Phuc Long Franchising Procedure

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 PHUC LONG[pic 3]

FRANCHISE BUSINESS PLAN

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GROUP MEMBERS

Kim Ji Song                                          BABAIU13391

Park Da Hyeon                                         BABAIU13359

Park Ji Wan                                    BABAIU12274

Bui Ha Bao Nhi                                         BABAIU14183

Huynh Duc Minh Quan                 BABAIU13228

Nguyen Minh Thang                   BABAIU13251

Le Nguyen Thuy Van                   BABAIU14321

CONTENT

Introduction

Executive Summary

1. Overview of the Franchisor – PHUC LONG
2. Situation Analysis

2.1. Macro Environment

2.2. Micro Environment

1. Marketing program

3.1. The franchisee’s mission and vision

3.2. Marketing goals

1. Segmenting, Targeting and Positioning

4.1. Segmenting

4.2. Positioning plans

1. SWOT Analysis of the Franchisee
2. Marketing Mix Strategy

6.1: Product strategies

6.2: Pricing strategies

6.3: Place or Distribution

6.4: Promotion or IMC Programs

1. Human Resource Plans

1. Financial Projection

1. Project Implementation and Control

References

introduction about phuc long

Vietnam is a developing country with population of over 93 million and a high percentage of population under 30 years of age, increasing incomes, and busy lifestyle are the main factors to drive changes in consumption patterns, experiencing steady growth, and trending toward food and beverage (F&B) industry. According to Ms. Ho Thi Kim Thoa, vice Minister of Ministry of Industry and Trade (MIT), said that F&B industry is considered to be cash cow because it is not negatively affected by the economic crisis… For those reasons, F&B industry in Vietnam is becoming more and more developed, and rated to be one of the most potential markets in Vietnam.

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About the development trend of coffee and tea market, growth in the F&B industry has also resulted in a growing demand for coffee and tea in Vietnam in general, and in Ho Chi Minh City in specific. Due to the combination of westernization and rising health consciousness, clean and non-alcohol beverage, such as fruit and vegetable juices, coffee, and tea are dramatically grow. In Ho Chi Minh City, people consumed coffee outside home particularly more than 2-3 cups/day. That of tea is 1-2 cups/day. And people prefer outside home consumption to home consumption. These trends drive branded coffee and tea chains growth in Vietnam.  Branded coffee and tea chains have followed on the success of Highlands Coffee (98 outlets in Vietnam initially built by Viet Thai International Company and now owned by Jollibee Foods Corp) and Trung Nguyen with over 1000 outlets but without a consistent chain environment nor service. International brands now include: Starbucks, Coffee Bean and Tea Leaf, Angel-in-us Coffee (by Lotte Group), Cafe Bene and Gloria Jean’s, and new entrant Holly’s Coffee. The rise is not only foreign brands but local brands such as vertically integrated Phuc Long Cafe, The Coffee House (by Seedcom).  Other rapidly expanding chains include Urban Station, Passio Coffee. Bubble tea is on the rise at menus in many of the aforementioned cafes, especially Phuc Long but bubble tea chains are also on the rise with the likes of Chattime, Tien Huong, and Hot&Cold.

executive summary

• Management: Mr. Lam Boi Minh has been the owner, and the director of the company as well. Mr. Lam Chan Huy is the company vice-director, takes the responsibility for sales. He has a degree in economics. He has helped the company modify and expand their sales program. Both company director and vice-director have a lot of work experience in this business field. About staff, due to the nature of the business, both part-time and full-time employees will be hired; manager for full-time; and barista, cashier, staff for part-time.  Those employees will be attracted through competitive wages as well as discounts products and services.

• Market Opportunities: As mentioned in the preceding part, beverage shop chain business is developing strongly with the great growth of R&B industry. Number of people visited one Phuc Long is about 400 people/shop/day during the last twelve months. While the outdoor tourism industry to Ho Chi Minh City is increasing and the economy of Vietnam is growing rapidly, the company expects its number of customers to grow over for the next few years, for about 500-600 people/shop/day. In Ho Chi Minh City, to be specific, for the following years, Tan Binh, Tan Phu, Go Vap districts and district 2, 10 are likely to be priorities. Presently, there are many middle class people moving to sub-urban areas due to the high cost of living in the downtown. So, those places are becoming crowded. Therefore, operating Phuc Long stores in these areas will likely to push the brand to develop more and more vigorously.

• Competition: Since F&B industry is growing and expanding rapidly, there is a great competition here. Phuc Long’s competitors are not only local brands: Highland Coffee, Trung Nguyen Coffee, Effoc Coffee, Hot&Cold, The Coffee House… but also international brands: Starbucks, Café Bene, Coffee Bean and Tea Leaf… Our two primary competitive advantages will be location and reasonable price.

• Financial projections: We expect to earn profit by year two based on projected sales. Our projections are based on the following key assumptions:

- Cash requirements for starting are $309,000 in total with $300,000 initial investment capital and $9,000 franchise fee.

- Initial growth will be moderate as we establish awareness in the market.

- Marketing/Advertising expense takes first year 4250$, later 3000$ each year.

- Residual profits will be reinvested in expanding the product and service line.

- We project first-year revenue of $348,277 and a 21% growth rate for each year later. For each year, cost includes fixed cost and variable cost. Fixed cost includes rental payment, advertising/marketing, depreciation, property insurance, interest payment (annual interest payment takes 15% of initial investment multiplied with debt ratio of 0.3), social and health Insurance. Variable cost includes transportation cost, wages and benefits, other operating costs, royalties (10% of gross sale). Net income is projected to reach $7,799.7 in year 2 as sales increase and operations become more efficient.