Franchise Owned Franchise Operated Model – HAWTE

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In a world full of competitive foodies’ hub comes this latest joint that will win your hearts. Experimental more than you can think of and quality conscious beyond measures, the ice creams at Hawte are made in slow churned process right in front of you and have some of the most unique flavours. Options like Bloody Berry, Chocolate Bourbon, Nougat Praline, Snickers are just very common here and you are definitely going to be spoilt for choices!

THE IDEAL LOCATION AND THE AREA REQUIRED

The total area required to do the set up of the franchise is 180-200 sq. ft carpet area. The store must be located in a busy street, high street, mall or residential complex with good visibility. Pre-approval of the store specifications has to be taken from the brand so that the store set-up can be efficiently carried out.

PRE-REQUISITES FOR STORE SELECTION

The store has to have the following facilities:

  • 12 to 14 feet width inside the store
  • Mezzanine would be an added advantage
  • Provision of drain
  • TMC water supply
  • Society must approve late night operations restricting to 1:00 am
  • Parking facility is an added advantage
  • Outside seating space could be accommodate if permitted by the society
  • Licenses and Government permissions?
  • The Franchise must be GST registered
  • Shop and Establishment license prior to commencement of operations is 
mandatory
  • Franchise must obtain FSSAI license prior to comment of operations
  • Franchise should have a current account for banking purposes

OPERATIONAL EXPENSES

All operational expenses are incurred by the franchise. It is the responsibility of the franchise to pay all dues timely to avoid complications. Operational expenses include- Salaries, utility bills, rentals, cost of raw materials, local marketing expenses, online ordering charges, Zomato clicks, Swiggy charges etc.

ROYALTY PAYMENTS TO THE BRAND

The franchise has to pay a monthly royalty of 9% of the gross sales to the Brand or ₹20,000 whichever is higher. The sales of the store do not affect the royalty payments.

GUARANTEE OF SALES

The Brand does not provide any customer base or guaranteed sales to the franchise. It is solely the responsibility of the franchise to ensure that the sales are maintained at optimum levels. The franchise can seek timely advise or suggestions form the brand to incorporate effective marketing strategies that may positively accelerate sales. However, the provided advise does not guarantee any sales or customer base.

Franchise Owned Franchise Operated Model

TRAINING FACILITY

The Franchise shall be provided with a 1-week training program where in all the operational aspects shall be covered in total. It is the duty of the franchise to ensure that every aspect of the operations is thoroughly understood and practiced during this training period to avoid any futuristic complications. Training shall be provided timely by the brand if there are any major alterations made in the operations. Extra training shall be provided by the brand only if necessary.

RECRUITMENT AND STAFFING

It is the responsibility of the franchise to recruit staff. There is a minimum requirement of 2 full time staff to operate the store efficiently. The Brand does not provide any support with recrement or staffing.

LOCAL MARKETING SUPPORT

The franchise has to do all local marketing by itself. The art works for the same shall be provided by the brand only on requisition. The brand shall require a lead time of 5 working days prior to providing the necessary artwork to the franchise. Other than local marketing the brand shall carry out central marketing for all its outlets on a larger scale however the same shall not specifically target any outlet. If the franchise feels that there is a need for specific marketing for its outlet then the brad may do the needful for additional charges. However, the marketing aspects do not guarantee any sales.

SUPPLY OF RAW MATERIAL AND FOOD COST

All Raw materials shall be supplied by the brand. There shall be 2 deliveries scheduled in a weak. The process for placing orders shall be taught during the training sessions. Food cost shall average between 25-27%. However, the cumulative cost of raw materials shall not exceed a total of 30%. All packaging materials shall also be supplied by the Brand. There shall be no credit facility provided for purchase of raw materials. The Franchise cannot purchase any raw material or packaging material for third party vendors directly.

TIME FOR COMPLETE SET UP

The complete set up of the store shall take approximately 30 days. It is the responsibility of the franchise to negotiate with the landlord to avail an extended free fit out period to make the most of the rental payment. All interior works shall commence only after the relevant NOC’s are received form the landlord, society and any other governing or managing bodies that overlook the regulations of the rented store.

MANDATORY MARKETING TIE UP’S

The Franchise has to mandatorily sign up for Zomato clicks and Swiggy integration. The charges for the same are solely borne by the Franchise. The Brand can provide support by sharing the contact details of the agents from both the companies.

PRODUCTS THAT SHALL BE OFFERED AT THE OUTLET

A range of ice-creams up to 25 flavors, ice-cream milkshakes shakes. The Brand shall incorporate any new product line or item at its own will however the training for the same shall be provided at no additional cost.

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STANDARDISATION

Brand shall have periodic audits to ensure product standardization. Any flaws in operations shall be rectified timely. There are escalation procedures outlined by the brand that shall ensure that standardization and operations are maintained to the optimum expectations of the brand at all times.

LINES OF COMMUNICATION

There shall be a CRM appointed for the franchised outlet and all communications pertaining to the specific franchised outlet shall be handled only by the appointed CRM. There are escalation steps that may be followed by the franchise if needed.

LOCK IN PERIOD AND CONSEQUENCES

There is a 3-year lock in period from both sides that is the Brand and Franchise. In case the Franchise wishes to terminate the agreement during the lock in period then the Brand has the right to take over operations along with the stock at no additional cost if it wishes to. The Franchise shall have to pay a termination fee of the entire Franchise Fees that may be applicable at that time. The termination process shall take place only after the termination is approved by the brand. The franchise has to provide a 2-month advance notice of termination prior to commencement of the termination process.

In case the Brand decides to terminate the agreement then the Brand pays the franchise the total depreciated value of the machines that are owned by the Franchise as per the invoice provided. The Brand pays the entire franchise fee as compensation of whatever shall be the amount at that time, the royalty charges shall be waved off after the provision of notice and until the termination process is complete.

RETURN ON INVESTMENT

As per projections after the 3rd month if the store averages a sale of ₹5,000/- per day @ 30 days the total turnover is at ₹1,50,000/-
From the above if the OPEX is deducted as follows:

  1. Food cost @ 30% = 45,000/-
  2. Wage Cost @ 16% = 24,000/-
  3. Over heads @ 20%= 30,000/-

Balance NET profit = ₹1,50,000 – ₹99,000 = ₹51,000/-

Thus ROI @ 51,000 per month shall be achieved at 20 months (1.7 years approx.)

 

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