Individual Assignment- franchising PDF

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INDIVIDUAL ASSIGNMENTBFT212 BUSINESS FRANCHISING AND LICENSINGSEMESTER 2 2020/Name: KAJASHINE A/P GOPAL KRISHNAN No. matric 201240283Class 22APrepared for: MADAM. SRI SARAH MAZNAH MOHD SALEHDate of Submission: 4 th JUNE 2021TABLE OF CONTENTCONTENT PAGE NUMBER11 REFERENCE 1 INTRODUCTION OF TEALIVE AN...

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INDIVIDUAL ASSIGNMENT

BFT212 BUSINESS FRANCHISING AND LICENSING SEMESTER 2 2020/2021

Name: No. matric Class

KAJASHINE A/P GOPAL KRISHNAN 201240283 22A

Prepared for:

MADAM. SRI SARAH MAZNAH MOHD SALEH

Date of Submission:

4th JUNE 2021

TABLE OF CONTENT

CONTENT

PAGE NUMBER

1.0 INTRODUCTION OF TEALIVE AND GONG CHA

1

2.0 BACKGROUND

2

2.1 Tealive

2

2.2 Gong Cha

3

3.0 INDUSTRY WITH MOST GROWTH

3

3.1 Tealive

3

3.2 Gong Cha

4

4.0 FEASIBILITY OF THE BUSINESS TYPE IN THE SPECIFIC LOCATION OR GEOGRAPHICAL AREA.

4

4.1 Tealive

4

4.2 Gong Cha

5

5.0 AMOUNT OF CAPITAL NEEDED

5

6.0 KNOWLEDGE AND MANAGEMENT SKILL

5

7.0 FINANCIAL STATUS AND REPUTATION

6

8.0 FRANCHISOR SUPPORT

7

9.0 COMPARISION OF TEALIVE AND GONG CHA 10.0 CONCLUSION 11.0 REFERENCE

1.0 INTRODUCTION

8-10 10

A franchise or franchising is a way to distribute products or services that involves a franchisor, who establishes the brand's trademark or trade name as well as a business system, and a franchisee, who needs to pay a royalty and, in some cases, an initial fee for the right to do business under the franchisor's name and system. The “franchise” technically refers to the contract that binds the two parties, but it is more generally used to refer to the franchisee's real business. Franchising is a term used to describe the process of developing and spreading a brand and franchise system. Franchises are a good pick for entrepreneurs to establish a business, particularly in a competitive industry like fast food. Thousands of people are now able to be their own boss and run their own business because of franchising. Franchising empowers entrepreneurs to work for themselves, but not alone. Since a proven business strategy is in place, starting a franchise rather than a mom-and-pop business usually has a considerably greater chance of success. As I want to launch a franchise business in my area, I plan to join a franchise company and become a franchisee. Since there are so many Malaysian and international franchise companies, I'm struggling to decide which one is the best. To help in making the final decision, I decided to differentiate and identify a Malaysian and an international franchise company with the most potential for me to join and start my own franchise. So, I have selected Tealive for Malaysian franchise company and Gong Cha for International Franchise company.

I

Malaysian Franchise International Company Franchise Company have come up with a few criteria for evaluating and identifying the best franchise opportunity that would be helpful to me if I want to become a franchisee. The points are evaluation of industry or industries with most growth potential, feasibility of the business type in your specific location or geographical area, amount of capital needed in becoming a franchisee of the selected franchise companies, knowledge and management skills needed to start and run the specific selected franchises, financial status and reputation of the selected franchise companies and franchisor support provided by the selected franchise companies. 2.0 BACKGROUND OF TEALIVE AND GONG CHA

2.1 Tealive Tealive is a Malaysian brand with over 150 locations with almost 70 different tea beverages on the menu. Bryan Loo, the chief executive officer of Loob Holding Sdn Bhd, founded this business. Chatime was the previous name for Tealive. Loob Holding's agreement as the main franchisee holder of Chatime was terminated in early 2017 by LaKaffa, the Taiwanbased organisation behind Chatime, due to the different perspectives on commercial implications for Chatime Malaysia. He launched Tealive Malaysia in 2017, due to disagreements with Chatime Malaysia's franchisee, La Kaffa. Before launching Tealive, he opened his first tea outlet under the Chatime franchise, which he started in 2010 and they only operated a single location. In Pavillion, Kuala Lumpur, a small store was opened. The Loob Holdings was his only asset at the time, and it became one of the elements in his ability to manage the Chatime effectively. He has the potential to lead the Chatime franchise throughout Asia, as evidenced by the fact that he has opened over 100 shops, but unfortunately, the owner of Chatime Malaysia, La Kaffa, has terminated their partnership with Loob Holdings. After the incident, he moved on and decided to start his own business which is Tealive Malaysia. His new business started with RM480,000 in capital, and he made over RM10 billion in monthly earnings. He has branded his business in a few countries, including the Philippines, the United Kingdom, Vietnam, and many others. One of the reasons he founded this business is to ensure that the tea café follows the same route as the coffee café. For instance, he wanted to develop a tearista in the same way that a coffee shop had a barista. He has successfully managed 600 outlets and has over 2000 employees working for him. The most significant success is that he's still able to gather such a large team to ensure that his company's finances are solid in the future so that it may plan for increased earnings. His loving father, Loo Chu Lin, who is also in the air-conditioning company, provided him with the inspiration and entire support he needed. His father was always willing to share his experiences, particularly when it came to business issues. His wife also played a major part in this business by assisting him. He will ensure that all of Tealive's clients are happy and satisfied with the services provided. In addition, he received various honours in recognition of his achievements.

2.2 Gong Cha

Gong Cha, which means as "tribute tea for the emperor," was founded in 2006 in Kaohsiung, Taiwan, and entered a highly saturated bubble tea market. In 2009, a Hong Kong native who had spent the previous five years in Taiwan opened the first Gong Cha store in Hong Kong. By private backings, Euiyeol Kim, owner of Gong Cha Korea, Gong Cha's Korea franchisee, purchased 70 percent of the company in 2017. It had roughly 46 outlets in Hong Kong as of 2012, mostly at MTR stations and shopping malls, but that number has since reduced to five due to a loss in business following various health and safety problems. Gong Cha offers a total of roughly 57 beverages, separated into seven categories: house favourites, brewed tea, milk tea, "Creative Mix," coffee, "Healthy Series," and ice smoothies. Gong Cha is an international bubble tea chain that founded in Kaohsiung, Taiwan in 2006 and has taken Malaysia's neighbouring countries by storm since 2009. Gong Cha is now the fastest-growing brand in the world, with over 1,500 outlets in South Korea, Japan, the United States, Canada, and other countries. Gong Cha was officially introduced to Malaysia by Teafe (M) Sdn Bhd in April 2011 and quickly became a great success. Many brands have proceeded to close their outlets in a market which Gong cha has grown increasingly crowded with bubble tea franchises. Gong Cha, on the other hand, continues to operate smoothly and maintain stringent quality control over its products.

3.0 INDUSTRY WITH MOST GROWTH POTENTIAL Tealive Tealive have a good growth potential because of the brand. Brand is considered as important matter for a product as the name and design will make it more easily to be identified and recognize by the customer. Tealive brand becoming one of the most demanded bubble tea drink in the market. The company's strengths include a well-known brand in Malaysia, a new and innovative image, a huge distribution network, and market knowledge and connections in the local market. Tealive has locations throughout Malaysia, including in Sabah and Sarawak. Customers will be able to easily purchase Tealive beverage products as a result. Customers that buy Tealive get a lot of benefits. Customers who wish to try Tealive beverage drinks may buy them in a store or purchase them online from sites like GrabFood and Food Panda. Customers will have greater access to Tealive goods, and the Tealive market will develop as a result. It also has high local market knowledge and connection because of the six years of experience in previous business. Tealive has a lot of connection in the bubble tea market

especially among the supplier and customer that has visited the outlets. Tealive is the largest Tea Beverage Company in Malaysia which is 200 outlets in its home market. The growth factor of the Tealive company is its unique tea, coffee and juice innovation, always make a new promotion and discount, and fast order (20 sec per glass). Gong Cha Gong cha have a good growth potential by its nearly 1,500 outlets around the world, the popular bubble tea chain became a sensational icon associated with pop culture. Gong Cha offers unique drink customisation services for its customers' preferences. It is rich, flamboyant, creative, and brewed with premium quality. Being one of the top famous brand’s milk tea-brand in Asia, Gong Cha has a long history of stable development and non-stop innovation such as freshly brewed tea leaves, high-grade ultraviolet filters and sugar and ice options. Next its low cost of goods with high profit, good quality tea and pearls with friendly customer service and high-quality drinks for the entire menu is the reason of Gong cha growth. A growing number of international companies, particularly from Singapore, are interested in breaking into the sector. 4.0 FEASIBILITY OF THE BUSINESS TYPE IN THE SPECIFIC LOCATION OR GEOGRAPHICAL AREA. Tealive Tealive has emphasize its outlet all over the Malaysia. Tealive mainly located its outlet in shopping mall, near petrol station, hotel, airport, and train station. Many locations offer driveup service. In my location, Tealive is feasible. It is because tealive's popularity can attributed to their unique approach and located in strategic area, easier for customer to get it. Tealive's approach has always been to focus on three basic things which is high convenience, high affordability and high quality of the products on their menu. Gong Cha Gong cha emphasize four states in Malaysia, which is Klang, Johor, Penang and Melaka because of economy and population rate. Gong cha mainly located in shopping malls to attract the customers. But in my area there’s no Gong cha shop because I am located in Kedah. I think Gong cha is not feasible in my area and it has a fewer outlet in Malaysia

because of its indistinguishable packaging to other competitors, thus creating confusion among consumers. 5.0 AMOUNT OF CAPITAL NEEDED Tealive requires an initial capital investment of RM250,000 to RM480,000 to open the one outlet. This is based on the size whether small, medium, or large that is appropriate for the company's needs. Franchise fee will be RM75,000 and 3% of royalty on the gross fee which includes marketing as well as Advertising and Promotions. While Gong Cha’s capital starts from RM300,000 to RM498,000 to open the one outlet. Franchise fee will be RM30,000 and also includes 6% of royalty fee. 6.0 KNOWLEDGE AND MANAGEMENT SKILLS Problem-solving is an important skill in management. A successful manager must be able to deal with and handle the many difficulties that might emerge throughout the period of a typical workday. In management, problem-solving is identifying an issue or situation and then identify the best way to deal with it and come with the best solution. Tealive’s management good in problem-solving. This is proven when everyone is working for a few weeks without taking a break to celebrate Chinese New Year and Valentine's Day during the rebranding of Chatime to Tealive, the process of introducing the Tealive brand can be seen quite clearly. It also has extensive local market knowledge and connections as a result of the six years of experience it gained while still under the Chatime. While for Gong Cha, the number of stores has reduced, due to a drop in sales caused by several health and safety issues. As a solution, gong cha management sets the price lower and improving health and safety like self-custom sugar level and has complete control over it. Planning skill are defined as the capacity to think about and successfully manage activities to accomplish goals using any available resources. Identifying and setting achievable goals, formulating appropriate methods, and detailing activities and schedules to achieve the specified goals are all part of the planning process. There isn't much that can be done without a clear plan. By their planning skills, Tealive has already implemented various flavours to complement its existing beverage lineup, including the Durian King Smoothie, which sold out in less than two weeks. Since then, they've brought Vietnamese coffee to their Malaysian market. There are the drinks that come as a result of their collaboration with Horlicks. So, planning skill in tealive helps in the development of competitive strategies.

While planning skill in Gong Cha has shown when Gong Cha earned a profit in 2009, and the company developed steadily over time. As a result, Gong Cha begins to grow its plant, increase the number of branches, and grow throughout Asia, including Singapore, Malaysia, South Korea and other countries. By this we can that without a good plan, we cannot achieve anything. But in Malaysia they fail to expend their business due to heavy competition. 7.0 FINANCIAL STATUS AND REPUTATION Financial Status refers to the category of income that applicants are classified to in order to determine the extent to which they are eligible for financial assistance. Reputation is a person's subjective qualitative opinion of a brand, person, company, product, or service. For Tealive, according to Loob's financials, the company has been growing on the top line. Loob's revenue increased from RM68.06 million in the financial year ended June 30, 2017 (FY2017) to RM86.15 million in FY2018 and RM180.4 million in FY2019. According to CTOS data, net profit during the same time was RM2.36 million in FY2017, RM1.96 million in FY2018, and RM29.88 million in FY2019. Tealive has a high reputation in this society. One of the best awards he has achieved is the Best Master Franchise in 2012 and also got the title of “Emerging Entrepreneur of the Year” at the Ernst & Young Entrepreneur in 2013. The other award was Best Employers Brands Awards in 2019. One of his goals for the future is he wanted his own company will be conquered the F&B (Foods and Beverages) industry at all around the world. While in the United States, Gong cha franchisees have already generated $898,370 in average gross revenue for the top quartile in 2019.Gong cha has a track record of successful growth, with revenue and EBITDA increasing at a CAGR of 43 percent and 70 percent, respectively, from 2016 to 2019. The award had proved that Gong Cha has high reputation in this society. For an evidence, Gong Cha, Singapore’s bubble tea pioneer, has been awarded the Gold Award under the Pearl Milk Tea category in the Trusted Brands Awards 2020 by Reader’s Digest, the first year that this category is introduced. 8.0 FRANCHISOR SUPPORT Prospective franchisees would prefer to buy a business where everything is already set out for them rather than starting fresh and doing everything themselves. They also want to buy a business where they will be provided encouragement, guidance, support, and training to support them build the business. They don't want to struggle to learn the ropes of running the business on their own. They desire a mentor and a strong support structure to guide them through the process. Franchisees need introduction and continued training from

franchisors, as well as on-site or on-the-job assistance, branch visits, conventions, and newsletters. The sort of assistance supplied varies by business, but the bottom line is that franchisees seek franchise advice to assist them in a variety of areas, the most essential of which are operations and marketing. As a franchisor Tealive will give support to its franchisee so that franchisee will be able to run the business effectively. There will be a 7day franchise business course which will be conducted throughout the year. The Initial Training Programme is a must which should be participate by the franchisee candidate. They train 50-100 individuals every month, and they aim on training quality at all times. Blackbox Insights is used to monitor operations and get a thorough overview of current activities while making accurate business decisions. Employees in various places can be educated using e-learning systems such as the Loobies mobile learning application. The learning app, which is available on the Google Play Store and Apple Store, includes videos on how to brew tea based on standard operation procedures, as well as facilities to speed up the learning process among employees and reduce logistic costs of training for employees. A 10% incentive from the highest sales is awarded. Tealive has a strong field support team comprised of franchisees, developers, builders, and marketers. The company has a lot of expertise with franchise prospects, helping with everything from project development through implementation and ongoing product line training to the outlet with the highest accumulative sales during the annual Conference. Advertising and Promotions includes in 3% of royalty on the gross fee. Gong Cha, on the other hand, would provide complete assistance to its franchisees, since one of their aims is to assist franchisees in achieving excellence in all aspects of the business. In order to achieve these objectives, Gong Cha would provide extensive training covering all aspects of the business. Day-to-day restaurant operations, hiring, training, and retaining good personnel, and maintaining financial controls are examples of training that will be provided. In order to build a good franchisee connection, Gong Cha emphasises the significance of open lines of communication. Since the first franchise, new technologies have transformed the outlook of franchising. The franchisor will keep an eye on the business and assist the franchisee in maintaining a consistently high level of customer service. They also assist in the promotion of the company by efficiently promoting the brand inside the zone. As the franchisor, they must assist the franchisee in setting up the point of sale system so that sales can be tracked properly. 9.0 COMPARISON OF TEALIVE AND GONG CHA

Malaysian franchise company

International franchise company

Tealive is a drink and beverage industry.

Gong cha is a drink and beverage

Tealive is considered for one of the most

industry. Gong Cha is an international

well-known bubble tea brands in Malaysia.

What type of

bubble tea chain that founded in Kaohsiung,

Tealive is currently available in over 520

business or

Taiwan in 2006 and has taken Malaysia's

places all over the world, including Malaysia, China, Vietnam, Myanmar, Brunei, the

industry

neighbouring countries by storm since 2009.

interests you?

Gong Cha is now the fastest-growing brand

Philippines, Australia, the United Kingdom,

in the world, with over 1,500 outlets in South

and more.

Korea, Japan, the United States, Canada,

Tealive have a good growth potential

and other countries. Gong cha have a good growth potential by

because of the brand. Brand is considered

its nearly 1,500 outlets around the world, the

as important matter for a product as the

popular bubble tea chain became a

name and design will ma...