5. Pros
of
Franchising
Probability of success
Proven line of business
Pre-qualification of franchisee
Overall lower failure rates
Operating benefits
Location feasibility study
Marketing assistance
Quick start-up time
Training
Franchisor-
provided
Financial
assistance
Loans & loan
guarantees
6. Cons
of
Franchising
Franchise costs
Initial franchise fee
Investment costs
Royalty payments
Advertising costs
Restrictions on business
operations
Hours of operation
Restrictions on expansion/growth
Franchisor only source of supplies
Lack of
franchisor
support
Termination/renewal
clauses
Loss of
independence
9. Do You have
Patience?
a) Prefer getting results
quickly
b) Can slog for years to
make my dream
How good is your
marketing?
a) Don’t know to make a
flyer or ad
b) Kotler is my middle
name
Willing to put 18
hours a day?
a) Maybe less due to
work life balance
b) What is sleep?
Do you have a
Vision?
a) Know what to but not
where to start
b) Business blueprint is
ready
How much are you
willing to invest?
a) 50% of savings
b) Go big or go home
Do you like taking
risks?
a) I m adventurous as
long there is safety
b) I live on the edge
Are you Financially
savvy?
a) Know only basic Maths
b) Can handle Balance
sheet, P&L, tax receipts
Are you a Team
Player?
a) I m willing to take
advice and help
b) I m a control freak and
want to do my way
12. Understanding MMT’s flight to Success
•MMT’s franchise partners are a part of MMT’s hybrid expansion model to help
serve those consumers who are more comfortable planning holidays offline.
These are typically consumers looking for personal interaction and would not
have ideally opted for the online option.
Targeting ‘Click
Averse’ Customers
•Access to key Indian markets such as Ahmadabad, Kolkata and Bangalore.
•Looking to expand further in cities such as Mangalore, Gandhidham, Kolhapur
and Patiala through the franchising route.
Strategy for
geographic expansion
•Service quality is one of the most important factors that differentiates MMT’s
franchise partners with key competitors such as offline travel agents.
•This is enabled through franchisee training which includes:
•Standard training on products and destination guides
•Close involvement if MMT’s service delivery team with the franchisee
•Periodical trainings before peak holiday season
•Consistency in service quality is maintained through regular audits at the
franchise outlets
Focus on quality
•Few important criteria for MMT’s franchisee appointment include:
•Passion for travel industry
•Proven business track record and management skills
•Ability to invest the necessary capital
Associating with
the right partners
•To enhance demand, MMT supports its franchise partners through:
•Designing stores optimally
•Managing store launch and creating awareness in the area
•Carrying out local promotional activities such as road shows and mall events
Other support
13.
14.
15. Attractive Franchise Propositions
Investment Area Required Other
Rs 20 – 25 Lakhs 1200 sq.ft. Near NH/SH
Investment Area Required ROI
Rs 30 – 40 Lakhs 1200 - 1500 sq.ft. 2 – 3 years
Investment Area Required Royalty
Rs 4 – 8 Lakhs 2200 sq.ft. 15%
Investment Area Required Royalty
Rs 25 – 30 Lakhs 170 - 350 sq.ft. 3.5 - 8%
Investment Area Required Royalty
Rs 2 – 5 Lakhs 300 - 700 sq.ft. Nil
17. Good Reasons to Purchase an Existing Business
easier route if the
entrepreneur has limited
business experience
established trade
credit
less risky than
starting from
scratch
loyal customers
and reliable
suppliers
a price below what a
new business or
franchise would cost
begin a business
more quickly
18. Pros of Buying an Existing Business
• Higher chance of success
• Less planning
• Existing customers/ suppliers
• Necessary equipment
• Bargain price
• Experienced employees
• Existing business records
Advantages
19. Cons of Buying an Existing Business
• Existing problems
• Poor quality of current
employees
• Poor business image
• Modernization required
• Purchase price based on
inaccurate data
• Poor business location
Limitations
20. What to Look For in a Business
• A business that had a broad scope that would
insulate it from market downturns.
• A business with existing customers and vendors
• A low-tech business but with high growth
• A market that was not so large so as to encourage
major players but not so small that the company
couldn’t grow.
• Available float from suppliers; in other words, leeway in
having to pay vendors.
• Manageable seasonality
• Cost cutting potential
21. Find Out Why the Business Is For Sale
• Owner’s stated reasons for selling the business
– Poor health or illness in the family
– Wants to retire while he can still enjoy life
– Desires to relocate to a different section of the country
– Has accepted a position working for another company
– Wants to start a new business in a different industry
– Has to sell the business to generate funds to settle a divorce, lawsuit, etc.
Beware of sellers who may have priced the business at more than its worth, or who have
“cooked the books” to make the business appear to be more attractive than it really is.
22. The REAL reason the Business Is For Sale
• Larger companies are squeezing the firm out of the market
• Key employees have been leaving
• The industry is very mature and there aren’t any new ways or
places to grow
• Competitors’ products (or services) are superior
• The business has developed a negative reputation in the
community
• The firm is facing a pending lawsuit
• The business is just not profitable
• The physical facilities are old or obsolete and in need of
major renovation/repairs
23. Valuing the Business
Estimates the value of the
firm’s assets; does not
reflect the value of the
firm as a going concern
Asset-Based
Compares the expected
and required rates of
return on the amount of
capital to be invested in
the business
Cash flow-
based
Considers the sale prices
of comparable firms;
difficulty is in finding
comparable firms
Market-
Comparable
25. Do Your RESEARCH!
Develop a set of criteria for judging the business
based on the entrepreneur’s needs and goals
Understand the industry and the market niche in
which the business will operate
Examine the records of the business
26. More Ways to RESEARCH!
Talk to employees, suppliers, and customers
Verify the value of the business based on
industry statistics and perhaps the advice of a
professional business appraiser.
Examine all contracts
Examine equipment and facilities to make certain
they are current and in good working order
28. WHAT IS AN ANCILLARY UNIT?
An industrial unit which is engaged or is proposed to be engaged in the
manufacture or production
Parts Components Sub- assemblies
Undertaking
supplies
Whose investment in fixed assets, , does
not exceed Rs 75 lacs.
Proposes to supply or render not less than 5o percent of
its production or services, as the case may be, to one or
more other industrial takings,
29. An Overview
• Started with the Govt. setting up enterprises almost in all the core sectors viz. manufacturing
equipment for Defence/ Railways/ Telecommunications, Heavy Electricals, Electronic,
Chemical, Fertiliser, Petroleum/ Petrochemicals, Ship & Aircraft etc.
• The large industries notably HMT and other Public Sector undertaking (PSUSs) started sub-
contracting the standard and low technology items to SSI’s which developed a sound base of
ancillarisation.
• Bureau of Public Enterprise in consultation with Small Industries Development Organisation
(SIDO) framed the guidelines in 1978 for Proposing linkages between small & large Industries
through ancillarisation.
• PSUs were required to concentrate on core activities of design, development, research and
manufacturing critical items thereby sub-contracting the standard items
• Large industries in private sector such as Telco, Escorts, Eicher, Ashok Leyland, Mahindra &
Mahindra, have also developed a chain of their ancillaries and major percentage of their
components are sub-contracted.
• SIDO proactively promotes ancillarisation through its vender development programmes and
sub contracting exchanges.
30. Classification of Ancillary Industries
Monotype
Normally cater to the requirements
of one parent unit only
Poly type
Normally cater to the needs of a
number of parent units
Indirect operation
Conducting supplies through the
organization, often operating as
commission agents or dealers
31. Minimizes set up cost
Low level of Inventory
Economical Sourcing
Better Quality Standards
Complementary Role
Development of
Entrepreneurial Skills
Dependence on parent
company
Obsolescence
Multiplicity of suppliers by
parent company
Securities like earnest money
deposit
Delay in receiving payments
ConsPros
