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Growth of the middle-class Increase in disposable income UNTAPPED CONSUMER MARKET :
New consumers
Malleable consumers
Brand illoyal consumers
Higher Aspirations
Technologically savvy consumers
ExtraOrdinary CLTV
MADE IN JAPAN: A MARK OF GREAT REPUTATION
JAPAN NOS. 1 BRAND IN THE WORLD : フューチャーブランドは、75か国別ブランド評価を実施。 国別ブランドは、企業ブランド同様に消費者行動に影響力が あるとし、評価指数の高い上位20か国を発表した。 「メイド イン ジャパン」に抱くイメージとしては「高品質」が最多で 日本の高いブランド力を示している。 回答者の6割以上が日本産の製品を買いたいと答えた。
Olympics
45% Tourist increase
ASEAN, TPP
Saturation domestic market
Opening of Japan
WHAT IS FRANCHISING
Agreement between 2 parties: Franchisor -
Owner of Intellectual Property
Know-how & experience
Support
Training
Developed audience reach & advertising channels
Receives a Royalty
Franchisee-
A turnkey business
Proven business 4-7P
Benefit from networked advertising/promotions
Pay a Royalty & Marketing fee
Franchise
Product Trusted Status Brand Value Established
Place Distribution Inventory Supply chain Logistics
Price Trusted Status Economies Scale Accepted Proven
Promotion Online access Existing SNS Audience Reach Media channels Shared cost
ENTRY METHODS COMPARED:
TYPE MERIT DEMERIT
Company/Subsidiary Easy to make company structure. Control & Quality maintained. Tax Breaks. No negotiations & Faster decision making process
Higher Risk. High Capital requirements. Legal Barriers & Dispute resolution. Reduced local knowledge.
Joint venture Better local knowledge. New capacity & experience. Greater resources. Shared risk. Diversify from core business.
Partner disputes due to inequality. Resource heavy. Slower decision making. Business culture differences.
Direct Control. Quality maintained.
Recruitment of franchisees. Slower process of opening. Ongoing support procedures & time.
Master franchise Initial Master fee. Capital and human resources to expand. High local knowledge. Reduced risk and responsibility. In country support and management.
Trust. Goals not aligned. Loss of control & quality may affect the whole network. Lower revenue than direct. Dispute resolution & enforcement difficulties.
Area Representative In - country support & local feedback. More control . Greater revenue compared to Master.
Recruitment of suitable candidate. Time consuming.
Licensing Low intensity & Fewer resources. Low risk & Cost effective
No import/regulation barriers. New market segment opportunities.
Low level of market control. Risk of local competitors. Validating Licensee revenue. Inconsistent product quality
ENTRY METHODS COMPARED 2:
FIRST STEPS FOR OVERSEAS EXPANSION :
Basics: Resource capability
Operational systems in place
Draft Agreements ready:
Distribution agreements
FDD Master Agreements MoU/ LoI
Understanding of culture
Know what you want: Clear Goals Clear Timelines Milestones
FRANCHISE DISCLOSURE AGREEMENT (FDD):
1. The Franchisor & company key staff 2. Management’s experience 3. Bankruptcy and litigation history 4. Fees and initial investment 5. Region/Area 6. Responsibilities of the franchisor &
franchisee/ Termination clauses 7. Contact information of other franchisees 8. Restrictions on products/services
MASTER AGREEMENT MAIN SECTIONS:
1. Use of trademark, products and materials 2. Rights and obligations (training, operations,
advertising, support, procedures)
3. Duration, Renewal and Termination 4. Development terms 5. Sub-Franchise terms 6. Financial terms
MASTER AGREEMENT KEY POINTS:
1. Clear obligations/rights between 3 parties 2. Control (quality, store design, products, staff)
3. Business information feedback deadlines 4. Financial arrangements and pay schedule 5. Performance criteria 6. Sale/assignment/transfer of the agreement 7. Acceptable solutions for termination 8. Unrealistic development schedules 9. Manual for the Master
BENEFITS OF A MASTER PARTNER 1:
1. Confirmation of Capabilities (INternal)
2. Desktop Market Research (Country Focused) (INternal /EXternal) X
3. Decide viable countries (INternal) X
4. Primary Market Research (Country Focused) (EXternal) X
5. Supply chain & Logistics (INternal /EXternal) X
6. Planning and Strategy (INternal)
7. Clarify Goals (INternal)
BENEFITS OF A MASTER PARTNER 1:
8. Draft Financial check (INternal)
9. Draft Business Plan (INternal)
10. Domestic Secondary/Desktop Market Research (INternal) X
11. In country Primary Market Research (EXternal) X
12. Analysis of Primary with 9. Run a Feasibilty Study (INternal & EXternal) X
13. Build Detailed plan and Final Decision
14. PR and Pre entry Announcements
BENEFITS OF A MASTER PARTNER 2:
Local knowledge & experience
Local support
Compliance with local laws
Foreign direct investment problems
Overcome political difficulties
Low risk
Low resources needed
Capital injection
Agreed expansion plan
Limited responsibility
WAYS TO FIND A PARTNER :
EXPO & Trade shows
Events like these
Chambers of Commerce
SMRJ
JETRO (accepted applications only)
FC Matchmakers
Banks
Consultants & Brokers
Business Matching Events
KEY POINTS FOR A SUCCESSFUL PARTNER
Solid track record
Good local market knowledge.
Resources and contacts to source
Supply Chain and Logistical capability
Primary/Secondary and Mall locations
Experience in the same industry
Adequate cashflow to sustain initial loss period
Shared philosophy and values
Understand Japanese company culture and flexibility
to adapt to different cultures and business methods
Passion
Mutually agreed Goals, Timelines and Milestones and
clarified roles
REAL LIFE EXPERIENCE
Yoshinoya: China royalty problem. Employee contract. 7/11 Control of local shops with Japan HQ. Speedy support difficulties. Ootoya Chose Thailand as their 1st overseas country. Keep aspects of Japanese culture. Long term vision is required. Build local business model first.
REAL LIFE EXPERIENCE 2
CoCo Ichiban
Difficult to understand local tastes. Serving temperature difference. Be prepared to adjust menu depending on availability of ingredients. Family Mart
Return to profit will be slower because of initial capital outlay. Takes less than 50% when entering into a J/V agreement. Target Country: High birth rate; Big young population; Low regulations. By many Japanese franchises
Employee Problems: Motivating and retaining employees different to Japan. Disciplinary issues, procedures and penalties. Ensure Employee value. Clear criteria of conditions and benefits.
TAKE AWAY:
T rust
A greements
C ountry/control
S ystems