Related: Global Health And Wellness Trends
Euromonitor International is the world leader in strategy research for consumer markets. Global coverage and leading edge innovation make our products essential for companies worldwide. From socio-economic context to intimate detail on the smallest products or markets, we offer unmatched detail and unbiased content for every region, country, category and channel. Euromonitor International market research focuses on industry, country, company and consumer lifestyle research. We analyze companies and markets in more than 200 categories across 80 countries.
Related: FMCG In India: Understanding A Billion Needs
Source: Euromonitor International from national statistics/Eurostat/OECD/UN/IMF
Note: Data are forecast. The red line depicts forecast annual real GDP growth for the global economy in 2015.
India’s annual real GDP growth is expected to reach 7.3% in 2015 – higher than China’s forecast growth, as the initial phase of government efforts to unlock the country’s investment potential is lifting investor confidence. Policy reforms that the government has begun to implement aim to improve the business environment; liberalise foreign direct investment (FDI); boost both public and private investment in infrastructure; simplify taxation, and lower corporate taxes. Meanwhile, lower oil import prices in 2015 will raise household real disposable incomes and help drive down inflation as well as boosting exports.
Notwithstanding the expected positive impact of policy reforms and low commodity prices, India’s accelerating growth is also in part due to changes in the methodology that the country’s total GDP and base year are calculated. India now measures GDP by market prices instead of factor costs (to take into account gross value addition in goods and services as well as indirect taxes) whilst the base year has been shifted from 2004-2005 to 2011-2012. Euromonitor economists consider that the new methodology better reflects the true composition of India’s GDP, but have reserved their judgement vis-à-vis the effect of this methodological change on India’s forecast growth.
China’s real GDP growth fell to 7.4% in 2014 and is expected to fall further to 6.8% in 2015. Although this is still impressive in comparison to the annual real growth of 3.2% expected for the global economy, it is much more moderate than the average growth of 8.8% per year China achieved in the 2008-2014 period since the global financial crisis.
Although Chinese annual GDP growth below 7.0% is widely expected as a “new normal” and considered to be more sustainable (because it does not rely on excesses in credit, fixed asset investment and government spending), significantly slower growth than currently projected for China would affect the rest of the Asia Pacific region and the world economy as a whole, due to the Chinese economy’s large size and deep trade and financial linkages with other nations. For China, the key challenges are to rebalance the economy and tap new sources of growth.
In our ranking of forecast economic growth for major economies in 2015, Bangladesh is expected to make it to the third position with annual real GDP growth accelerating to 6.3% in 2015, up from 6.1% in 2014. The country’s trade reform and greater integration into the global economy will boost exports while continued healthy remittance inflows are expected to support consumer expenditure. However, violent political unrest, which is on-going since January 2015 (the anniversary of national elections that the opposition boycotted), and nationwide traffic blockades are seriously undermining the business environment, affecting private investments, hindering export activity, and adversely impacting growthprospects. Other challenges that impede Bangladesh’s economic growth include infrastructure bottlenecks, insufficient energy supply, rampant corruption, unequal income distribution and high poverty rates.
Real GDP growth in the Philippines is expected to come in at 5.8% in 2015, below the 6.1% recorded in 2014. The weaker growth forecast for 2015 is primarily due to slowing activity in China (one of the Philippines’ key trade partners) and the impending rise in US interest rate which can reduce capital inflows into the Philippines. Nevertheless, the country’s annual real GDP growth prospect remains strong on an internationally comparative basis, driven robust consumer spending, rising government expenditure, and strong gains in private construction. Real consumer spending growth in the Philippines is set to accelerate to 5.4% year-on-year in 2015, up from 3.9% in 2014, on the back of growth in employment, low inflation, and higher inflows of remittances.
Vietnam’s annual real GDP growth is forecast at 5.7% in 2015, down from 6.0% in 2014. The Vietnamese economy is vulnerable to slowing economic growth in China (its neighbour and key trading partner), although improved economic performance in the USA and other advanced markets will help to spur exports. Meanwhile, Vietnamese consumers are confident and also are benefiting from low oil prices. As a result, real consumer spending is set to grow by 9.2% in 2015 over a year earlier, the fastest growth rate in the Association of Southeast Asian Nations (ASEAN). FDI inflows will also be strong thanks to a shift of investors away from China and towards Vietnam, while regulatory changes that take effect in the second half of 2015 will potentially help to lift investment activity.
An Hodgson joined Euromonitor International in 2006. She manages research into income and expenditure as well as industry, infrastructure and environment. Her strategic analysis helps businesses gain important insight into global, regional and key emerging market trends and thereby allowing them to make more informed commercial decisions.
Euromonitor International is the world leader in strategy research for consumer markets. Global coverage and leading edge innovation make our products essential for companies worldwide. From socio-economic context to intimate detail on the smallest products or markets, we offer unmatched detail and unbiased content for every region, country, category and channel. Euromonitor International market research focuses on industry, country, company and consumer lifestyle research. We analyze companies and markets in more than 200 categories across 80 countries.
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Getting swayed by emotions is one of the worst factors for any investment decisions. It could be exciting to own a franchise of a cool brand but will you still feel that same passion when you are required to be around and involved with it for 80% of the time you are awake?
In most cases, this is when information gets distorted or perhaps even exaggerated. While there is no evidence that you will not be able to replicate that success, basing perceptions on hearsay instead of actual facts could set you up for unrealistic expectations. Besides, “that guy” could have experienced success because he was a good fit for the franchise (i.e. possess certain skill sets, experience, contacts, etc.). But it doesn’t necessarily mean it will be so for you too.
Firstly, it doesn’t really work that way. Furthermore, there could be a very good reason why the franchise doesn’t have a presence in your location. Maybe the market is too small to generate sustainable revenue or maybe their market offering just didn’t suit consumers in that particular area. Or it could just simply be because no one from your location had ever made an enquiry. Whatever the case, find out whether the franchise had previously entered your location and how it turned out if they did.
While it is somewhat true that for a business to start franchising, it should have a successful revenue model in order to produce reasonable profits, but it should also be clear that there are no guarantees. Regardless of how established and successful a franchise is, franchisee failure is a very real prospect even when the franchisor does their part and fully prepares the franchisee and his/her business. In other words, the risk of failure (while could be decreased) doesn’t completely disappear just because you bought into a franchise system.
The franchise’s product/service could be the “in” thing now but how long will that sentiment among consumers last? Instead, rather than going after the latest fad, it could be far better to pursue a sustainable alternative that you will be comfortable with. Knowing the difference between a passing trend and a sustainable business model could save your retirement fund from a wipeout.
From Spotify playlists to sandwiches, consumers are well versed in custom building their purchases according to individual tastes. For younger, fashion-forward apparel consumers, feeling unique is vital. Customisation offers the chance to stand out from the masses as an individual, communicating their personality for all to see.
Related: Store Visits: Examining Online Players Moving Offline
For apparel manufacturers looking to invest in customisation, there are numerous benefits to be had. Customisation brings the feel-good factor that a garment was created specifically for the consumer, and consumers expect to and are happy to pay a premium for this type of exclusivity. Brands that allow modification and personalisation of their designs are also perceived as more creative and cutting-edge, generating consumer loyalty and outshining competitors as a result.
When opting for customised products, customers pay before their item is put into production, eliminating the risk of excess inventory and future discounting – a major advantage for apparel retailers. Lastly, from the all-important CSR perspective, this reversal of the manufacturing chain should make for less waste.
The fledgling customisation trend has been led primarily by sportswear, with designer and start-up brands more recently picking up the mantle. NIKEiD, launched in 1999, was the first. The online platform allows customers to have tailor-made sports shoes, with a vast range of styles, materials, colours and patterns on offer. Nike-owned Converse followed suit in 2005 with a similar offering – it now offers customisation online and instore. In 2014, adidas launched the mi adidas app, allowing users to create shoes printed with their own Instagram images. Looking ahead, the brand has plans to allow shoppers to embroider names and logos onto shoes in-store.
In terms of high-street clothing brands, Uniqlo is one of the first to try its hand at customisation; its UTme! app enables consumers to create graphics and text for printing onto t-shirts. In luxury, Hermes allows consumers to monogram scarves, but colours and patterns are limited. Meanwhile, the Burberry Scarf Bar lets customers monogram initials on scarves made from fabrics of their choosing.
Beyond the established fashion brands, new arrivals and start-ups are seizing the opportunity to offer customisation. In the US, Apliiq lets consumers customise basics with pockets, panels and linings, while Bow & Drape offers appliqué graphics and letters; both import pre-made garments, which they then customise. UK-based Knyttan offers a range of knitwear – style guidelines such as colours and fit are pre-selected by designers, and within this framework, consumers create their product. Meanwhile, Australian retailer Shoes of Prey and UK equivalent Upper Street both allow customers to design their own footwear from a selection of styles, fabrics and colours.
While customisation offers a host of opportunities for fashion brands, it is not without its challenges and there have already been victims along the way. Tinker Tailor, a mass customisation platform for designer fashion, closed its doors in 2015 after less than a year in operation. Meanwhile, Burberry Bespoke, a customisation service for luxury trench coats, has been quietly disbanded. A key issue is the time it takes to manufacture a customised item – timely delivery is a must in the impulsive world of fashion where the desire for an item can quickly diminish over time. Customised pieces from Tinker Tailor could take three to four months to reach consumers. Part of the solution is customising closer to the customer allowing for a quicker turnaround; obviously this requires an initial outlay.
Overwhelming consumers with too much choice can also prove problematic. Too many options can be intimidating for someone with little design experience. In addition, a finished product lacking aesthetic appeal is far from ideal for the brand. Here, a compromise is key – and this is evident in most of the brands that are finding success in customisation. Designers must set the parameters within which consumers can work, safeguarding the brand but still allowing the creation of a product that feels individual.
Given the difficulties involved, customisation is unlikely to become more than a niche corner of the apparel market anytime soon. The desire for customisation is there, however, and businesses targeting younger fashion-forward consumers that do not offer an element of personalisation risk losing revenue and customer loyalty over the longer term as demand for personalisation grows. At this stage, it would be wise for these apparel brands to consider how they can integrate a degree of product customisation alongside regular stock to their existing business model – Nike is a prime example.
Emily Potts - Contributing Analyst - Euromonitor International
Euromonitor International is the world leader in strategy research for consumer markets. Global coverage and leading edge innovation make our products essential for companies worldwide. From socio-economic context to intimate detail on the smallest products or markets, we offer unmatched detail and unbiased content for every region, country, category and channel. Euromonitor International market research focuses on industry, country, company and consumer lifestyle research. We analyze companies and markets in more than 200 categories across 80 countries.
Related: Marketing To The ASEAN Consumer
Euromonitor International is the world leader in strategy research for consumer markets. Global coverage and leading edge innovation make our products essential for companies worldwide. From socio-economic context to intimate detail on the smallest products or markets, we offer unmatched detail and unbiased content for every region, country, category and channel. Euromonitor International market research focuses on industry, country, company and consumer lifestyle research. We analyze companies and markets in more than 200 categories across 80 countries.
Related: What Characteristics Do Franchisors Look For In Franchisees During Recruitment?
As the saying goes, “One bad apple spoils the bunch”. And it is precisely this reason why franchisors are wary about awarding franchise rights to someone who could potentially “mess up” and put the whole franchise in bad light.
See more franchise facts at A-Z Of Franchising!
Dubbed “nowners” and “digital natives”, the millennial generation are a diverse consumer group. This report examines the behaviour and buying patterns of a demographic that, while linked by its adherence to the internet, is also divided by culture and individualism.
Related: When Sharing Is The New Buying
Euromonitor International is the world leader in strategy research for consumer markets. Global coverage and leading edge innovation make our products essential for companies worldwide. From socio-economic context to intimate detail on the smallest products or markets, we offer unmatched detail and unbiased content for every region, country, category and channel. Euromonitor International market research focuses on industry, country, company and consumer lifestyle research. We analyze companies and markets in more than 200 categories across 80 countries.
Related: The History Of Franchising
Integrity means doing what you have to do on your part as a franchisor, fulfilling your contractual responsibilities to franchisees. It also means doing what you say you will, when you make promises to franchisees. Breaking your word will likely break their trust in both the franchise system and you too.
Related: Franchising Your Business With Integrity
Franchisees already have enough problems on their own — rising costs, employee turnover, attracting customers — pretty much the same you are experiencing in your own corporate-owned stores. And as franchisees, they have the added expense of recurring franchise-related fees (i.e. royalties) so it's not an easy ride for them. Before planning and implementing something new, step in their shoes and think how it will affect their operations and bottom line because that’s what they will be looking at with every new change you make.
Related: 3 Ways Franchisors Contribute To Franchisee Struggles
It takes courage to reject money when it comes knocking on your door and in franchising, this comes in the form of prospective franchisees. While there will be enquiries for your franchise, not all will be made from suitable or qualified candidates and letting this particular group of candidates into the franchise system could have a lot more disruptive consequences than the initial financial benefits that come along.
Related: What Should Franchisors Consider During Franchisee Selection?
If money was the only thing franchisees wanted, they wouldn’t have joined your franchise in the first place because there are so many other less-hassle options available, such as investing in stocks, properties or even something as straightforward as a trip to the casino. Most franchisees actually want the experience of owning and operating a business themselves and the fact that they chose your franchise shows their belief in your brand and methods. Thinking that they are just money grubbers is insulting.
Related: Is Making Money The Only Thing Franchisees Want From Franchisors?
Franchisees did their part by putting up the franchise fee payments and required investment capital. Now its your turn to do your part and do whatever it takes to help them have their business ready to make that money back, and more. The worst start you could make is to miss the planned opening date for the franchisee’s business because it might imply you didn’t dedicate sufficient resources (i.e. time, support staff, etc.) or you simply overlooked certain details. Either way, franchisees could be thinking you just didn’t care because you already got what you wanted — their money.
Related: 3 Scenarios That Could Happen When The Planned Opening Of A Franchise Unit Is Delayed
When there are at least two parties involved in a relationship, disagreements are inevitable so don’t be under any illusions that your relationship with franchisees will always be full of sunshine and roses. When disagreements arise, take a step back and see from the franchisees’ perspective. Try to understand where the unhappiness is coming from and more importantly, whether it is warranted.
Related: Navigating Through Conflicts In A Franchise Relationship
Franchising should be adopted as a method of expansion only when your business is ready. Meaning to say, you should have all the tools, knowledge and experience to mentor and support franchisees to reach the same successful levels you achieved. And if you don’t, perhaps it is time to go back to the drawing board and figure out what you can do to improve the system. It makes no sense if they are paying for your assistance and yet the both of you are stumbling through together.
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Marketing in today’s environment is not like before. Now, how a product is packaged and presented is just as important as the quality of the product itself. In other words, a previously superficial aspect is now a major one that contributes to how today's consumers make purchase decisions. Besides, if franchisees are able to implement successful marketing campaigns, chances are sales revenue will also go up, and in return, the royalties submitted to you will also increase. If marketing isn’t part of your franchise support, you should really think of changing that.
Related: Why Marketing For A New Franchise Unit Should Be A Franchisor’s Priority
Every country or territory could have their own specific set of franchise regulations that the industry has to abide by. Having all the necessary information and knowledge will help you to figure out what you need to do and what you might want to do, in order to operate as a franchisor. And this is especially so when regulations could determine whether you have any right to franchise your business in a particular location in the first place.
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The franchise pitch to franchisees is more than just a presentation of what your franchise is about. The session is to reinforce belief that your franchise concept is what they had been looking for and convince them to invest in your system. Surely, the financial benefits for franchisors is apparent so you really don’t have a reason to be nonchalant about optimizing an effective and efficient experience for candidates in order to attract and convince them to join your system.
Related: 5 Mistakes You Might Have Made When Delivering Your Franchise Pitch
Of course, there are no guarantees in the world of business. And, while franchises do have a high success rate compared to fledgling independent businesses, if you choose the wrong opportunity, you could find yourself with a flop on your hands – and nothing to show for it. That's why it's so essential that you take time to research your options, speak to lots of different franchises, talk to lots of successful franchisees and get a real feel for the franchise market in your chosen niche.
At the end of the day, there's no foolproof way to select a winning franchise. The most promising opportunities can go awry, or seemingly hopeless franchises can turn to gold in the right hands. However, if you undertake rigorous research and careful assessment of the market and your shortlist of opportunities, you can heighten your chances of success. Here are a few essentials to consider when you make your assessment…
Related: The Pros And Cons Of Franchising
Accreditations are not the only mark of a well operated franchise, but they do provide prospective franchisees with a little more peace of mind before they make the leap. There are lots of different franchising bodies around the world who have strict membership criteria to ensure the businesses they approve subscribe to high ethical business standards.
Even more importantly, take plenty of time (and seek expert help from an accountant if necessary) to assess your finances and the financial burden of your potential franchise. How much can you realistically afford to invest? How much are you prepared to borrow to get on board? Once you have a good handle on what you're financially capable of doing, really nail down your potential franchisor on the financials. Are historic returns based on verified, real life figures from sister franchises? Will there be working capital requirements during the early months?
Money matters may be extremely important from a practical standpoint but, above all, it's how well you and your franchise are suited to each other which could make all the difference. Consider your interests, your skills, your sphere of knowledge, the previous industries you've worked in. Think carefully about how much of your personal time you're prepared to devote to your new undertaking. When you have a firm idea of where you are personally, it's essential that you ensue your franchisor is prepared to work with you on a basis you feel comfortable with. While they assess your suitability, you should be assessing theirs. Always speak with current and former franchisees, and spend time getting to know the management, their approaches and the company culture before you get on board.
The money's right, the culture is right, it's a good fit for you and your lifestyle – but there is still a long list of questions and tasks you'll need to work through before you've thoroughly assessed a potential franchise, including:
Finally it's time to bring the professionals in. If you're serious about conducting a thorough assessment of your prospective franchise before you sign on the dotted line, it's a good idea to seek a professional opinion.
From accountants who can look over the numbers, to solicitors who can look over legal agreements and even business consultants who can advise you – it's worth investing a little time and money now to ensure you're making the right decision over the long term.
Sam Butterworth is a writer and content creator based in Yorkshire. He has written for various local, national and international media and has put together this guide to franchising for Tubz Vending Franchise. You can follow Sam on Twitter @sjtbutts.
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Trust is central to many significant consumer trends that have a daily impact on consumer markets. It is a key factor in:
At the same time many consumers have become increasingly cynical of big brands, especially those of large multinational corporations. Words that have resonance with today’s consumer include authentic, genuine, simple, natural and real. Perhaps not words that have been traditionally associated with international brands – although many have worked hard in recent years to claim them. This partly explains why international companies have spent large amounts of money on buying smaller, more authentic brands – such as Campbell Soup Company’s purchase of Plum Organics, a premium organic baby and toddler food products company which was, as its marketing points out, “founded by parents”. And why many in the food sector have embraced the idea of the clean label – for example, Kind, with 22.0% of the energy and nutrition bars sector in the USA, advocates “ingredients you can see and pronounce”. Kind claims it believes that “if you can’t pronounce an ingredient, it shouldn’t go into your body”. It’s almond and apricot bar has 29 words in its ingredients list, compared with 111 in rival Quaker Granola Oatmeal Raisin.
What Factors Were Considered Most Important When Determining The Level Of Trust In A Company?
Source: KPMG Consumer Insights Panel
Note: The survey reflects the responses of 2,079 UK adults and was conducted between the 10th and 15th of April 2014.
Volkswagen offers a cautionary tale of what happens if consumer trust is not respected. The Financial Times reports that the emissions scandal could cost the company up to €30 billion. In addition it has led to the company’s debt being downgraded. In an attempt to win back trust, US consumers have been offered a goodwill package which includes up to US$1,000 in gift cards, discounts on new cars and three year breakdown cover. This is in addition to the costs involved in replacing hardware and software in affected cars.
The ripple effects of a loss of trust can extend well beyond the company and affect the wider category, related categories and even a country. The melamine scandal in China in 2008 amply illustrates this. Melamine, an industrial chemical, was found in baby milk and other food products. The episode damaged China’s reputation in manufacturing globally as well as a host of multinationals manufacturing in China including Heinz, Nestlé and Unilever.
Although some would argue that consumers have short memories, the risks associated with reputation and the loss of trust are so important that trust should remain at the heart of strategy planning. It is at least as important as other, more quantifiable, risks such as supply shocks, and as such requires a comprehensive strategy.
The fast-evolving beliefs and expectations of consumers will need to be tracked continually, as will differences between countries and consumer segments. As connectedness and transparency continue to play a central role in decision-making, trust will persist in being an asset to be safeguarded.
Sarah Boumphrey — Head of Strategic, Economic and Consumer Insight - Euromonitor International
Euromonitor International is the world leader in strategy research for consumer markets. Global coverage and leading edge innovation make our products essential for companies worldwide. From socio-economic context to intimate detail on the smallest products or markets, we offer unmatched detail and unbiased content for every region, country, category and channel. Euromonitor International market research focuses on industry, country, company and consumer lifestyle research. We analyze companies and markets in more than 200 categories across 80 countries.
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However during negotiations, in the pursuit for franchise sales, some franchisors might exaggerate or provide misleading insights into the type and level of franchise support provided. In such a situation, this leads to the inevitable outcome where franchisees feel they are not getting their money’s worth, afterwhich feeling resentment, or even taking legal action. For franchisees to avoid this, the key is to find a franchisor that actually sticks to their word and do what they say they will. And the best way for franchisees to protect themselves is to have all the franchisor commit to these responsibilities in the franchise agreement in black and white.
See more franchise facts at A-Z Of Franchising!
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Euromonitor International is the world leader in strategy research for consumer markets. Global coverage and leading edge innovation make our products essential for companies worldwide. From socio-economic context to intimate detail on the smallest products or markets, we offer unmatched detail and unbiased content for every region, country, category and channel. Euromonitor International market research focuses on industry, country, company and consumer lifestyle research. We analyze companies and markets in more than 200 categories across 80 countries.
So, while not a guaranteed recipe for success, some best practices for franchisees are highlighted - the "what" and "why" of some mindsets that need to be embraced in order for any form of success to be in sight.
Related: Making A Commitment For Success
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Instead of starting a completely new business with no traction in the market, you are buying into a well known brand that already has a loyal band of customers.
The hugely expensive and time consuming task of marketing your business is often done for you as part of a wider national campaign. Marketing materials can also be provided for local campaigns.
Rather than building your business from the ground up, you can benefit from established relationships with suppliers that provide all the raw materials your business needs.
Business owners cannot expect to be experts in every area of running a business. As a franchisee, the support you need is on hand.
Many of the franchise opportunities out there provide the management and technical training you’ll need to run the business in the established and expected way.
Some franchisors provide funding or a credit facility to give franchisees the assistance they need.
It is in the franchisor’s interests that your business is successful. As such, you’ll benefit from a regular stream of new products or improved processes to keep your customers happy.
For many franchisees, this business model provides the perfect compromise between reduced risk and being the master of their own destiny.
All these factors combined mean buying a franchise from an established brand is less risky than starting a business from nothing.
The initial cost of some of the better known franchise operations can be large when the start-up costs and franchise fees are factored in. In many cases, it would be cheaper to start your own independent business.
You will have to pay a percentage of your turnover in royalty payments to the franchisor, thereby reducing your earning potential.
Some franchise agreements will ask for fees for the marketing and advertising support you receive.
Your ability to make decisions and manage the business as you see fit will be limited by the exacting standards of the brand.
Franchise contracts will often stipulate that supplies can only be bought from an approved list of suppliers, sometimes at a higher cost.
Fail to do your research thoroughly and you could find yourself locked into a contract with the wrong franchise.
Your business can only be as good as the reputation of your parent company. Any difficulties they experience could impact on you.
While opening a franchise does reduce your risk somewhat, there are still no guarantees of success.
Sam Butterworth is a writer and content creator based in Yorkshire. He has written for various local, national and international media and has put together this guide to franchising for Tubz Vending Franchise. You can follow Sam on Twitter @sjtbutts.
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Related: Killer Mistakes Franchisors Must Avoid When Engaging An External Franchise Broker
So, during this first meeting, you should be aiming to deliver a pitch to strengthen interest and clear any doubts. But sometimes, the opposite happens and the prospective franchisee leaves the meeting feeling even more confused or loses interest in taking negotiations further. Then you start to wonder how it all went wrong…
Related: Answering The All Important Question From Prospective Franchisees
Going into a meeting unprepared gives the feeling of a lack of professionalism — not exactly how prospective franchisees will feel safe spending their money. Instead, you should be focused on a clear delivery of (at least) these messages:
If after all that and the prospective franchisee didn’t go ahead to take up your franchise, it has to be because they didn’t think it was a good fit for themselves, and not because they were confused and didn’t remember what you presented, or simply had no idea what you were talking about.
While you need to structure your meeting to provide the necessary information to prospective franchisees, it doesn’t mean you throw everything and the kitchen sink at them. Providing too much information might compromise clarity and obscure your major pitching points. Rather than that, focus on your key arguments and avoid getting sidetracked, however easy and tempting it might be.
With today’s Information Age, looking up someone online is as simple and straightforward as going to your chosen web browser and entering in a name. Besides, the meeting could result in a very profitable outcome for you if the prospective franchisee decides to join your franchise system so there really isn’t any reason to be lazy. Learn about who you’re meeting with — their background, current line of work, and even more if those information are available. You never know what might come in handy when the exchange turns serious and you’ll also know what landmines to avoid too, if any.
The truth is prospective franchisees are not just trying to find out about the good, but more importantly, they are also looking for reasons why your franchise would not be a good investment. Before meeting with you, chances are they would have done their own research and might have stumbled upon some previous bad press, controversy or complaint, and you can be sure they will definitely bring it up. Anticipate what tough questions could be asked and figure out how to best provide an acceptable response. Having no answers at all or even trying to avoid it completely would likely result in you looking ignorant or untrustworthy.
While it is good to be excited about meeting with a potential new franchisee, you need to have realistic expectations when dealing with franchise enquiries because a large portion of enquiries will be from people simply fishing for information. If you’re thinking you have an awesome franchise sales process and will be experiencing a “one shot, one kill” ratio, you’ll be in for a rude shock because the reality is closer is “20 shots, no kill”. Being overly optimistic then meeting with constant rejection could eat away at your confidence and morale, and this frustration would likely lead to a negative attitude towards future enquiries. So be prepared to be turned down very, very, very often while keeping your socks on.
Date: 22nd to 24th Jan 2016
Venue: Tatmadaw Hall (Yangon, Myanmar)
Myanmar International Franchise & SME Expo is a dedicated franchise expo where franchisors and prospective franchisees are brought together in a melting pot for first-hand interaction.
Franchisors have the opportunity to showcase their concept to an emerging market's new untapped audience while visitors could learn more about potential business opportunities. Furthermore, the expo will also showcase opportunities, products and services from both local and foreign SMEs.
Date: 11th to 13th Jan 2016
Time: 9:30am to 6:30pm
Venue: Hong Kong Convention and Exhibition Centre
*Note: Persons under 18 will not be admitted.
Hong Kong Licensing Show 2016 is a premier licensing-focused exhibition in the Asian region, aiming to provide a platform for licensors to showcase themselves and create potential business partnerships, especially with an eye on the Chinese market. The exhibition also provides a one-stop avenue for parties involved in the licensing industry for the sourcing, promotion and discovery of new licensing-related services.
Related: Answering The All Important Question From Prospective Franchisees
That being said, franchisors have a responsibility to provide prospective franchisees with accurate and relevant insights into the profitability of the business. In any case, when franchisors try to avoid or provide a misleading answer to this all important question, prospective franchisees could start to wonder that maybe the business isn’t profitable after all and look elsewhere.
See more franchise facts at A-Z Of Franchising!
Related: Store Visits: Examining Online Players Moving Offline
Source: Euromonitor International
South Korea, Indonesia and Singapore are the top three countries in terms of licensing penetration in the region, with more than 40% of toys being licenced properties in 2014. South Korea is the most heavily licensed toys market globally, with over half of products being licensed, valued at US$274 million.
Japan is the largest licensed toys market in the region in actual terms, with a value of just shy of US$1.7 billion in 2014, accounting for 35% of Asia Pacific’s sales.
By contrast, in India and China, licensing penetration remained well below the regional average, at around 6-15% in 2014. Having said that, China’s licensed toys market still translates into almost US$1.4 billion in absolute sales, making it the second largest in the region.
China is one of the most interesting markets in terms of toys licensing, as the country’s regulations prevent foreign companies fully developing their properties in the country. There is national policy imposed by the State Administration of Radio Film and Television that compulsorily requires TV channels to broadcast only domestic animated TV series during prime time. Imported animated TV series can be aired, but the proportion of foreign programmes must be lower than 40%. In order to survive in this unfavourable environment, a number of multinational companies competing in traditional toys and games have resorted to the online video platform in recent years.
International franchises such as Barbie, Cars, Marvel and Transformers enjoy loyal consumer bases that they have built up over the years. Apart from classic animated toys, successful launches of new animated movies also provide stimulus to toys sales. For example, the Disney movie Frozen was aired in theatres in 2014, with the positive image of Princess Elsa benefitting greatly from strong popularity, not only among children, but also their parents as well.
As the leading domestic player in traditional toys and games, Guangdong Alpha Animation also adopts a strategy similar to Disney. The company produces animated television series and movie series. As the owner of animated characters, the company also manufactures and distributes animated toys. This ensures that the company can capitalise on television and movie series while managing the sales operations of its toys first hand. In the coming years, its model could continue to threaten the sales of international properties as, despite the success that Transformers and Frozen have enjoyed, in most cases, the impact of international movies levels off quicker than the emotional influence of properties based on domestic television series.
The South Korean government puts great efforts into protecting and promoting local properties, as it sees licensing as a key component of a growing economy. Local character licensing is perceived as an important national resource, with the competitive domestic film industry giving a further boost to local firms in the development of successful characters so that licensing will prosper. These properties are also exported to other countries, giving South Korea more influence in character licensing in the region.
The most popular pre-school and toddler characters are Pororo Penguin and Tayo Bus, which has been increasing in popularity. Tayo Bus has been extended into many different industries, including stationery and apparel. This is different from many other countries, where some of the most popular pre-school and toddler franchises are likely to be Disney Cars, Disney Princess etc, showing the strength of the domestic licensing market in Korea.
During 2014, the most influential licensed toy was Tobot by Young Toys Inc. The franchise’s popularity secured the company second place (after Lego Korea Ltd) in traditional toys and games shares, pushing Bandai Korea Co Ltd back into third position. Tobot is a transformer robot car that was developed in cooperation with Kia Motors Corp, with its popular TV animation series helping to boost sales. As of early 2015, a new rival, Hello Carbot, which is a brand by Sonokong Co Ltd in cooperation with Hyundai Motor Co, became the leading licensed toy, as popularity rapidly shifted towards this new character. As part of its strategy, the company initiated a TV animation and family musical show featuring the new character Hello Carbot, which immediately increased sales and awareness of the brand.
Licensed character toys are particularly strong among children and young women in Japan. Licensing has increasingly helped penetrate different categories, with varying degrees of success.
By far the most popular toy licences in Japan are long-established home-grown characters. As these characters are frequently used in new television anime and movies, consumers have considerable exposure to these characters. For example, Anpanman is a popular licensed character in infant and pre-school toys. Masked Rider, the Super Sentai Series and Ultraman are prevalent in boys toys, especially in dressing-up and role play and action figures. Hello Kitty and Pretty Cure, meanwhile, are popular in girls toys. In 2014, Hello Kitty, which is one of the all-time most popular licensed characters in the country, celebrated its 40th anniversary. Tomy Co launched licensed Hello Kitty toys in collaboration with Licca-chan and Koeda-chan towards the end of 2013 to commemorate the merchandise’s anniversary.
Beside the local franchises, a number of international properties, including Disney Princess, Toy Story as well as Thomas and Friends, have also established a strong presence over the years in Japan.
Utku Tansel - Head of Toys and Games - Euromonitor International
Euromonitor International is the world leader in strategy research for consumer markets. Global coverage and leading edge innovation make our products essential for companies worldwide. From socio-economic context to intimate detail on the smallest products or markets, we offer unmatched detail and unbiased content for every region, country, category and channel. Euromonitor International market research focuses on industry, country, company and consumer lifestyle research. We analyze companies and markets in more than 200 categories across 80 countries.
Related: Is It Time To Redefine Luxury?
Euromonitor International is the world leader in strategy research for consumer markets. Global coverage and leading edge innovation make our products essential for companies worldwide. From socio-economic context to intimate detail on the smallest products or markets, we offer unmatched detail and unbiased content for every region, country, category and channel. Euromonitor International market research focuses on industry, country, company and consumer lifestyle research. We analyze companies and markets in more than 200 categories across 80 countries.
Related: Choosing The Right Location For Your Franchise Business
Some of the most common methods to geographically segregate a territory include demarking by street, postal code or a specified radial distance originating from the franchise unit location. Regardless of which method is adopted, the key is to minimize the potential for a scenario where internal competition or conflict between two or more franchisees where they are competing for an overlapping group or even the same set of consumers.
However, when the franchise system continues to expand, franchisors will inevitably look to maximize the density of franchisees in a particular market, especially if it proves to be lucrative, as this will directly result in higher profits from franchise sales and royalties. But this is also where problems could start to arise from an over-supply of the same goods or services from the same brand.
Franchisees whose territories are placed too close to one other could also start to feel threatened by each other, hardly what one should be feeling when they are supposed to be on the same team. What could happen next is the newer franchise unit eats into the profits of the existing one. When the dust settles, the end will often result in at least one party failing to make it out of the ring. In other words, at least one of the franchisees closes shop because their territory can no longer generate sufficient customers to sustain the business, much less make a profit.
So the next time you ask a franchisor about territorial exclusivity and they answer, “this will be your franchise territory”, the only way that you should interpret it as is “this area has enough customers for you to build a profitable business”.
As no two locations are the same, every market has its own rate of population density, business diversity and racial/cultural aspects, etc. From this perspective, it will be next to impossible to implement a one-size-fits-all plan for demarking franchise territories, especially in unfamiliar overseas markets where lots of data gathering will need to be carried out to understand how things work. So don’t just take the franchisor’s word for it, ask them how these territories were decided upon on their drawing board.
But if the franchisor can’t provide any logic behind how territorial rights were segregated, it is likely that they just picked and chose something of out anything, without any thought behind the decision. Still sounding like a good idea when it's your hard earned money on the line?
Related: How Does Franchising Work?
Next, we jump to colonial times, when what were known as ‘Franchise Kings’ would authorise individuals to run local markets and hold fairs on their behalf. These franchising rights were bestowed upon local citizens who agreed to take on the risk of moving to a new area and establishing a new colony. Their reward for taking on the risk of creating a new colony was a share of the spoils from their commercial ventures, while the crown would benefit from extra taxes and royalties.
The first example of the modern day franchising model came to light in the 1880s, and was created to boost the sales of the Singer sewing machine. Isaac Singer invented a sewing machine which was far superior to anything available at the time. To improve the distribution of a product American people were desperate to own, Mr Singer found businesspeople who were interested in owning the rights to sell his sewing machines in specific geographic areas. He then charged these individuals an upfront licensing fee for the right to sell the machines. Singer gave the licensees training so they could teach their customers how the sewing machines should be used. He then stepped up the production of his sewing machines on the back of the money coming in from licensees.
Probably the world’s most well known franchise came along in the 1960s, when Ray Kroc, a travelling milkshake salesman with a vision, heard about two brothers from California, Dick and Mac McDonald, who owned a restaurant which produced its food on an assembly line-like system. Mr Kroc saw the potential for similar restaurants to operate right across the country and started to sell the franchises.
Today there are 34,000 McDonald’s restaurants around the world, give or take the odd one, and that assembly line method of producing the food is the reason you’ll eat the same burger in a retail park in Hull, as you will in Leicester Square.
Sam Butterworth is a writer and content creator based in Yorkshire. He has written for various local, national and international media and has put together this guide to franchising for Tubz Vending Franchise. You can follow Sam on Twitter @sjtbutts.
Here are 3 (very real) horrible scenarios that could happen for every prospective franchisee — something to ponder about before jumping right into committing your money into a franchise.
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Related: The Worst Scenarios That Could Happen After Acquiring A Franchise
Related: What Goes Into Your Franchise Operations Manual - Part 2: Determining Content
Date: 15th Dec 2015
Time: 9:00am CST
This event is organized by Euromonitor International.
With increased attention on sugar and the role it plays in diet-related disease, is there such thing as an ‘anti-sugar consumer’? This question will be addressed by looking at how trends in packaged food and soft drinks have influenced sugar consumption, what the forecast is for the next five years, the potential for reduced-sugar products and what effect the ‘anti-sugar movement’ is having on manufacturers, consumers and policy makers.
So it’s like a fight just to gain the attention of prospective franchisees — and yes, that’s just only to gain the their attention. Let's take a look at some basic aspects for your business and franchise to do just that.
Related: Is Making Money The Only Thing Franchisees Want From Franchisors?
First and foremost, in order to be in a business, there needs to be existing customers who want to buy from you and make actual purchases. In other words, there needs to be a real market need for the product or service that your business is selling. But this isn’t a problem with the business itself. Instead, it is a market gap that the business has been designed to fill. And guess what? Prospective franchisees will want to know how effective your business is at providing a solution as a market need because this literally translates to the lifeblood of every business — customers.
In today’s modern times, innovation is something that is truly hard to come by. However, it doesn’t mean you have to be involved with something that hasn’t been thought of or introduced ever. Besides, even if you actually launch a totally new and unheard of business, you’ll likely find duplicates popping up everywhere once the word is out that a new potential golden goose has arrived.
However, being unique allows people to differentiate the business. Do you cater to a specific age group? Is speed during delivery of product or service your best asset? Are you able to do what you do better than your competitors? There are so many ways to differentiate your business and create your own niche, but prospective franchisees need to see that clearly.
Think of it this way: if you yourself don’t take the initiative to showcase your franchise concept to be different, how can prospective franchisees be expected to differentiate it from all the other noise?
While it’s great if you can charge as much as you’ll like for your business offerings in your home territory, can markets in other locations bear that similar pricing level? At the end of the day, it won’t matter how low operating expenses are, or even how much cost savings they would be getting by being a part of your franchise system. If prospective franchisees cannot visualize the scenario where enough consumers will be willing to pay your level of product/service pricing, they won’t be convinced that their investment in your franchise concept will be feasible or sustainable, even if you yourself are experiencing impressive sales figures.
Typically, when someone makes an investment, they aren’t looking for a flash in the pan. Rather, it is with an eye on the future so that’s something the business and franchise needs to address when negotiating with prospective franchisees.
While you may have a successful business today, the key is to ensure that this status quo is going to remain unchanged five years (or more) down the line. But more than that, the dynamic environment we all live in means you’ll also need to figure out how to regularly create new opportunities. Will you be able to improve the business, whether from an operational point of view or in terms of new product/service launches? The key point is to remain relevant and competitive in the market and that’s what prospective franchisees will be looking to be a part of because more opportunities means more chances to increase sales figures.
In a new report, FMCG in India: Understanding a Billion Needs, Euromonitor International explores the current state of a range of key FMCG industries and their future potential. Changing patterns of consumer expenditure and evolving aspirations are shaping the potential of these industries for the future.
Related: Store Visits: Examining Online Players Moving Offline
Indian FMCG industries have higher growth potential compared to many markets around the world based on the life cycles of two broad industry types:
Consumers in India are slowly moving beyond basic necessities. As household disposable incomes grow, the share of spending on leisure and recreation, and miscellaneous goods and services, will witness stronger growth than categories constituted by basic necessities. However, income inequality will become more pronounced, as the share of disposable income of richer households continues to grow till 2030.
Source: Euromonitor International
In 2014, the US boasted the highest per capita spend based on a basket of 18 FMCG industries combined, at US$6,028 per person. China’s per capita spend is five times lower at US$1,262. While India stands at just US$203.
If we assume that the US represents peak penetration, then over time FMCG in India has the potential to grow thirty-fold. Even to reach the global average, India’s per capita spending would increase seven-fold. Quite how long it might take to catch up is not clear, although the size of the opportunity India represents is immense, and the direction is set.
Janaki Padmanabhan - Syndicated Research Manager, Euromonitor International
Euromonitor International is the world leader in strategy research for consumer markets. Global coverage and leading edge innovation make our products essential for companies worldwide. From socio-economic context to intimate detail on the smallest products or markets, we offer unmatched detail and unbiased content for every region, country, category and channel. Euromonitor International market research focuses on industry, country, company and consumer lifestyle research. We analyze companies and markets in more than 200 categories across 80 countries.
Related: 5 Things Every Business Should Possess Before Franchising
Being differentiated doesn’t just attract prospective franchisees to learn more about the business concept, it also portrays the ability to let potential investors know that the brand has their own niche of customers, surely a subtle hint that business longevity and prosperity has a higher chance to be achieved.
See more franchise facts at A-Z Of Franchising!
Related: Consumer Electronics: Trends And Future Predictions
Euromonitor International is the world leader in strategy research for consumer markets. Global coverage and leading edge innovation make our products essential for companies worldwide. From socio-economic context to intimate detail on the smallest products or markets, we offer unmatched detail and unbiased content for every region, country, category and channel. Euromonitor International market research focuses on industry, country, company and consumer lifestyle research. We analyze companies and markets in more than 200 categories across 80 countries.
Once the franchisee begins to trade, it will also pay an ongoing royalty payment, which could be on a monthly, quarterly or annual basis. This payment will usually be a percentage of the franchisee’s revenue.
Related: Franchise FAQ - A Basic Guide
Most franchising deals will include:
The shop, restaurant, or alternative business, will always be an exact replica of the parent business to keep the brand consistent. This means that the franchisee will not have as much control over the business as they would if they set up on their own enterprise. However, they will have the added security of investing in an established brand and a formula that has been proven to be successful.
Control of a franchise is generally quite strict, and will include everything from the staff uniforms to the marketing literature that appears in the store. In most cases, the pricing will also be standardised across all franchises to keep the brand’s advertising and promotions streamlined and consistent. Once all the training has been completed, the franchisee will be responsible for the day-to-day running of the business and will make or lose money based on its individual performance.
As part of some franchising deals, the franchisee may also receive exclusive territory rights, which ensure that another franchise will not be sold within a certain distance of their business. The franchise deal will also include a term, typically 5-10 years, after which time the franchisee will usually have the right to renew the franchising deal if they’re willing to cough up more cash.
Sam Butterworth is a writer and content creator based in Yorkshire. He has written for various local, national and international media and has put together this guide to franchising for Tubz Vending Franchise. You can follow Sam on Twitter @sjtbutts.
So why do so many franchisors still do it? Why are they willing to bear these expenses with only some hope for return on investment?
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Related: 3 Reasons Why Franchisors Should Participate In Franchise Exhibitions & Trade Shows
While you may be running a successful business and had perfected your operational processes, it takes more than that to go into franchising because creating a proven business model is one thing, teaching another party to have a go at replicating that same success is quite something else.
So how are you as a franchisor? Are you fulfilling your responsibilities and doing all you can to help your franchisee? Or are you doing something that makes you a “bad” franchisor, whether knowingly or unknowingly? Because all these would determine in some way whether franchising could turn out to be a hit or miss.
Related: The Fundamentals Of Ethical Franchising - Part 1: Elements & Part 2: Practice
People invest to make money, and they want to buy something that works. If the franchise opportunity you're offering does not consist of these two basic elements, what exactly are you selling? If the answer is something like "hopes and dreams" and "believe in the business", you’re coming out looking like a scam. And that goes for your franchise too.
For the payment of franchise fees, franchisees will be receiving the initial support and training required to successfully replicate the original operations of the franchise. Naturally, when you structure your franchise fee, you should also include the costs for providing the related necessary support and training to franchisees, and maybe even include the cost of selling that franchise. So it’s a deal now, you get your money and the franchisee gets what they paid for.
But if you don’t plan for sufficient support resources and don’t structure an effective training schedule for franchisees, how will they be able to gain the necessary knowledge and skills to make the business work? In this case, the possibility of them messing up and enraging customers is very real, leading to a negative impact on the franchise brand. Is this really how you want your franchise brand to be represented, by parties who have no idea what they’re doing (not because they didn’t listen but because you performed a slipshod knowledge transfer)?
And if you’re thinking you can blame it all on your franchisee and legally pursue this, think again because it was you that didn’t perform your part in the first place. And when push comes to shove, franchisees will defintely remember that particular part of the franchise agreement that wasn’t realized.
Unless your brand is spectacular enough that people rush through the doors to make purchases (think Apple), the need for advertising and marketing to be competitive in today’s sea of competition is now more apparent than ever. Even the fruit-named technology company still invests in regular advertising and marketing campaigns. So what’s your reason for not placing advertising and marketing efforts high on your list?
And if you do collect some sort of advertising fund from franchisees, you’ll need to account for that expenditure — stating why there’s a need for the collection and how it’s going to be appropriately spent.
As a basic guideline, and depending on the business and location, a franchisee’s territorial rights could be anywhere from 2-4 square kilometres (or more). In other words, territory exclusivity provides protection for franchisees from over-saturation of a certain location with the same brand. But when two franchisees from the same franchise system are competing for the same group of customers, it really doesn’t seem like they are on the same team anymore. What happens next could be an all out fight for survival.
Franchising entails not just providing support at the initial phases, but at an on-going rate too. However, providing reliable on-going support comes at a cost, with some common expenses coming in the form of additional hires, traveling-related costs or even development of teaching material. Furthermore, franchisors are also expected to continually improve the system. It could be a new product or service that may potentially boost profits, or it could be a new operational process that is more efficient and effective.
If you’re not allocating royalties collected to either improve the franchise system or fund your support resources, how are you going to fund these actions? Or is all that money going straight into your pocket? Because that’s what franchisees will be thinking.
Related: Strategies For Consumer Market Success In China
Since 2012, when it overtook the US and Germany, China has been the country with the highest outbound expenditure in the world. Hong Kong and Macau are by far the most popular destinations for Chinese residents, although these trips have been under pressure recently.
Chinese authorities have started to clamp down on some of the illegal activities associated with the gambling industry in Macau, which has impacted the travel of rich Chinese tourists to the area. Furthermore, recent protests from Hong Kong locals, demanding more autonomy from the Chinese government and against Chinese shoppers emptying the shelves of local shops to benefit from VAT discounts, has reportedly resulted in a slump in Chinese tourists visiting Hong Kong in the first half of 2015. With the Chinese government censoring most of these protests, however, it is likely that stricter rules for one-day visas have also contributed to a decline in one-day shoppers crossing the border to Hong Kong.
As a result, data from tour agencies suggest a decline of 20% in hotel stays in Hong Kong, while the UNWTO data showed a 5% and 6% decline in arrivals to Hong Kong and Macau, respectively, in the first half of 2015. Other Asian destinations such as South Korea, Japan and Thailand have benefited from the declining popularity of Macau and Hong Kong, as well as from increasing disposable incomes and Chinese travellers becoming more adventurous as their travel frequency increases. This has also benefited the growth of Chinese travellers visiting Europe, with particularly Schengen countries proving popular destinations. The UK appears to be falling behind, as a Schengen visa is lower priced and allows access to all 26 Schengen countries, compared to a UK visa.
Top 10 and Selected Destinations of Chinese Outbound Visitors 2014 and CAGR 2009-2014
Source: Euromonitor International from UNWTO
It is largely impossible to know at this moment what the downturn of the Chinese stock market will mean for Chinese outbound travel. As is always the case with the travel industry, the situation is more nuanced and not just influenced by one factor. A prime example of this is the recent lull in Chinese visitors to France and Thailand – normally very popular destinations – due to the Charlie Hebdo attack in Paris and the shrine attack in Bangkok. Travel is a turbulent, but also resilient industry, and this is especially true for China, where disposable incomes are quickly growing.
According to GaveKal, a financial services company, the downturn is expected to only impact around 20-30 million Chinese households, mainly the upper middle class and very wealthy, with large sums of money invested in the stock market. As the strong growth in Chinese tourism seen in recent years has come predominantly from the middle classes, it is unlikely that a major decline in outbound travel is around the corner. When comparing China with its fellow BRIC countries and MINT countries, it is evident that household incomes will grow strongly and outperform other countries over the coming decade, as more and more households reach a disposable income level of US$35,000, which Euromonitor International estimates is the threshold for international travel.
Households with Disposable Income Over US$35,000 in MINT and BRIC Countries 2010-2030
Source: Euromonitor International
Chinese tourism, then, is set for strong growth in the coming years, and it is unlikely that the economic downturn will have a significant impact on this. Business travel will be hardest hit. The management of Chinese hotel chain Homeinns Hotel and Management Inc acknowledged during the company’s Q2 earnings call that it is feeling the impact of the economic slowdown in its domestic business stays. This will, however, mainly impact domestic travel as of the nearly one billion business trips made in 2014 by Chinese residents, only 2% were international. In comparison, leisure travel is expected to maintain flourishing growth, as leisure travel is becoming the “norm” for Chinese families. This is boosted by better infrastructure in second- and third-tier cities, with added flight capacity to international destinations, 82 new airports by the end of 2015, and better high-speed rail links to and between airports.
The impact of a weakening economy will not stop Chinese consumers from travelling, but it might change the destinations they choose and their in-destination spending. Short haul destinations such as Japan, South Korea and Thailand are expected to reap the benefits, while destinations further afield in Europe and North America might suffer from declining arrivals. Chinese consumers are expected to downgrade on hotels, as travellers become more conscious of their spending options. Shopping, and particularly luxury shopping, is also likely to be affected, which will be felt most particularly in European cities such as Paris, Geneva, Milan, Amsterdam and London.
While the stock market volatility is not a reason for panic, it does provide a reminder of the Chinese government’s desire to control and intervene. The current developments could end the financial opening up of Chinese market, which would result in even more difficult times for Western companies entering the Chinese market. With private rental players such as Airbnb and HomeAway just starting to discover China’s potential, this might lead to some extra hurdles for these players. HomeAway’s VP of Asia Pacific, Dan Lynn, remains positive nonetheless and believes that demand will continue to drive the segment forward, noting that “China’s economy will likely go through numerous adjustments over the coming years, but what we see in China is continued growth of people with the means and desire to travel. In China, we may see more people choose vacation rentals instead of relatively overpriced hotels.”
It is difficult to argue with this view. In a country where only 3% of the population has a passport, and with a government actively promoting tourism through a recently launched 2.5-day-weekend campaign, it is unlikely that an economic slowdown will result in a decline in outbound and domestic tourism. However, the current slowdown might lead to lasting changes in spending behaviour. The challenge for the travel industry is to remain on top of these changing consumer demands.
Wouter Geerts - Travel Analyst, Euromonitor International
Euromonitor International is the world leader in strategy research for consumer markets. Global coverage and leading edge innovation make our products essential for companies worldwide. From socio-economic context to intimate detail on the smallest products or markets, we offer unmatched detail and unbiased content for every region, country, category and channel. Euromonitor International market research focuses on industry, country, company and consumer lifestyle research. We analyze companies and markets in more than 200 categories across 80 countries.
Related: Using Megatrends To Examine The Health And Wellness Market
Euromonitor International is the world leader in strategy research for consumer markets. Global coverage and leading edge innovation make our products essential for companies worldwide. From socio-economic context to intimate detail on the smallest products or markets, we offer unmatched detail and unbiased content for every region, country, category and channel. Euromonitor International market research focuses on industry, country, company and consumer lifestyle research. We analyze companies and markets in more than 200 categories across 80 countries.
Related: The Franchise Operations Growth Success Formula
Business owners who simply jump into franchising without sufficient preparation and think they can react in time when the situation arises, might be playing a dangerous game which could lead to consequences that far outweigh the potential financial benefits. Rather, the pursuit of franchise growth should be an outlined pro-active activity instead of a reactive movement.
See more franchise facts at A-Z Of Franchising!
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Related: Common Mistakes Prospective Franchisees Make - Snuff Out That Fire Before It Starts
Date: 3rd to 5th Dec 2015
Time: 9:30am to 7:00pm (3rd & 4th Dec), 9:30am to 6:30pm (5th Dec)
Venue: Hall 1E, Hong Kong Convention and Exhibition Centre
*Visitors under the age of 18 will not be admitted.
A one-of-a-kind event, Hong Kong International Franchising Show showcases franchise concepts and business opportunities from both local and foreign origins.
Truly a melting pot for franchisors and prospective franchisees, the exhibition is an effective platform for those with an interest in franchising to meet and interact to explore potential partnerships and collaborations.
But while most people have ambitions of being a business owner, they don’t actually work at it. Instead, what takes place is the creation of excuses to justify why they shouldn’t take the leap and stay in the safe zone. Not that avoiding risk is a bad thing, but the acceptance of risk is basically the first step of going into business for yourself. So if you can’t overcome that, you’re going to have to find a new dream to work towards to.
Either way, here are 4 reasons why most people could pass on a franchise opportunity, even when it could be well suited for them. Will one of it be yours?
Related: Sort Out Your Needs & Wants Before Acquiring A Franchise
In recent years, young techpreneurs becoming instant millionaires might be headlining newspapers (and they just seem to get younger and younger). However, this might be skewing the notion that in order to start a business, one needs to be young, although not being necessary true.
As a matter of fact, the biggest obstacle isn’t your age, rather it is your level of commitment to do what you want to do. Take the decison to push yourself one more time because it is never too late to give it a go. What’s more, franchisors already have everything mapped out so lots of time is saved trying to figure out what works and what doesn’t.
Related: Investing In A Franchise - For Now Or The Future?
The basic pre-requisite to take up a franchise is having enough money. There really isn’t anyway way around it because franchisors aren’t going to let you in the system without the necessary funds. In case you're wondering, your passion, skills and experience only become attractive factors after you meet the capital requirements.
One way to maneuver around this potential setback is to look for franchise opportunities out there that require a lower investment capital — one that fits your current financial abilities. Besides, there are many financing options available, some of which franchisors might even be able to provide assistance with during the application process.
Having said that, you have to be realistic because you can’t expect a franchise opportunity with lower investment requirements to churn out the same profit levels as another franchise concept that requires higher financial commitments. For a start, the realistic expectations for a typical franchise investment is a return on investment period of somewhere between 18 to 24 months.
Related: What Are The Initial Investments Involved With Taking Up A Franchise?
Everyone is afraid of failure so you’re not alone. And being scared could be a good thing because then, you'll likely be more careful about committing to any decisions. But this fear factor is also the same reason why most most ideas get stuck in the “just a thought” phase.
While not a guarantee for success, franchising does alleviate some of the risks involved because your business will be associated with a known brand with proven products or services. In other words, you will be running a trusted business with a group of loyal customers. So muster up that courage and don’t let a fear of failure dictate your actions. Just be sure to look before you leap.
Related: 3 Franchisee Mindsets That Set Up For Failure
Related: What Are The Main E-Commerce Drivers In Emerging Markets?
The World’s Top Five Marketplaces By Web Traffic: May 2015
Source: SimilarWeb
The Internet is being conquered by online businesses that simply provide a meeting place for buyers and sellers. With a revenue model that largely depends on creating the perfect conditions for consumers to shop and businesses to advertise, online middleman platforms are outpacing almost all other Internet segments in terms of web traffic growth:
Building on the success and the ideas brought to the web by today’s horizontal giants, specialist services marketplaces are taking the baton and challenging traditional segments beyond the physical retailing sphere. Vertical players such as Airbnb (home rental), Upwork (freelance services) and even Uber (taxi rides) have essentially focused on bringing an innovative and cost-cutting online approach to somewhat outdated services markets. Catering to a more mobile-oriented audience (over 2.3 billion mobile Internet subscriptions globally in 2014), these platforms can provide 24/7 coverage and reach across the world.
As more segments become “marketplaced”, venture capitalists are racing to find the next billion-dollar platform, the one single brand that can stand out of the pack and become synonymous with the service itself (like an Uber or Airbnb). This flow of liquidity is driving e-commerce to new areas where it was non-existent previously, and spreading the reach of marketplaces across the web.
While online marketplaces are growing rapidly, cross-border trade and newly created segments do face obstacles.
In major emerging economies, local marketplaces are often dominant and make market-entry difficult even for global giants. For example, in Russia eBay has made little progress despite continuing efforts due to the presence of local general classifieds major Avito, while Amazon is unable to compete with long-established players such as Alibaba in China. These two countries combined represented an e-commerce segment value of US$180 billion in 2014.
Adjusting to unique governance landscapes is a particular challenge for services marketplaces. Uber has been fighting a well-publicised legal battle in numerous markets, Airbnb offers officially illegal services in most markets (due to the tax avoidance implications of private rentals) and online freelance services face the obstacle of limits on undocumented e-payments to workers due to restrictive money-laundering laws in many countries.
Nonetheless, if one brand fails to overcome such challenges, another simply adapts and succeeds, and therein lies the organic all-conquering essence of the online marketplace.
Pavel Marceux - Digital Specialist, Euromonitor International
Euromonitor International is the world leader in strategy research for consumer markets. Global coverage and leading edge innovation make our products essential for companies worldwide. From socio-economic context to intimate detail on the smallest products or markets, we offer unmatched detail and unbiased content for every region, country, category and channel. Euromonitor International market research focuses on industry, country, company and consumer lifestyle research. We analyze companies and markets in more than 200 categories across 80 countries.
Related: Advantages & Disadvantages Of Franchising
Before jumping right into franchising or even disparaging it, whether as a business owner or prospective franchisee, it is important to fully understand what franchising actually means, and consider whether the potential disadvantages that come along with it are acceptable, when compared to other expansion or investment options.
See more franchise facts at A-Z Of Franchising!
Related: Internationalizing Your Brand Through Franchising – Are You Ready?
There are so many options out there and one could easily be overwhelmed. Simply trying to choose a target market for the next phase of expansion already brings about headaches and blurred vision. Not to mention, every country (or even state) has its own way of getting things done so expecting to come up with a one-size-fits-all masterplan for franchising seems a little naive and overly optimistic.
As the ambition to expand into overseas markets grows, some of the more commonly sought after market information that business owners should obtain before any decisions are made, are those such as costs for setting up the business, consumer spending power, competitive pricing and local preferences. Furthermore, having market data also helps to prioritize certain markets over others, and plan for the necessary budget and resources accordingly. In short, identifying and analyzing targeted markets will allow franchisors to answer one critical question — is there a practical market for the franchise and its offerings?
But in the midst of these all, one aspect that might be overlooked is the one that basically determines whether a business has the right to franchise. Normally, the biggest obstacles that would come into play when looking at overseas expansion are local laws and business practices — in this case, franchise regulations. This is especially important because some countries have stipulations that requires a business to physically operate in the country for a certain amount of years before being able to start franchising activities. So even after all that time, effort and resources spent on franchise marketing, and eventually converting a prospective franchisee into an actual franchisee, it could be all go down the drain because the single most important criteria was overlooked from the start.
Oops, you say?
Related: Making A Commitment For Success
While it may work in some situations, when it comes to decision-making for taking up a franchise investment, going with your gut feeling skips one critical evaluation aspect — objectivity. In the absence of objectivity, there is always biasness and prejudice involved. And in the case of giving consideration to a franchise concept, you’ll likely convince yourself that whatever franchise opportunity you’re looking at is great fit even when it isn’t.
Furthermore, going with gut feelings relies on passions and emotions, something that is really difficult to quantify, unless you are willing to explore the co-relation between neurobiology and biochemistry. But that’s besides the point because it still doesn’t answer the question of whether a franchise concept is viable, and more importantly, whether it suits your profile.
Related: Sort Out Your Needs & Wants Before Acquiring A Franchise
The franchisor will help in whatever way that they are legally obligated to do so, and maybe even a little more if within reasonable limits. However, expecting the franchisor to be responsible for your success is a totally different matter. While the franchisor provides support and assistance, it is up to you to do your part as a franchisee and implement the necessary requirements to make your business a success.
If you’re thinking all you need to do as a franchisee is put up the investment capital then the franchisor will handle everything else, you’re going to be in for a whole new level of shock once the franchise agreement is signed.
Related: Franchising Is A Piece Of Cake? Here’s What Prospective Franchisees Usually Underestimate
At the end of the day, all franchise units are entities that must perform for profit — undoubtedly the single most important determinant for success or failure. But success doesn’t come easy, especially with low commitment levels or nonchalant attitudes. Simply put, treating your franchise investment like it is a hobby (instead of a business) will most likely result in you not putting enough effort or giving enough attention for a positive-enough outcome. So if you’re thinking you can take up a franchise and “sort of” be on the team, don’t.
Likewise, how excited will the franchisor be to “sort of” have you on board? In any case, this “sort of” mentality probably won’t get you into the franchise system anyway. But if you actually do get through the doors, it is you who should be wary of what the franchisor wants from you instead.
Related: 4 Reasons For Investing In A Franchise
Date: 26th to 27th Nov 2015
Time: 9:00am to 5:00pm
Venue: TKP Conference Centre - Raffles Place
This course is organized by Franchising and Licensing Association (FLA) Singapore.
Fee: SGD550.00 (FLA member), SGD650.00 (non-FLA member), SGD150.00 (student)
Register before 12th November 2015 and enjoy a SGD51.00 discount (not applicable for student pricing)
RegisterFundamentals of Franchise Management (FFM) will introduce participants to multidisciplinary areas involved in the franchising practice. Using lectures, case studies and assignments, FFM will provide participants the necessary theories, background information and practical learning experiences for their executive responsibilities.
1. Understanding the Franchise Business
2. Legal and Commercial Framework of Franchising
3. Franchise Manuals and Franchise Marketing
4. The Financial Considerations of Franchising
Date: 5th to 7th Nov 2015
Time: 5th Nov: 10:00am to 5:00pm, 6th & 7th Nov: 9:00am to 5:00pm
Venue: Saigon Exhibition and Convention Center (SECC), 799 Nguyen Van Linh Street, Tan Phu Ward, District 7, Ho Chi Minh City, Vietnam
Into it’s 7th edition, Vietnam International Retail & Franchise Show (VIETRF) 2015 is expected to be a franchising-focused marketplace for one of Asia’s most exciting emerging markets.
VIETRF 2015 provides a platform for franchisors to interact with potential investors while prospective franchisees can gain first-hand insights into multiple business opportunities offered by local and international brands.
Related: 3 Reasons Why Franchisors Should Participate In Franchise Exhibitions & Trade Shows
Date: 1st Oct 2015
Time: 9:00am CDT / 3:00pm BST
This event is organized by Euromonitor International.
Menswear is expected to contribute US$40 billion to the global apparel and footwear market by 2019, compelling consumer insight experts and strategists alike to take notice. Despite the smaller market, menswear is growing at a faster rate than their female counterparts. Have men started to care more about their appearance in recent years resulting in this increase in spending? What is driving demand?
Related: Trends In The Men's Fashion Market
Date: 20th to 21st Oct 2015
Venue: Jumeirah Beach Hotel Convention Centre, Dubai
The Middle East’s premier franchise expo is back on showcase!
Showcasing over 100 local and international brands, Middle East Franchise Expo is a platform for franchisors to meet with high net worth investors who are looking to build successful networks.
Related: Get The Most Out Of Visiting A Franchise Exhibition
Discover new and exciting brands, and interact with the brand owners themselves to find out what it means to take on multi-unit franchising.
Date: 29th to 31st Oct 2015
Time: 29th – 30th Oct: 10:30am to 6:30pm, 31st Oct: 10:30am to 5:30pm
Venue: Marina Bay Sands, Sands Expo & Convention Centre, Level 1, Exhibition Hall B, 10 Bayfront Avenue, Singapore
Franchising & Licensing Asia (FLAsia) 2015 is a major international trade show for both business owners and prospective investors with an interest in franchising and licensing.
Related: Get The Most Out Of Visiting A Franchise Exhibition
FLAsia 2015 provides a platform for business owners to source for new partners while prospective investors can explore multiple business opportunities at once.
Date: 20th to 21st Aug 2015
Time: 9:30am to 5:30pm
Venue: TKP Conference Centre Cecil Street, #03-01, 137 Cecil Street, Singapore
This event is organized by Singapore Franchise Training School.
Early Bird Ticket:
SGD800.00 (limited)
Standard Ticket:
SGD1,200.00
*This course is applicable for 60% PIC claim.
RegisterAs a franchisor your success is only as good as the success of your franchisees.
Learn what it takes to a world-class franchise organization to build great franchise units in this Franchise Unit Excellence course. You will interact and learn in the company of franchisors who want to build strong franchise organizations based on global standards. Franchise Unit Excellence is also the required foundational course for the Franchise Quality Mark Certification Program.
9:30 - 10:45am
- Introductions
- Intro to franchising and terminology
- Goals for the course
10:45 - 11:00am
Break
11:00am - 12:30pm
- P.L.T.S of the franchising
- Purpose: Relationship of franchisor and franchisee goals to the success of the franchise eco-system; 6 influence factors of relationship to franchising
- Leadership: Leader's role in franchise unit excellence; understanding individual leadership style as they relate to performance of franchise and franchisees
12:30 - 1:30pm
Lunch
1:30 - 2:30pm
Continuation of Leadership
2:30 - 3:30pm
Training: Identifying types of training for life cycle of franchise; development of effective training programs for franchisee success
3:30 - 3:45pm
Break
3:45 - 5:00pm
Support: What is the support philosophy that drives performance; identifying the phases of support; development of effective support systems for franchisee success
5:00 - 5:30pm
Wrap up and questions
9:30 - 9:45am
Review of foundations / Day 1
9:45 - 10:45am
Launch: setting the stage for successful launch of new franchise; expectations of franchisee and franchisor
10:45 - 11:00am
Break
11:00am - 12:00pm
Growth factors: Sales and marketing; Roles of franchisor and franchisee in growth of franchise unit; system and processed required by franchisor including processes for handling of service failures
12:00 - 12:30pm
Evaluation methods for performance
12:30 - 1:30pm
Lunch
1:30 - 5:00pm
Simulation exercise: Applying the concepts learned in class
5:00 - 5:30pm
Wrap up and questions
Ms. Venu Babla, a learning and performance strategist, has headed up training departments for franchise organizations for the past 20 years and currently is the Director of Training and Development for Global Franchise Masters, a Singapore-based company.
Ms. Babla has strong entrepreneurial experience in building franchise businesses from concept to implementation with deep skills in operations, training and support. Her franchise journey includes being a franchisee, a master licensee as well as a co-founder of an innovative franchise brand.
Utilizing adult learning principles, Venu focuses on developing training programs that are relevant, fun, and drive high performance. She has a Master’s degree in Education in Learning Design and Technology.