site details will be discussed as per client requirement Weekly progress sheet submitted to client Test & measure marketing activity- to identify gaps.

Lead Management Marketing Lead Generation Recruitment

Detail Application form

Signing the agreement

Expression of Interest Franchise Evaluation

City & Site evaluation

Franchise Approval

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11. Marketing Need of the Business (B2C)

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Marketing of Happy Learning Center is needed to build long term brand equity, to communicate the brand’s benefits and hence incentivize the consumer to purchase the services. Long-term results will occur when Promotions would work in conjunction with advertising and other elements of marketing mix.

Promotions

Long Term (Builds Equity)

Advertising

Brand PR

Short Term (Builds Usage)

Strategic

Tactical

Advertising and PR

Sales Promotion

B2C Marketing

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Promotions would translate favorable attitudes towards the brand into sales through offering a value proposition and an encouragement to the consumers to buy the services. Primary objectives are as follows: • Increase Household Penetration • Increase Share of consumers category purchase • Increase Consumer Consumption • Maintain current users/current purchase levels • Counter/ Preempt Competition

a. Increase Household Penetration

• Increase the Customer Base to a specific number of new households • Support achieving awareness levels for the brand • Achieve a specific level of presence all across in the given geography

Target Group Promotion Actions

• All Residential Places in the

Geography

Trial Offers

Combo Offers

Campaign at schools at discounted price

Seminars & Demonstration of services

Contests with discounted registrations

Why Promotion is needed for Happy Learning Center?

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b. Increase share of consumer category purchase

• Convert a specific number of consumer sales to the target group • Increase the depth and quality of distribution to specific levels across the line


• Alternators and Occasional users

Offers at Education & training centres

(complimentary ones)

Certificate Awards assurance

Coupons for Discounts & Trial Class

Shelf Display Programme in Education &

Training Institute (complimentary ones)

In house Merchandising on sale

Innovative Reward Offers to convert existing

client base with referral options


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c. Increase consumer consumption

• Increase the depth and quality of reach to specific levels across the geography • Incentives to join back and bring more referrals


• Loyal Core Customers


Multiple purchase coupons for referrals

Loyalty offers

In-house branding (in the premise)

Course Demonstrations should be done with a

Power Point Presentation (accolades included)


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d. Maintain current users/current purchase levels

• Defend the franchise against intense competitive activity • Maintain household consumption by consumers • Hold current levels of presence in the given Geography by expanding and Marketing and

cluster approach Target Group Promotion Actions

• Loyal Core Users


Consumer contests

Consumer promo

Loyalty programmes

Loyalty Programme

Scratch Coupon Rewards to High scorers

Display Contests (Occasional)

e. Counter/Preempt Competition

• Response to a competitive initiative • A new product launch positioning the New Product versus competition • A competitor’s new product launch that threatens our brand • A new product upgrade to counter competition • A preemptive measure at the onset of a season


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Franchise Financial and Franchise Legal Agreement (Separate Submission)

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12. Way Forward

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PARTICULARS Completed FIRST DRAFT SUBMISSION

Initial Client interaction and information download YES YES

Franchise Feasibility Assessment YES YES

Franchise Strategy Presentation YES YES

Industry overview & growth strategy YES YES

Establishing franchise Strategy YES YES

Franchise Business Format YES YES

Franchise Profile YES YES

Rollout Strategy YES YES

Franchisor - Franchisee obligations YES YES

Franchise Acquisition Strategy YES YES

Recommended Financial Model Initial No. s Initial No. s

Franchise Legal Structuring and documentation

Franchise Kit

Franchise Marketing Brochure

Franchise Recruitment Documentation

Launch of the Opportunity (M&R Phase)

Program Deliverables and Status

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Thank You

DISCLAIMER This Report is highly confidential and provided for general information for the Happy Learning Center management only and nothing contained in the material constitutes a direct recommendation for any investment related decisions. The plans, materials, and consulting advice provided here in have been prepared based on our experience and the information available to us. However, because the success of a franchise program depends upon a variety of factors outside Francorp's control, Francorp India cannot and does not warrant the success of any such program or forecasts provided by Francorp India contained herein. Although the statements of fact in this report are obtained from sources that Francorp India consider reliable, we do not guarantee their accuracy and any such information may be incomplete or condensed. Views expressed in this Report are based on the research materials available from sources considered reliable and are subject to change on the basis of additional or new research, new facts or developments.

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Draft strategy presentation for happy learning (1)

Education

Transcript of Draft strategy presentation for happy learning (1)