Franchise – The Process

The Process

                                                                                                               

Wie300Sq02senhof achieves these results through an uncompromising belief in service and consistent standards in all facets of the business.  Wiesenhof is proud to be one of the only coffee shop groups roasting its own coffee in-house, not relying on outsourced roasteries – which means our beans are never compromised!

One of the cornerstones of Wiesenhof’s success is the amount of focused effort placed on recruiting, selecting and training of franchisees and staff.

Wiesenhof is very diligent in avoiding opening Franchises in these non-viable locations through its emphasis on business viability studies and will assist potential franchisees in assessing sites, however franchisees will be required to do their own diligence, making the site selection more secure.

Another one of Wiesenhof’s success strategies, is to ‘tailor make’ each store to its environment, the Wiesenhof Café with its extensive South African interiors, menu and hospitality.  Smaller Wiesenhof refill unit aimed at more niche environments, aimed to give customers a quick, easy and value for money offering in limited spaces.

Wiesenhof currently operates sites in a wide variety of markets such as Hospitals, Shopping Malls, Airports, Corporate Head Offices, National retailers etc.  Liquor licenses are site and customer dependant.

The ideal franchisee is an individual with an entrepreneurial, outgoing nature and desire to own and grow their own successful coffee shop business – working for him/herself but not by him/herself. Due to the nature of the business, franchisees must be hands on and have the ability to work long hours, manage others through good communication skills and respect. An eye for detail and a strong service orientation is a positive factor to increase turnover and profits, whilst previous direct experience in the industry is not a necessity.
A MINIMUM of 50% unencumbered (debt free) cash funds, and the ability to borrow the balance.  Collateral is usually required against this – however we suggest consulting your bank/financial institution for guidelines on their funding options for acquiring a franchised outlet.

 

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The following is a summary of the pertinent clauses of the Franchise Agreement. Please read the Franchise Agreement in its entirety and get the assistance of an attorney.

 

  • The Agreement (usually) lasts for 10 years. The agreement does not provide you with an exclusive trading area but does provide you with the right of first refusal for another Wiesenhof outlet within a three-kilometer radius of your business. This will only be initiated if circumstances demand and require the establishment of a new unit within the trading area.
  • A fixed percentage royalty fee will be entered into upon joining the Wiesenhof group which will be based on the turnover of the store. This will be fixed for a 12-month period and increase 10% on an annual basis.
  • You are responsible for providing monthly financial reports to the franchisor.
  • The franchised business must be operated under the direct supervision of the franchisee, except at the Franchisers discretion.
  • The franchised outlet will be upgraded at regular intervals when the need therefore is determined by the franchisor (typically a three-year facelift and a five
  • year revamp) and at the cost of the franchisee.
  • The Operations Manual details the specifications, standards and operations procedure that the franchisee must follow.
  • The franchisee must comply with the Wiesenhof standards and menu.
  • The Operations Manual may be changed from time to time at the discretion of the franchisor.
  • Trade secrets provided by Wiesenhof may not be divulged or utilised in other businesses.
  • The franchisor provides the initial training and ongoing support to the franchisee.
  • Use of Wiesenhof’s trademarks and logos is limited.
  • Personal surety will be required for the duration of this agreement.

 

As part of the Business Viability & Verification Process, you will be assisted with the following important factors:

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  • Sourcing and securing premises for the prospective franchisee
  • Financial modelling
  • Cash flow modelling
  • Developing start-up requirements, schedules and plan
  • Business Plan formatting, compilation and presentation
  • Finance requirement schedules, facilitation, planning and documentation compilation
  • Assistance with ‘Offer to Lease’, lease negotiation and ensuring reasonable leases
  • Tenant installation requirements
  • Independent Market research, Site analysis and verification of suitability
  • ‘Start-up’ project management 

    One of the outcomes of the Business Viability & Verification Process is the franchiser’s assistance with the production of your detailed business plan. This business plan fulfills several roles, namely:

    The business plan answers your questions as to whether you are suited to this franchise.

    • It answers your questions regarding the potential financial viability of your intended franchise.
    • It answers the franchisor’s questions as to whether you will succeed as a Wiesenhof franchisee and therefore whether he should proceed by entering into a Franchise Agreement with you.
    • The business plan is used as part of the presentation to the bank for the bank’s final approval on loan finance for the business.
    • The business plan serves as the blueprint for your running of the franchised business, should you proceed.

    As Wiesenhof is a retail business, location is important. For this reason, your business plan is produced for a specific site. Wiesenhof actively source sites for potential franchisees. Once a site has been identified that meets Wiesenhof’s basic site criteria.

    Wiesenhof enters negotiations with the landlord to obtain an Offer to Lease for the site, on your behalf. The objective of the Offer to Lease is to get the landlord to legally bind himself to leasing you the premises yet enabling you to withdraw should you not be satisfied with the outcome of the Business Viability & Verification Process. Once the landlord has committed himself to the Offer to Lease. Wiesenhof undertakes a detailed site verification to confirm the suitability of the premises and Wiesenhof produces the designs, plans and costing for the site so that you will know exactly what the store will cost. 

    The cost of these services is usually born by the prospective Franchisee.  Costs to consider:

    • Operational training for the owners, manager and kitchen supervisor
    • Basic evaluation of your suitability to be a successful franchisee (may include all significant partners/managers)
    • Optional Business skills training courses or modules
    • Sourcing and securing premises for the proposed franchise
    • Independent analysis and verification of the proposed premises
    • Lease negotiation for the proposed premises
    • Guidance and assistance in evaluating the viability of the proposed franchised outlet
    • Detailed costing of your total investment for the proposed franchise
    • Guidance and assistance in producing a business plan for the proposed franchise
    • Facilitation and assistance in securing loan finance, if necessary

    The Operations Training programme is conducted in a classroom and hands on training at one of the franchisor’s training stores, and finally in your own store. Training stores can be in various locations countrywide, and at times training can be moved to better suit the Franchisee, at the Franchisors option. The Operations Training programme lasts a minimum of four full weeks, and finishes prior to your outlet opening, however where needed, training can be extended where required.

    Wiesenhof handles the entire project management (turnkey) of your new business, from designs to plans, costing, shop fitting and merchandising.  As a new franchisee we encourage you are to give input on the design and layout of your new business. However, the final decision on the design and layout rests with Wiesenhof. Shop fitting is performed by Wiesenhof and their appointed shop fitters, etc.

    One of the most satisfying aspects of a Wiesenhof franchise is the teamwork Wiesenhof promotes and supports. Wiesenhof Coffee Holdings encourages participation and feedback and takes an active role in supporting your needs with its over 20 people strong back up team. We are on the same team and we consider our relationship a partnership, where we are striving to achieve the same goals.

    Business structuring and/or partnership formatting

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    TOTAL INVESTMENT

    The total investment for a Wiesenhof franchise varies from store to store because of numerous factors including concept type, different store sizes and varying contributions from landlords etc. The total investment is made up of the following costs:

    • Initial discussion and registration
    • Initial Franchise Fee
    • Variable Franchise establishment costs

    The objective of this section is to give you an indication of what your total investment may be.

    Full Service and Menu Coffee Shop – the setup of such store is site specific and costs are done per site.  Landlord contributions ae negotiated and will include table service, retail section (where applicable) and provide a full and comprehensive menu to customers.  Costs vary from R1,4m to R2,8m.

    Refill Espresso Bars – has a lower turnkey set up cost of R800 K to R1.4 million, depending on many variables of size, complexity of the menu and hence the equipment required in the kitchen.

    INITIAL DISCUSSION AND REGISTRATION
    There is no cost to a potential franchisee during initial discussions, basic registration, and discussion and response to the Wiesenhof business disclosure document. If both parties are positive, and wish to proceed further, then costs will then start to be incurred, which are payable by the prospective franchisee.

    .

    BUSINESS VIABILITY & VERIFICATION PROCESS
    The cost of any Business Viability & Verification Process will range from zero (internal), to an estimated maximum of R10 000.00 plus VAT if the prospective Franchisee wants an outside agency to be used, dependant on the store location and to what degree suitable Market research is available or required. Our normal service level is usually sufficient, and this carries no fee, but as with all viability assessments carries no guarantees, the decision is entirely the Franchisees.

    INITIAL FRANCHISE FEE
    The Initial Franchise Fee is as follows ex Vat.
    Wiesenhof Coffee Shop R 95 000
    Wiesenhof Refill Espresso Bar R 45 000

    This fee is mandatory for all franchisees. In purchasing an existing store this fee is site dependant, and will be decided on by the Franchisor, dependant on the location and training requirements. This amount is to cover the cost of granting a franchisee the right to the use of trademarks, logos and intellectual property, as well as the following services:
    Design and plans, costs dependant on requirements from approx. R20 000 to R45 000

    Project Management Fee approx Amount (Excl Vat)
    Within 100km
    Amount (Excl Vat)
    Outside 100km
    Wiesenhof Coffee Shop R165000 ±R195000
    Wiesenhof Refill Espresso Bar R100000 ±R150000

    The set-up cost is calculated on the following basis and includes the following:

    Typically, your potential total investment for getting the Wiesenhof Concepts to opening, as a turnkey cash outlay, including rental deposit, first month rental, stock etc (every cost or cash outlay) to 1 month after opening is approximately:

    Café – R3 million excl vat.
    Refill Bar – R1.5 million excl vat

 

 

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