2. Fundamentals of Franchising
WHO GETS WHAT
The Franchisee:
• Established trademark or service mark
• Shorter learning curve than an entrepreneur
• Economies of scale.a large business network lets you compete with big chains
at low cost
• Joint advertising and promotion with franchiser
• Transfer of management expertise
• Training and support
3. The Franchiser:
• Greater access to capital thanks to franchisee fees
• Possibility of rapid expansion with low operating costs
• Access to varied skills and feedback
Fee Structure:
Licence fee is an upfront fee that you pay to the franchisor for
using the brand. For an established brand, it forms a major
chunk of the initial investment (upto 65% in some cases). It also
depends on the area you are going to operate from
Royalty is an ongoing fee you have to pay the franchiser for
using the brand. It is mostly a percentage of your gross business
(not net profit) and amounts to a sizeable chunk. Some may
charge a fixed sum also
4.
5. Why Franchising……
Given that the survival rate of a franchised business is more
than twice the survival rate of independent small
businesses, it makes sense to start your own business riding
on the back of an established and proven model.
The franchise model is a great way for a franchiser to
expand operations rapidly, with relatively low overheads
and expenses, coupled with the local expertise that
franchisees provide.
“The ship works primarily in three formats: where both
players are small, when the franchiser is big and the
franchisee is small, and when the franchisee is big and
franchiser is small.”
6.
For the franchisee, this business model makes sense:
Since he will have to spend less on infrastructure and
processes than he would have in an independent business.
The franchiser helps the franchisee establish and get over
teething troubles and franchisees are free to grow their
operation.
Expanding business and revenues is what matters the
most.
A franchisee is in an ideal position to make profits, since
the business he is entering has already been proven to be
successful.
8. Pizza Market
Market Size - 2300 cr
CAGR- 25%
No one in India-Dominos- 67% Mkt Share
No two- Pizza Hut
Non-Veg Offering Contribute-30%
http://timesofindia.indiatimes.com/india/Vegetarian-
has-biggest-slice-of-pizza-
pie/articleshow/25967622.cms
9. BacKground
Pizza Hut entered India in 1996, and opened its firstrestaurant in
Bangalore. Since then it has captured a dominant and significant share
of the pizza market and has maintained an impressive growth rate of
over 40 per cent per annum.
Pizza Hut now has 95 outlets across 24 cities in India; and employed
nearly 4,000 people by end of 2004. Yum! has invested about US$ 25
million in India so far; this is over and above investments made by
franchisees.
Yum! Brands Inc is the owner of the Pizza Hut chain worldwide. A
Fortune 300 company, Yum! Brands owns Kentucky Fried
Chicken, Pizza Hut, Taco Bell, A&W and Long John Silver’s restaurants
worldwide.
Yum! generated more than US$ 25.9 billion in worldwide sales in the
year 2003, and has more than 33,000 restaurants in over 100 countries.
2014: 320 outlets of Pizza Hut in 60 cities of India.
27% market share.
10. Pizza Hut Franchise
Pros
Ranking - Ranked No. 1 in its category in 2008.
Multi-Branding - Yum! Brands is the worldwide leader in
Multi-branding.
Cons
Operations - Can take up to 46 weeks to open the first
store, but it's probably worth the wait.
Pizza Hut Franchise Information
Business Established: 1957
Franchising Since: 1959
11. Franchise In India
How to Start Pizza Hut Franchise in India:
Investments, Cost & ROI, application process
Eighteen years have passed since the first opening of
Pizza Hut franchise in India,
Pizza Hut is a property of the Yum! brand, and remains
to be one of the top ten food franchises in India.
Starting a Pizza Hut franchise in India can be an
excellent business plan because of the international
reputation of all Yum! brands, an ever increasing
popularity among consumers.
12. Why starting a Pizza Hut franchise in India is a good business
idea?
The precise answer is, due to the enormous growth in the last few years
that has led Yum! corporation to start the separate Yum! Restaurants
India back in 2011.
As of now, it runs more than 220 KFC franchise in India, alongside
320 Pizza Huts and more than a hundred Pizza Hut Home Service
Units.
The third Yum! brand, Taco Bell, is also entering the Indian
market (yes, starting a Taco Bell franchise in India is yet another good
option). Pizza Hut has also been ranked as the #1 most trusted food
franchise in India by The Economic Times.
It has a good future for sure as the Indian QSR
industry is expanding fast.
13. India is one of the fastest growing markets in the
world.
The organised segment is valued at about 8,000
crore, growing 20%-25% a year. "Global chains are
looking for more control of India operations and want
more share of the value creation of their brands,”
14. Investments: Cost of starting Pizza Hut franchise in India and
ROI
Indeed, the cost of starting a Pizza Hut franchise in India is quite high.
In the United States, minimum investment required for opening a
Pizza Hut franchise would be something around $350000 to $400000.
Translated into Indian currency at the prevailing rates, that means
nearly 2 crore rupees.
The initial franchise fee is 25 thousand USD, or nearly 14 lakh rupees as
per the present conversion rates. Additionally, you will have to pay an
annual 6.5% royalty on your profit.
Source- franchising.com
15. For those who qualified as Pizza Hut franchisees, the
corporation will provide them multiple training
programs that will teach them how to manage effectively
this food chain business. With leadership and
management courses, franchisees will be more equipped
with knowledge which can maximize their profit.
The franchisor does not offer, directly or indirectly, any
arrangements for financing the initial investment or the
continuing operation of the franchise. The franchisor does
not guarantee the franchisee’s note, lease or obligation.
16. Training and Assistance: The franchisor will provide
Basic Operational Training to the franchisee (if the licensee
is an individual) and your managersas needed at the Pizza
Hut Express Training Center in Piano, Texas. In addition
PHI will provide training for two "Pizza Hut Champions"
from each Licensed Location before opening. A Pizza Hut
Champion is a member of management who will be
working at the Licensed Location on its work schedule. The
franchisor also will provide periodic assistance and
consultation in the proper operation of the concept, as
reasonably requested.
17. Territory: The franchisee will not receive an exclusive territory. The franchisee may face competition
from other franchisees or licensees, from restaurants that PHI owns, or from other channels of
distribution or competitive brands that the franchisor or affiliates control.
Term of Agreement and Renewal: The term of the franchise is five years for each Licensed
Location. PHI may agree to a longer term, but in no event will the Term end more than 10 years from
the Starting Date. There is currently no option to renew.
Obligations and Restrictions: The franchisee must designate two individuals as “Pizza Hut
Champions” for each Licensed Location. A Pizza Hut Champion can be designated to cover more
than one Licensed Location. The Pizza Hut Champion will be responsible for ongoing training of unit
level employees, ensuring the quality of operations at the Licensed Location, and visiting the
Licensed Location at least biweekly.
The Pizza Hut Champion most successfully complete PHI's training and must be certified by PHI as
capable of functioning as a Pizza Hut Champion. All employees exposed to the Pizza Hut Information
must sign a written agreement to maintain the confidentiality of PHI's trade secrets and proprietary
information.
The franchisee must sell only those products that PHI has approved for the Licensed Location in the
area of the Licensed Location associated with the Licensed Concept and PHI's Marks.
18. Pizza Hut's Mission Statement
We take pride in making a perfect pizza and providing courteous
and helpful service on time all the time. Every customer says, "I'll
be back!"
P. E. A. R. L. S
a) PASSION for excellence in Doing everything
b) EXECUTE with positive energy and urgency.
c) ACCOUNTABLE for growth in customer satisfaction and
profitability.
d) RECOGNIZE the achievement of others and have fun doing it.
e) LISTEN and more importantly, respond to the voice of the
customer.
19. PRODUCTS
Pizza Hut sells "Stuffed Crust" pizza, with the
outermost edge wrapped around a coil of
mozzarella cheese; "Hand-Tossed," more like
traditional pizzeria crusts.
Depending on the individual restaurant
size, Pizza Huts also may offer pasta dinners
such as spaghetti and Cavatini – a mixture of
Cavatelli (shells), Rotini (spirals), and Rotelle
(wheels).
20. MARKETING STRATEGY
Pizza Hut’s Says:We want to satisfy
our customerby offering them“The Best”
Be C.H.A.M.P.S(Cleanliness, Hospitality, Accur
acy, Maintenance,Product quality and Speed)
You will Find 3F’s at Pizza Hut(Fun, Friendly
and Familiarity)
