Draft strategy presentation for happy learning (1)
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The document outlines a draft strategy presentation for the Happy Learning Center, focusing on establishing a franchise model in the private coaching education industry. It covers objectives such as market assessment, standardization of offerings, and a phased roll-out plan to penetrate key markets. Additionally, it includes an analysis of the education system in India, the growing demand for private tutoring, and case studies of successful education franchises.
Draft strategy presentation for happy learning (1)
- 1. Draft strategy presentation for Happy Learning Center January 2014 Principal Consultant: Mr. Gaurav Marya Consultant: Mr. Shashwat Prakash Confidential Francorp India Advisors Pvt. Ltd.
- 2. 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 2
- 3. 1. Background of the project Objectives of the study Project scope of work 3
- 4. 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 4
- 5. 2. Approach to the Happy Learning Center franchise business model 5
- 6. The Intent is to standardize the franchise offerings in the market.. 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” The brand has aggressive growth plans and intends to approach through a standardized and benchmarked franchise proposition. Standardization will ensure: Lifecycle Saturation Growth 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 Happy Learning Center strategy for the next 5-10 yrs Penetration • 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 Roll Out 6
- 7. Hence, we have outlined the business plan with a Phase wise approach for Happy Learning Center.. The stage wise approach has been formulated with the objective to create more realistic approach to franchising for the Happy Learning Center business Phase I Diagnosis of current stores Phase II Phase III Analysis of the franchise model Benchmarking Recommendations and Strategies for future franchising and growth 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 7
- 8. 3. Happy Learning Center current business snapshot Snapshots of the business Management Team Company USP 8
- 9. Snapshots of the client’s business operation (1/3) Name of the Company Happy Learning Center Education Private Limited Years in establishment From 2006 Registered Office Industry and Segment Brand Name Marketing Medium Courses 401/402, Jamuna Niketan, Manav Mandir Road, Neapensea Road, Mumbai, Maharashtra, India 400006 Education & Training Happy Learning Center (HLC) Distribution of Pamphlets, Facebook advertisements, Quikr Billboards, advertisements in newspaper, Stalls in social functions etc. 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 9
- 10. Snapshots of the client’s business operation (2/3) 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.. 10
- 11. Snapshots of the client’s business operation (3/3) 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. 11
- 12. Management Team 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 12
- 13. 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. 13
- 14. 4. Mapping the Education System in India Structure of India Education System Industry Analysis Projected Demand 14
- 15. Structure of the Indian Education System Education system category based on regulations governing Education system category based type of education Formal Schools Higher Education Non - Formal 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 Skill Development Language Training Other segment specific training E-learning and online tutoring Falls under the purview of MHRD with regulations 15 Segments are free from any regulations
- 16. 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. Private Education Industry Growth Rate- 2005-2012 CAGR 16.5% FY 2012 FY 2005 16
- 17. 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 companyoutlets (approx.) operational by education franchisor in all. 17
- 18. Key Facts on Private Tuition Market 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 18
- 19. 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. 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. The desire to score well has resulted in more and more school children going for private tuitions. 19 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.
- 20. 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. 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. 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. 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. 20
- 21. 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. 21
- 22. 5 (1). Case Studies to analyze the Education & Training based Franchise System Bansal Tutorial Kota Tutorial IIFT i360 Staffing & Training Solutions Mexus 22
- 23. Bansal Tutorials 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. Company Details Company Name Bansal Tutorials Business Categories Education • 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. Address 65, Kalu Sarai, Sarv Priya Vihar, Hauz Khas, New Delhi-110016 • Bansal Tutorials has recognized the potential of market penetration to tap talent from smaller towns. Country India Website www.bansaltutorials.com 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 23
- 24. Kota Tutorials Business Overview • Kota Tutorials is a Agra based education coaching institute. Company Details • Kota Tutorials has been showing remarkable performance in preparing and guiding IIT JEE & Medical aspirants. Kota Tutorials Business Categories Education Address 14/145, Mandi Sayeed Khan, Near St. Peter's College, Sanjay Place, Agra Country India Website • Kota Tutorials is an educational group spreaded all across the country to impart quality education students preparing for IITJEE/Medical competitive examination. Company Name www.kotatutorials.com Franchise Model Franchisee Requirement Franchise offering • 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 24
- 25. International Institute of Fashion Technology Business Overview • • • Company Details International Institute of Fashion Technology (IIFT) was established in India in 1990 by Mr. Ratnadeep Lal – a Leading fashion technologist. Company Name International Institute of Fashion Technology Business Categories Education 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. Address H-12, South Extension Part - I, New Delhi Country India IIFT has 70+ franchisee center in India Website www.iiftindia.net Franchise Model Franchisee Requirement Franchise offering • 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 25
- 26. i360 Staffing & Training Solutions 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. 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 Franchise Model Franchisee Requirement Franchise offering • 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 26
- 27. Mexus Business Overview • Mexus’s focus on Combining engaging educational content with technology creating futuristic educational models for children of different age groups. Company Details 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. Mexus Education Pvt. Ltd. Business Categories • Company Name Education & Training Address Mexus Education Pvt Ltd. 612, Midas, Sahar Plaza, J.B Nagar, Andheri(E), Mumba Country India Website www.mexuseducation.com Franchise Model Franchisee Requirement Franchise offering • Area: 300 sq. ft. • Investment: 13-15 lakhs • Franchise Fee: 2 lakhs • Royalty: 15% • Marketing Support • Set up support • Administrable Support 27
- 28. 5 (2). Case Studies to analyze the Home-based Franchise System Jymka Beehive DataSoft Maid2Clean Multi Link Genieforyou.com Rajdhani Data Center 28
- 29. Jymka Business Overview Company Details • Jymka is an subsidiary of Irish company, KidFit, which is established in 2003. Company Name Jymka • It teach many sporting skills and other activities and offer specialized gymnastic and sport class programmes. Parent Company Fit Kids Business Categories Kids fitness • 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. Country India Website www.jymka.com 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%. 29
- 30. Beehive DataSoft Business Overview Company Details • Beehive DataSoft is a Bangalore Based Company and operate in all fields like data entry projects, pcb design, engineering. Company Name Beehive DataSoft Parent Company Bindu infotech Solutions Business Categories Home Based • Company has about 10 years experience in electronics and data entry domain. Address • Company offer home based work of data such as image to doc conversion by typing and provide payment upto 70% to 100% accuracy. 1st floor,behind vakkaligara kalyana mantapa, Doddaballaur, Bangalore , Karnataka – 561203 Country India Website www.binduinfotech.com www.beehivedatasoft.com Franchise Model Franchisee Requirement Franchisee Revenue • Should be any firm or a company with small space and • 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 staff with good communication skills. • Franchisee fee Rs.10,000/- for 6 months. • Minimum sales are 5 projects per month. 30
- 31. Maid2Clean Business Overview Company Details • Maid2Clean, a core service provider for domestic cleaning company of UK. Company Name Maid2Clean Business Categories Domestic Cleaning Address Caidan House, Canel Road, Altrincham, Cheshire Origin Country UK Website www.maid2clean.co.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. 31
- 32. Multi Link Business Overview Company Details • Company offer business in box service. Company Name Mos Utility Pvt.Ltd • Company provide complete travel or ecommerce website with best fares. Business Categories E commerce solution Address 3-3-50&50/1 Amrutha Arcade Kachiguda Hyderabad 500027 Origin Country India Website www.multilinkworld.com • Company provide the maximum commission on any booking of ticket, package or any other deal. • Company expand their horizon through franchise model. Franchise Model Franchisee Requirement Franchiser offering • 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 32
- 33. Genieforyou.com Business Overview Company Details • Company provide web technology based marketing, branding and media solution in various domain to SMB customer in India and across the world. Company Name Genie Communications Business Categories Web Based Creative Studio Address Level 9, Raheja Towers 26-27, Mahatma Gandhi Road Bangalore 560 001 Origin Country India Website www.genieforyou.com • 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 Franchisee Requirement Franchiser offering • 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. 33
- 34. Rajdhani Data Center Business Overview Company Details • RDC- Rajdhani Data Center is an Data center established in Jaipur Rajasthan by the name www.rajdhanidatacenter.com . Company Name Rajdhani Data Center Private Limited Business Categories Hosting Services and Web Development • 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. Address Rajdhani Data Center Private Limited Siker Road, Jaipur Rajasthan Origin Country India Website www.rajdhanidatacenter.com Franchise Model Franchisee Requirement Franchiser offering • 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.) 34
- 35. Amway Business Overview Company Details • Amway India was established in 1995. Company Name Amway India Enterprises Pvt. Ltd. • It commenced commercial operations in May 1998. 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 • 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. 35
- 36. 6. Competition assessment and Benchmarking in Education & Training Franchise for Other Segments Benchmarking Analysis in Education & Training franchise system in Other Segments 36
- 37. 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 37
- 38. Learning's from the Benchmarking study of Industry Players Entering into franchise model indicating management vision and realization of company potential. Investment indicates capital intensive and strays away non-serious people in the franchise business. 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. 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. 38
- 39. Thus, it is recommended to follow the best practices of the Industry for the franchise business model.. (Home Based Model) Key recommendations Average area (sq ft) Investment (Lac) 2.5-3.5 lakhs Construction cost (per sq ft) NA Average Sales (lacs) 2-4% Average break even (years) Within 1 year Franchise fees (Lac) INR 50,000 - 1 lakh Royalty (%) 15% ● The ideal size of centre/premise should be as per the volume and can be managed premise being home based. 1 – 1.5 lakhs Marketing cost (%) Recommendations for Happy Learning Center 2 Rooms (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. 39
- 40. Thus, it is recommended to follow the best practices of the Industry for the franchise business model.. (Centre Based Model) Key recommendations Average area (sq ft) Investment (Lac) 5-6 lakhs Construction cost (per sq ft) 300-350 Average Sales (lacs) 2.5-3.5 lakhs Marketing cost (%) 2-4% Average break even (years) Recommendations for Happy Learning Center 200-500 Within 1 year Franchise fees (Lac) INR 1 - 2 lakh Royalty (%) 15% ● 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. 40
- 41. Risk & Remedies • Confidentiality in Business Starting Business on Own • Associated Risk Customer Satisfaction • Substantial Business Generation • 41 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.
- 42. 7. Assessment of Opportunity for Happy Learning Center Franchise capability test SWOT Analysis for Happy Learning Center Strategies for business model 42
- 43. 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 The opportunity is ripe to tap the phenomenally growing Private tuition and coaching business. Not Franchisable 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. Franchisable in the current Indian Market 0-15 Moderately Franchisable Currently, the organised market stands with less competition in private K12 tuition. 16-35 Definitely Franchisable >35 43
- 44. 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. 44
- 45. 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. 45
- 46. SWOT Analysis for Happy Learning Center STRENGTH WEAKNESS Cost of acquiring customers is high initially High operating costs in up market locations Pricing Pressure 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 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. 46 Intense competition (although fragmented) from unorganized players Rising real estate costs Pricing pressure from peers Low entry risk.
- 47. The strategy should be to gain position & selectively push for market share Industry Life cycle stage Embryonic Growing Matured Ageing Dominant Strong Favorable Tenable Weak Competitive positions Dominant: Strong: Favorable: Tenable: Weak: • Rare. Often results from a near monopoly or protected leadership. • A strong business can usually follow a strategy without too much consideration of moves from rivals. • Industry is fragmented. No clear leader among stronger rivals. • Business has a niche, either geographical or defined by the product. • Business is too small to be profitable or survive over the long term. Critical weaknesses. 47 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.
- 48. The success of the business model will demand a high market penetration and development activity Market Product Current New Current Penetrate Market Dev New Product Dev Diversify 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 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. 48
- 49. Therefore the final terms & conditions for Happy Learning Center would be as follows: (Home Based) 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 49
- 50. Therefore the final terms & conditions for Happy Learning Center would be as follows: (Centre Based) 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 50
- 51. 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. 51
- 52. 8. Franchise business format Franchise business format requirement for the deal making 52
- 53. Franchise Model - Options Master Franchisee Unit Franchisee Option of Multi Unit Franchisee Alliances Area Franchisee Zonal Franchisee Considering the ‘Happy Learning Center’ business model and industry, possible options are Unit or MultiUnit 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 MultiUnit Franchise can be considered at the penetration phase of newer markets. Property should be ideally a room at residential place/apartment. 53
- 54. 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 COMPETITIVE APPROACH PERCEIVED VALUE 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. • Francorp recommends a "ceiling" price for the franchise by considering what the market will bear. • 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. 54
- 55. 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. 55
- 56. Franchise Profiling: Primary Shortlist (2/2) 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 INDICATORS 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, 56 Jewelers, Senior Police officers shall also be targeted. 3rd 1st Preference Ranking 2nd
- 57. 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 considered multi-unit Scale Most appropriate franchise for the type of format 57 Least appropriate franchise for the type of format be for
- 58. SOMF Analysis for Potential Market(1/2) 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. Strategic Fit Marketing Fit Operational Fit ATTRIBUTES OF POTENTIAL CUSTOMER 58 Financial Fit
- 59. SOMF Analysis for Potential Market(2/2) Strategic Fit Operational Fit Marketing Fit Financial Fit Is the city viable for setting up training center? Will it possible to operate the center in the particular shortlisted city? Is the center economically viable to market ? Do all the cities make a financially viable plan ? • Marketing cost • Yield per sqft • Efficiency per centre Market penetration • Increase in market share • City profile • Set up cost • Social conditions 59
- 60. 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. 60
- 61. Roll Out Strategy (2/3) 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. 61
- 62. Roll Out Strategy (3/3) Phase 1 Phase 2 Phase 3 • Western India Francorp recommends cluster approach at each stage considering the population etc. • Central India • PAN India 62
- 63. 9. Franchisor - Unit franchise Relationship Obligations of the subjects 63
- 64. Franchisor’s Obligations Provide course structure to be delivered by the franchisee during business operations for the Unit franchisee 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.) 64
- 65. 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 65
- 66. 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. 66
- 67. 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. 67
- 68. 10. Franchise Acquisition Strategy 68
- 69. Franchise Acquisition Strategy Target Market 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. Spiking Strategy: • The use of company-owned units to develop a presence in specific markets for the purpose of creating a franchise demand. Opportunistic 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. Projected Performance Strategy: • Explore each market by searching for favorable locations and develop a portfolio of potential locations. Develop only the most promising sites. Unit Franchise : Target Market Strategy along with the Opportunistic strategy (specific for phase approach to the roll out cities) 69
- 70. Franchise acquisition process Marketing Email Blasts to prospects Advertisements in The Franchising World & website Lead Generation Lead Management Basic Information provided to all Inquiries. Franchise meetings, further scrutiny of the prospect. Recruitment Franchise Application signed. Expression of Interest generated Agreement Process initiated. Site details will be discussed as per client requirement Rollout Plan. Franchise Exhibition Franchise kits & Communication design Information/training to all regions by Francorp Weekly progress sheet submitted to client Test & measure marketing activity- to identify gaps. Expression of Interest Detail Application form Signing the agreement Franchise Evaluation Franchise Approval 70 City & Site evaluation
- 71. 11. Marketing Need of the Business (B2C) 71
- 72. B2C Marketing 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. Advertising Long Term (Builds Equity) Advertising and PR Brand PR Promotions Strategic Short Term (Builds Usage) Sales Promotion Tactical 72
- 73. Why Promotion is needed for Happy Learning Center? 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 • All Residential Places in the Geography Promotion Actions Trial Offers Combo Offers Campaign at schools at discounted price Seminars & Demonstration of services Contests with discounted registrations 73
- 74. Why Promotion is needed for Happy Learning Center? 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 Target Group • Alternators and Occasional users Promotion Actions 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 74
- 75. Why Promotion is needed for Happy Learning Center? 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 Target Group Promotion Actions Multiple purchase coupons for referrals • Loyalty offers • Loyal Core Customers Alternators and Occasional users In-house branding (in the premise) Course Demonstrations should be done with a Power Point Presentation (accolades included) 75
- 76. Why Promotion is needed for Happy Learning Center? 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 • • Loyal Core Users Alternators and Occasional users Promotion Actions 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 76
- 77. Franchise Financial and Franchise Legal Agreement (Separate Submission) 77
- 79. Program Deliverables and Status 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) 79
- 80. 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. Chicago * Argentina • Chile • India • Japan • Malaysia • Mexico • Middle East • Philippines • South Africa • Thailand 80