3.

1 Aspects to develop a Franchise

Aspects to develop a franchise and must implement by the franchisor.

• Support and Training refers to the responsibility of the Provider to assist

Customers in their usage of the Services, as outlined in any Order Form.

• Transparent financial forecasts - Financial projections forecast the future revenue

and costs of your company using actual or estimated financial data. They frequently

provide many scenarios so that you may understand how alterations to one area of your

finances (such increased sales or decreased operating costs) might impact your

profitability.

• A distinct brand identity - A brand's visual components, such as its color, design,

and logo, serve to distinguish it from competitors in the minds of consumers. Consistent

branding, messaging, and sales are the results of consistent marketing.

• Consistent goods or services - Every firm must be consistent in order to succeed.

Your clients may anticipate a consistent, high-quality experience every time they buy

your products if you deliver on that promise. This boosts consumer confidence in your

company and can significantly affect how many things you sell.

• A formula for success - The success equation's two components are habits and

goals. Effective habits provide you the mental discipline to attain your goals while goals

give you a feeling of direction and aid in focus. In the absence of either variable, the

success equation cannot be solved.

3.1.1 Strategic Plan (Cost and Income Estimation)

Mission Statement

The mission of the sit n knit company is to meet the needs and expectations of our

valued clients so that we can achieve our own goals of customer satisfaction. To ensure

that orders are placed on the agreed-upon date, please follow the points that we and

the customer discussed regarding the goods they ordered. Their order will arrive on

time and in good condition.

Vision Statement

The Sit n Knit company is doing everything possible to live up to the expectations of its

customers for the handmade and labour-intensive product they have purchased from Sit

n Knit production. The company's vision is to be known not only in our local community

here in Cainta but also throughout other regions or in other countries

Long term Goals

Over the next two years, we will raise our overall revenue by 8 to 10% in order to

maintain the Sit n Knit company, also known as the crochet product. Additionally, over

the following three years, we will cut our expenses by 3 to 5%. We have discovered

direct vendors who help us manufacture the products, therefore we anticipate having

lower costs.
Action plans

We always schedule a meeting with my business partner when we are performing our

strategic planning. We make certain that the topics we discuss will benefit our company.

We attempt to respond to questions that will help us describe the current state of our

company at the initial meetings, such as "Where are we now? and Where are our

competitors? This issue may offer a bright future for the company.

Improved client satisfaction is one of our key strategies. Every time we get a

commission from a consumer, we ask them to give us feedback on the product they

purchased so we can figure out if there is anything we can do to make it better.

Individuals from outside our company will have a distinctive viewpoint on not only our

company but also the sector in which we operate. Your strategic plan can be put

together with their input on the direction they believe the industry is taking and what

they anticipate changing in the future.

SWOT ANALYSIS

STRENGTHS Weaknesses

· No inventory of ready-made garments · Time consuming co-design process

· No seasonal sales · New product hesitation

 · Price, values and quality · Lack of brand recognition

· High quality of products · Hard time letting go of project

· Good customer service

· Easily accessible

Opportunities Threats

To develop co-design product · Limited design option available in

YouTube
· Product expansion
· Customer can’t wait to get their orders
· Social influence
· Time consuming co-design process
· Emerging customer needs
· New design/pattern need to pay

Performance Measures

Input

Tracking costs for materials like the yarn and tools we use to produce things. You must

be aware of the cost of the purchase in order to determine whether you are making

money or whether you need to increase it.

Output

Tracking of the number of consumers and the amount of money spent on the products

we acquire
Efficiency

It is possible to track how much is produced and how many resources are used by using

efficiency measures. As shown in the section on expressing measures with two or more

variables, efficiency measures are produced by comparing input and output. And when

you have done the input and output compare them to find out how much you are

spending on the product and how many have already purchased

Unit Cost

For instance, sit n knit was used to purchase the client's merchandise.

Quality

Measures of quality are frequently developed through the comparison of outputs.

Certain components (aspects / total outputs) of the services, goods, or activities offered

by a company that are significant to its clients may need to be identified. To construct

measures of accuracy and timeliness as well as to assess the degree to which

regulatory criteria are met, specific outputs are compared to overall outputs.

Additionally, quality metrics can be obtained through the analysis of consumer feedback

information. Observe how to express measurements with two or more variables.

Cost and Income estimated

Expenses Cost Quantity Price Total expenses

Indophil Yarn Php18 50 pcs 900 900
Shipping fee Php38 38 38
= 938

Sales and Income

Product Product price Sales Total Sales

Bandana Php200 60 Php12,000

Expenses = php938

Sales = php12,000

Total income = 11,062

3.1.2 Franchise Operations Manual and Training Program

We will advertise a portion of our franchise business online on sites like Facebook,

Instagram, and Tiktok. Additionally, as our product is handmade, others will need to hire

an employee in order for us to finish the product right away and take on more

commissions. Additionally, it necessitates that my company partners attend an

orientation to learn about new orders and designs in order to fulfill customers' requests

for specific patterns or goods.

Together with my company partners, we control the product's quality and constantly

train to create fresh designs. Additionally, we are working together to develop innovative

patterns and designs.

3.1.3 Legal Document

There are two required documents in franchising a business, the franchise disclosure

document and franchise agreement.

It gives a clear picture of how the business relationship between the franchisee and

franchisor will be conducted. The franchising disclosure document, or FDD, is a

document that prospective franchisees can use to learn about franchise law and

includes information on the franchisor.

The franchisee and franchisor's contract is known as the franchise agreement.

Convenience stores, fast food restaurants, and chain dining establishments are a few

examples of companies that use franchise agreements.

3.1.4 Franchise marketing plan

A business will also need to sell franchises, which will require a specific marketing

strategy created to communicate the franchisor's message to the targeted franchise

prospect.
Our product is a customized crochet. Way back then we only producing some

scrunches but now we expanded our product. In our product menu we added swimsuit,

hat, path holder headband and some other girly things. Our product is made up of

ecofriendly materials. Our goal is to be known not just in Cainta Rizal but also in other

cities by customizing crochet. Our products usually for all the teens who loves fashion.

We offer discounts for the bulk and wholesale buyers. We also do deliver and shipping.

They can choose what design and product they want us to make in crochet. Our

customer may also contact us in our online account. We don’t have physical store yet

but they can pick up in our house located in brgy. Sto nino cainta rizal.

3.1.5 Franchise sales training

According to a British franchisee association There are 4 successful key for franchise

sales training program and these are the following:

Key 1: sales training

A good sales training franchise system does not cater to sales alone. They accept the

entire company and cater to each and every department of the company. This results in

the franchisee becoming the business and running all parts and every aspect of the

company’s operations. Once the training is complete, it is important for the members

who have gone through the training to train other employees in the company. It does not

matter what department the employee belongs to.

Key 2: operation implementation

They have to explain the entire operations and assist the new employees at every step

in the beginning. It is important that these franchises understand the entire system

before they depart their knowledge to others. The sales training franchise process may

seem long but is worth all the trouble.

Key 3: follow the system, do not reinvent the wheel

Usually people who own a franchise are entrepreneurs and have the will to buy and run

a business. However, during their sales training process, they have to work through the

entire process to understand how the operations of the company run. Companies who

have opened their franchises over the world have a very good sales training system.

These companies follow this system and are rigid with the policies they have developed.

Key 4: look into details

The become a franchisee is easier that establishing a new business from scratch and

buying service franchise is even easier, you can be up and running in a very short time.

The process requires rigorous sales training in all aspects of the operations of the

franchise. The franchisee is given a clear picture of what is required from him and the

amount of work he will need to put in to make sure that the franchise is successful.”
3.2 criteria for franchisability

3.2.1 credibility

Our management of businesses must be trustworthy. Management is crucial in the sit-n-

knit industry because it allows clients to see our professionalism in action, for example,

by letting them know how many days it would take to manufacture the product they

ordered. And we are the ones who respond to consumer issues or complaints about our

products, and if we made a mistake, we are willing to fix the product so that the

customer's expectations can still be met and so that our credibility with the customer

remains high.

Our services at sit n knit are not limited because we receive a commission, which

enables us to perform the following tasks that clients request. Next, let's talk about what

we can provide our customers in terms of services, as well as what else we can do for

them. We may make the customer's desired design, color, or style of swimwear if they

have that in mind. Because the swimsuit is handmade and not ready-to-wear like those

purchased from a store, it takes a few days to make, therefore we ask that our customer

be patient.

Due to the type of yarn we use, Sit n Knit products are of high quality, and our

customers have a variety of options, including swimsuits. For swimsuits, we use

Indophil yarn, which means that when wet, it won't be as heavy as milk cotton. Both

materials, however, are of high quality and won't itch or hurt the skin.
3.2.2. Differentiation

Our company's innovation, which allows customers to choose the design and type of

product they want to be produced in our sit-n-knit business, is how we initially became

distinctive. Because of how special and one-of-a-kind our product is, as well as the fact

that they are the only ones with it, we can be confident that people will like it. Why?

because they adhered to the client's preferred design. We'll advertise our company

online using platforms like Facebook, Instagram, and other social media. Because the

customer chooses the design, anyone can be a client, including workers or students; it

could be for their child or a sibling, or it could be a present. Because our product is

innovative in the eyes of consumers, it will be well-liked on the market. The cost of the

crochet item is a bit high, but the customer can start the project they want with a 50%

down payment and pay the remaining balance once it is finished. This allows the

customer save some money on the balance, which is especially beneficial for students

who only expect their pocket money because the product will be affordable here,

especially for tops that take a few weeks.

3.2.3. Transferability of knowledge

Mentorship

Information can be effectively shared through short- or long-term mentoring. The tacit

knowledge of the person whose information you are capturing and the person who

needs to learn it can be transferred through mentoring particularly well. It's crucial to
understand every aspect of a business, particularly when it comes to franchising and

becoming familiar with the obligations of both a franchisor and a franchisee.

Because the business will be profitable for both the franchisee and the franchisor. What

if one of the franchisee's employees leaves their position? It implies that a firm's

operations would cease and its revenue will stop, which is unsustainable because the

company will suffer a loss. Therefore, it is critical for the franchisor to understand how

the firm runs so that when someone leaves their workers they can perform the work left

by their workers.

Guided Experience

Guided experiences are workflow-based cards that help you perform specific tasks

through a multistep process possibly spanning multiple systems. When administrators

download our content package and enable the guided experiences, users can add them

to workspaces. This part will help franchisee to easily adapt the process and system of

a business they want to franchise. So it is required for the franchisor to always put

guidelines and other important details to make their business consistent.

Work shadowing

You can discover which organizational culture you prefer by job shadowing and learning

about the work cultures of other companies. This is important to know while deciding

between job offers because workplace cultures frequently influence decisions.

 This is a training where the franchisor might help individuals to know their

passion and skills. It also gives knowledge about the industry and fundamentals of the

business. This training is very important to be implemented because it sharpen the skills

and talent of the one who is willing.

3.2.4 Prototype Operation

Tests are conducted using prototype operations. Platform for innovative goods,

services, marketing strategies, merchandising, and flaws in operation. It is crucial for

successful prototype operations to be well-developed. Showcasing how a system helps

with franchisee training. It ought to be proof that the method works and is advantageous

for the dissemination of knowledge to aspiring franchisees.

3.2.5 Break even analysis & Payback Period

A break-even analysis is a financial tool that aids a business in figuring out when it will

become profitable to offer a new service or product. To put it another way, it is a

financial formula for figuring out how many goods or services a business should sell or

offer to cover its costs (particularly fixed costs).

How to calculate your break-even point

1. When determining a break-even point: Divide the fixed costs by the contribution

margin.

2. Break-Even Point = Fixed Costs ÷ Contribution Margin.

3. Contribution Margin = Price of Product – Variable Costs.

Fixed cost - are prices that don't depend on volume. The majority of fixed costs are

expenses that depend more on time than they do on how much your company produces

or sells. Rent and leasing charges, salary, energy prices, insurance, and loan

repayments are a few examples of fixed costs.

Variable cost - is a production cost that fluctuates in value according to a company's

manufacturing activities. For instance, the raw materials required to make a product's

components are regarded as variable costs because they frequently change depending

on the volume of units produced.

Payback Period

Investors, financial experts, and businesses frequently utilize the payback period as a

way to estimate investment returns. It aids in calculating how long it takes for an

investment's initial costs to be recouped.

In layman's words, until the cumulative cash flow is positive, or the payback year, the

cost of the investment is divided by the annual cash flow to get the payback duration.

Years are typically used to represent the payback time.

Annual Cash Flow

To calculate your yearly cash flow, subtract your total cash inflows from your total cash

outflows. If the result is positive, it indicates positive cash flow; if it is negative, it

indicates negative cash flow.

1. Add all of the cash receipts your small business received during the year to

determine your total cash inflows.

2. Add all of the cash payments your small business made during the year to

determine your total cash outflows.

When cumulative cash flow equals a positive value, the year is the payback year.

Cumulative cash flow is calculated as follows: (Net cash flow year 1 + Net cash flow

year 2 + Net cash flow year 3, etc.)

3.2.6 Market environment

According to Philip kotler, A company’s marketing environment consists of the actors

and forces outside of marketing that affect marketing management ability to build and

maintain successful relationships with target customers.

There are two types of market environment called Internal and external environment:

Internal environment

Internal Environment
The internal environment of the business includes all the forces and factors inside the

organization which affect its marketing operations. These components can be grouped

under the Five Ms of the business, which are:

Men: The people of the organization including both skilled and unskilled workers.

Minutes: Time taken for the processes of the business to complete.

Machinery: Equipment required by the business to facilitate or complete the processes.

Materials: The factors of production or supplies required by the business to complete

the processes or production.

Money: Money is the financial resource used to purchase machinery, materials, , and

pay the employees.

The external environment constitutes factors and forces which are external to the

business and on which the marketer has little or no control. The external environment is

of two types:

Micro marketing environment

Macro marketing environment

Micro-Environment

The micro-component of the external environment is also known as the task

environment. It comprises external forces and factors that are directly related to the

business. These include suppliers, market intermediaries, customers, partners,

competitors and the public.

Macro Environment

The macro component of the marketing environment is also known as the broad

environment. It constitutes the external factors and forces which affect the industry as a

whole but don’t have a direct effect on business.

3.2.7 Organizational Structure

In order for every department and franchisee that wants to be a part of the firm to follow

this technique, the franchisor must have an annual plan and framework. The franchisor

and franchisee will both benefit from this strategy's success.

An organizational structure serves to facilitate the achievement of goals and objectives

by the organization as well as the effective and efficient completion of tasks by

personnel. In addition to assigning employees their specific work duties and

responsibilities, an organizational structure aids management in coordinating and

managing operations.
3.3 assessment of sit n knit