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Summary

This well known brand is opening franchises all over South Africa. A relatively low investment buys you a complete turnkey operation. This franchise operates a retail concept specialising in Montagu dried fruits and nuts, Jams, Chutneys and Sauces, Olives and Muscadel. A total product range of more than 120 products.

1. History Background

Fully describe the business's activities?

Montagu Dried Fruits and Nuts was established 20 years ago in the town of Montagu and it produces quality dried fruits and nuts. To expand its distribution Montagu Trading Company established 10 independent operations over the past two years and used these outlets to sell their quality products in a retail environment. The success that were achieved through these operations has now let the company to focus on expanding its franchise concept on a national basis. Core products are Montagu dried fruit and nuts, jams, chutney and sauces, olives and muscadel, all together there are 120+ different products.

How long has the business been established?

Montagu Trading Company was only recently incorporated as an entity to oversee the expansion of the franchise outlets of Montagu.

How long has the owner had the business?

Montagu Dried Fruit and Nuts has been in operation for over 20 years and the current 10 franchises have been established over the past two years.

2. Present Market

How does the business operate on a daily basis?

The franchise concept is a small little retail environment and would typically be situated in a mall or shopping centre. Normal working hours are forseen (subject to the lease agreement) and customers will be walk in clients as well as clients that can be supplied with product on a regular basis.

How are the clients attracted to the business?

The well known brand name of Montagu Dried Fruits and Nuts is certainly the biggest selling point for all the products. It would be important that the location of a new franchise is selected with due caution in order to ensure enough walk in clients.

What Advertising/Marketing is carried out?

Franchisor does operate a website and assist with all the correct packaging of the products. It will however be a function of a new franchisee to market his/her business effectively. Each outlet is supplied with signage and a corporate identity this is included in the initial franchise fee. Also included is a pre-opening local advertising campaign (at actual invoice value) being paid for by the franchisor to introduce the new franchise to the local market before opening.

What are the seasonal trends?

The franchisor will not be able to provide seasonal trends for each town or area where it wants to establish a new outlet. It would be important for each potential franchisee to investigate these trends himself.

3. Financial

Are there up-to-date Management Accounts available?

The figures provided are projected numbers based on the earnings of all the current franchisees. Turnovers will be different as per the shop size of each outlet.

What percentage of of the business is cash/credit?

This is a retail operated and mostly cash.

How could the profitability of the business be improved?

With approval from franchisor other products such as bottled water and similar product lines can also be introduced in each franchise outlet depending on the market.

What is the payback period?

20 Months.

What is the ROI?

The franchisor has budgeted for a 60% return on investment.

4. Staffing

What is the total staff complement?

On the budgeted numbers it is foreseen that the franchisee is also the operator of the business and there is no costs budgeted for salaries or wages.

How involved is the Owner in running the business?

This franchise concept is based on the assumption that the franchisee/owner will also be working in the outlet. It should be stressed that a 100% owner involvement is encouraged.

5. Premises

When does the current lease end?

For each new franchise a new lease agreement in a suitable mall or centre should be negotiated. Typically landlords will require a 3 year lease agreement with 2 months deposit.

What are the trading hours?

Being a retail outlet normal trading hours will apply but will vary from once centre to the next. A new franchisee can expect to be open 7 days a week.

What is the square meterage of the business?

There are 3 franchise options: A smaller shop size requiring 35sq/m; an average shop size would be 45sq/m and a bigger outlets would require 50sq/m. (It is important to point out that the cost per square meter has been calculated from R170 - R200 per sq/m.

What lease deposit and/or other surety is required?

The business plan of a new franchise also includes R10 000 for a rental deposit and a further R3000 for electricity deposit. A potential franchisee may also budget a further R500 for a phone line and another R500 for stationary. As a potential new franchisee you should calculate your own working capital requirements depending on your shop size.

6. Assets

Is a full asset list on file?

There is a full asset list available. Montagu Trading Company only invoices a new franchisee for the exact amount paid for shop fitting, computers, software, signage, initial stock and local advertising.

Are any items not included in the sale?

Working capital must be provided for. Depending on the legal entity that a new franchisee will use the cost of setting up a new company is also for the account of the new franchisee.

What is their overall condition?

All the assets will be brand new.

How have they been valued. ?

A new franchisee will only pay the real cost of shop fitting, computers and software. Montagu Trading Company will ensure that the best possible prices are achieved for each franchisee.

7. S.W.O.T. Analysis

Strengths?

Well recognized brand name. Neatly packaged products. Easy to operate business.

Weaknesses?

New franchise.

Opportunities?

With good marketing a new outlet can certainly increase the projected turnover. This is a perfect opportunity for an individual that struggles to find employment and is willing to work in his/her own business.

Threats?

A franchisee should be careful to setup in a newly established mall and should make sure that there is enough "walk-in trade".

8. Reason For Sale

What is the reason for the sale?

Montagu Trading Company is busy expanding its retail operation in order to grow its sales of all of its quality products.

9. Conclusion

Why is this a good business?

There is no monthly franchise cost/royalty for the first 5 years there after the franchisee shall pay 4% of the gross turnover on a monthly basis. The benefit for the owner is that he will be selling a recognized quality brand of product and will be able to operate his outlet as he deems fit.

What is the price plus stock and the net profit?

The price for a new franchise is R385 000 which includes stock of R80 000. The projected monthly net profit is R19 000 p/m plus. The price include training and development, computer hardware and software, and shop fitting cost. You can open your brand new store and start trading for only R385 000.