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Executive summary …………………………………………1
Company overview …………………………………………2
Legal procedures …………………………………………4
Legal Basic
Subjects addressed
Dossiers and procedures for franchise operations
Processing time records
Announcement transfer registration of franchise
Conclusion ……………………………………………………..31
Company overview
This section provides a complete description of Dipping Dots Group: company history, the
Dipping Dots ice-cream concept and reason to choose this project.
Legal section
We will support all necessary procedures and notes to make franchise business in Vietnam
Management Section
This is one of the main factors Dippin Dots Group focuses on when choosing their
franchisees. It also provides the description of the key management roles in our new business.
Marketing Section
Marketing plays a key role for any business. Through it, we analyze a lot of things about our
mission & vision, target market, examination of the value equation related to the product or
service as it relates to potential customers and, of course, detailed marketing and advertising
plans for our business.
Financial section
This section includes start-up expense, forecasted revenue and cost, operations budget,
provisional balance sheet and finally justifying the investment for the investor
I. Legal basis:
- Commercial Law in 2005.
- Decree 35/2006/ND-CP dated 31/03/2006 of the Government.
- 09/2006/TT-BTM Circular dated 25/05/2006 of the Ministry of Commerce.
I. Management team
Each of 5 owners contributed 20% of the investment. As the result of the election, we decide
to establish our business following this management structure. Our director is Ms Huyen
Hoang. Everyone here is respected and treated by trust and fairness:
In our business, the management team has specific responsibilities to follow and finish
helping us achieves long term goals. These are:
1. Operational management:
It’s kept track by Operational Director, including establishing management system under
regulations, guidelines, requirement of Dipping Dots from franchisor; building standard for
products’ quality & inventory methods; creating plans for weekly, monthly, quarterly and
yearly objectives; controlling and evaluating the whole process, ensuring the performance
and the balance of relationship among managers; solving internal as well as external
troubles; keeping contact with franchisor to update any change and submit report in certain
periods.
It’s also be supervised by Operational Director, including recruiting and training employees
basing on franchisor’s standard; evaluating performance of managers as well as employees;
3. Marketing management:
It’s managed by marketing manager, including finding potential customer for Dipping Dots;
establishing strong awareness of brand in Ho Chi Minh City; building and controlling
promotion programs to achieve target customer; indentify to retain important and close
customers, checking and evaluating sale activities, solving problems which involved in
customers…
4. Financial management:
5. Sale management:
Sale management also plays a vital role with our business. It’s kept track by sale manager
who will train, control and evaluate employees in our store directly. Sale manager has
responsibility to take care of customers to ensure they come and go with high satisfaction
(then increase amount of customers). Moreover, he will keep very close relationship with
marketing manager to inform about sale situation to design suitable changes in
management.
We can see that all these management tasks are important and relevant.
If they can be implemented efficiently, our company can large profit and
cover capital in short period. Now, in the next part, we will show more
detailed description about human resource with key employees, recruitment
and training as well as our main culture.
As we know, big or small, all businesses can not develop without good human resource.
That’s reason why we try to build enthusiastic and excellent staffs from kiosk to store basing
on following special conditions (there will be at least one store and two kiosks first):
These employees will be recruited mainly from 18 to 25 year old people who are
young, friendly and active. They also have ability of creating good impression and
high satisfaction for customers. Employees can choose to work part time or full time
with the start salary from $75/ employees/ shift. Addition to that, they can have
opportunity bonus or monthly and yearly reward if they work hard with high
performance.
For all: Managers and employees, all staffs will be recruited directly by operational
director. After recruitment, they will experience important training programs
(following franchisor’s requirement) before working formally under certain policies
and regulations. To understand how we train our staff, let’s go to the next part-
training conditions
2. Training conditions:
Right of trainees:
To ensure the professional style, we will apply Basic Management Training – the
common training program from franchisor’s requirement. Following section 6 of Dipping’
Dot Franchise Agreement, franchisor will provide instructors, facilities, training
materials, technical training tools… and we - franchisee will be responsible for all
expenses for our trainees incurred in attending Basic Management Training including,
without limitation, all travel, lodging, wage and meal expenses. The trainees can learn a
Responsibility of trainees:
After training, trainees must satisfactorily pass the Basic Management Training test with
a score at least 75%. In addition to written test, Basic Management Training including
food preparation and service, equipment usage…
Trainees must be willing to attend additional, seminars, and others training programs as
franchisor may reasonably require from time to time, but not more often than twice per
year.
3. Regulations
In order to protect the reputation and good will of Franchisor and to maintain high
standards of operation under the system, we shall operate our business in accordance with
the standards, methods, policies and procedures specified in Franchisor’s Confidential
Operating Manual. Besides, our company also has additional regulations to establish our
special and friendly culture, for example:
All employees must come early at least 30 minutes before their shift and leave after
finish their tasks. At peak hour, number employees will be double to share work.
All employees must wear uniform during shift. The bright smile must be always on
their lips to create friendly atmosphere for stores/kiosks.
Saturday is seemed to be our “Happy day” which is not only give discount and
interesting shows for customer but also accept 01 to 02 relatives of employees enjoy
our ice cream free.
Every month we will give reward for “Best employee of the month” with bonus equals
500,000 VND. Besides, at the end of year, we also have bonus for employees which
equals 10% revenue of company…So on.
1. Checking quality:
Because Dipping Dots is the special product which needs checking quality frequently then
we will strictly follow the standard of franchisor’s requirement. The normal methods of
testing products are “Seven point quality check” and “Self checking”.
Seven point quality check: Taking regular samples from seven points along the
production lines. A sample is taken and tested:
1> Upon receipt of the bulk tankers of raw ice cream mix.
3> When the mix is pumped into the flavoring holding tanks for the silo
6> If the run is more than 1,500 gallons at a mid process - point
Samples are transferred to gel plates and standard plate counts are taken such as
coliform as well as yeast counts if the run is designate as international.
Self checking: Despite the increased challenges, the characteristics of the dots do
provide it with an innate seft-check – a quality on which the company is still
educating inspectors and its retail outlets: “ If the dots are free-flowing, the
temperature is OK”, Once the dots warm above -20 F, they will begin to stick
together. Once stuck together, they don’t unstick- even if returned to lower
temperature. If only slightly stuck together during handling, the dots can be
“massaged “apart. If a complete meltdown occurs, the ice cream will not be used.
How to store products is also another challenge. To deal with this, we decide to purchase
customized equipment and built our own storage system. This system will be supported from
master franchisee following contracts.
I. SWOT ANALYSIS
STRENGTH OPPORTUNITIES
WEAKNESSES THREATENS
• 8 – 16 year olds: Children and tweens who love ice cream and
sweet taste. They haven’t had income yet but are strong
“influencers” in buying decision.
1. Products
a. Brand Identity
b. Product Category
Soft drinks
2. Place
+ Two kiosks are located in front of Dam Sen Park and Hoa Binh Cinemar.
Store Design
Kiosk Design
3. Pricing strategy
• Why apply:
Thus, our menu and price are presented in the following table:
Menu Price
Ice-cream $ 1 .0 0 / 1 0 0 g r
Thus, we assume that averagely, 1 customer will spend about $2 (~40,000VND) every time
they come to enjoy ice cream, coffee, soft drinks, etc.
4. Promotion strategies
a. Communication objective
• To create our advertising awareness to target customers and build up our brand
personality in customer’s mind.
• To focus communication on building Dippin’ Dots as the new & so cool ice cream in
Vietnam
b. Communication strategy:
x1000USD
J F M A M J J A S O N D $
..
News paper x x xx x X x x 1
Online x x X xx x .3
Coupons xx xx xx x 1
Trials xx xx .5
Contingencies .2
6. Situational control
- If the business can develop more than expectation, we will import 2 Dippin’ Dots Ice
Cream machine for 24hours service automatically.
- If the business is not good as our plan. We will reduce 2 staff who serve at kiosks
and reduce selling time of kiosks from 8 to 4hours per days ( only selling in rush
hours) to save 300$ per month.
We are projecting profit based on the performance of other competitors and our own
judgment based on the following:
Totals $81,176
It means that you need to come up with 80,248$ of cash and that along with that you have
to have another 169,572$ of equity in other investments, your home, autos, cash value of your
life insurance, etc.
- We are going to increase the price by 5% each year as discussed in the Marketing
part.
- Seat turnover
o Ice-cream: at the store and Forecasted sale in 2 kiosks were decided based on
the market analysis, locations, target market (refer to Marketing part) and our
own observations at Yogurt Space and Yogen Fruz.
o Coffee and soft drinks are not our key product, but we’ll offer them for better
serving needs of wide ranges customers. For example: When parents take
their child to Dippin’ Dots, they still can enjoy the coffee or simply Coke if
they don’t enjoy the sweetness of ice –cream.
- Average check:
o Store:: As our observations at Yogurt Space, each time you pull the yogurt
machine, it gives at least 100gr. Almost every one pulls 2 times in order to mix
their cups. Thus, we assume that averagely, 1 customer will spend about $2
(~40,000VND) every time they come to enjoy ice cream, coffee, soft drinks,
etc.
o Kiosk: For easy management, we’ll set the price of every cup as $1 –
equivalent to 100gr. And kiosk will sell only ice-cream.
- Average cost of
o Ice–cream: equals 34% of the ice-cream revenue. This information was
provided by an industry trade journal, Ice Cream News.
o Coffee: For a $2.5 cup of coffee, the cost for coffee, syrup, milk, whipping
cream is $0.75
o Soft Drinks: Retail price of 1 can is easily found. Here we decided average
cost regarding our price.
III. Operations Budget
As the Operations Budget table shows, the company expects to continue its steady growth in
profitability over the next 5 years.
Operation Budget
500000
450000
400000
350000
300000
250000 Total Costs
200000 Total Revenue
150000 Net Income
100000
50000
0
Year 1 Year 2 Year 3 Year 4 Year 5
350000
300000
250000
200000
150000
100000
50000
0
Year 1 Year 2 Year 3 Year 4 Year 5
Here we can recognize the stable increase in revenue each year with the Profit margin at
30.34% in the 1st year of operation. At the end of year 5, the margin would increase to
38.46%.
As this is only the proposed investment, all information is forecasted, we use Provisional
Balance Sheet. The balance sheet is quite solid. We do not project any real trouble meeting
our debt obligations--as long as we can achieve our specific sales objectives.
Breakeven
The breakeven analysis is the tool to calculate the amount of sales that we need to achieve in
order to cover costs. After the breakeven point, we can make the profit.
According to the figure, the Dipping Dots franchisee can have break-even in the day 88 at the
revenue $71,187.07. Therefore, we can make the profit in the day 89.
As you see, the objective that we set for the next few years is based on the market research
as well as the environmental research and competitor’s research. Our system also considers
many contemporary issues as well as the internal and external factors to be able to achieve
the objective to get the breakeven point and the profit. We also have the backup plan in case
that our business can’t achieve the objective. Besides, we also take account into the
marketing plan to promote our product and offer other package to the customers to increase
the revenue and make sure the well being of our business
Payback
-
Cumulative 147630.90 8319.34 151159.55
Payback 2.052
- Pay back: when the number of cumulative of previous year –net cash flow < the number of
cash flow of the following year (cannot subtract anymore). Get the cumulative of this year
divided net cash flow of the following year, which plus with the number of years till the year
we can’t subtract the anymore
a. Discount rate
Since we are debt free company, the Cost of equity is also the discount rate. We calculated
the cost of equity based on CAPM model:
When:
• Market risk premium = 13.3% (Source: Survey MRP used in 2010 by Analyst and
Companies)
• Equity Beta = 0.3
• Risk-less rate (Risk free rate) = 3.25% (Source: What is the risk free rate? A Search
for the Basic Building Block)
For more precise justify, we take another discount rate of 13% - interest rate at bank to
compare this investment to others and 15% which is higher than the interest rate to show the
project profitability.
b. Calculation
Cost ($250,000)
CF1 102369.10
CF2 139311.56
CF3 159478.89
CF4 176928.41
CF5 196618.45
IRR 0.47
For all discount rates, we get back positive outcome. That means this project is accepted.
Moreover, to be more accurate, we analyze our business with the calculation of the NPV. The
result indicates that from year 2 to year 5, we not only can pay back for the investor but also
can get the health net cash flow. These figures are already considered the impact of the
inflation of the money. For sure, the money that the investors invest today will not be the
same value in 5 years later because of many factors including the inflation. However,
according to the NPV value, our business still can get the positive number (>0) even at the
NPV factor at 7.24%, 13% or 15%.
Therefore, we believe that the investing to our franchisee is the potential way for you to have
more profit and many benefits. Since our franchisee not just only brings back to you the
profit, it also brings the goodwill and other benefits for the investors.
By calculating many formulas in order to assess the well being of the investment and predict
the health value for this opportunity, we are proved that investing to us is the right decision
to get more benefits than other investments..