Growth of the middle-class Increase in disposable income UNTAPPED CONSUMER MARKET :

New consumers

Malleable consumers

Brand illoyal consumers

Higher Aspirations

Technologically savvy consumers

ExtraOrdinary CLTV

MADE IN JAPAN: A MARK OF GREAT REPUTATION

JAPAN NOS. 1 BRAND IN THE WORLD : フューチャーブランドは、75か国別ブランド評価を実施。 国別ブランドは、企業ブランド同様に消費者行動に影響力が あるとし、評価指数の高い上位20か国を発表した。 ｢メイド イン ジャパン」に抱くイメージとしては「高品質」が最多で 日本の高いブランド力を示している。 回答者の6割以上が日本産の製品を買いたいと答えた。

Olympics

45% Tourist increase

ASEAN, TPP

Saturation domestic market

Opening of Japan

WHAT IS FRANCHISING

Agreement between 2 parties: Franchisor -

Owner of Intellectual Property

Know-how & experience

Support

Training

Developed audience reach & advertising channels

Receives a Royalty

Franchisee-

A turnkey business

Proven business 4-7P

Benefit from networked advertising/promotions

Pay a Royalty & Marketing fee

Franchise

Product Trusted Status Brand Value Established

Place Distribution Inventory Supply chain Logistics

Price Trusted Status Economies Scale Accepted Proven

Promotion Online access Existing SNS Audience Reach Media channels Shared cost

ENTRY METHODS COMPARED:

TYPE MERIT DEMERIT

Company/Subsidiary Easy to make company structure. Control & Quality maintained. Tax Breaks. No negotiations & Faster decision making process

Higher Risk. High Capital requirements. Legal Barriers & Dispute resolution. Reduced local knowledge.

Joint venture Better local knowledge. New capacity & experience. Greater resources. Shared risk. Diversify from core business.

Partner disputes due to inequality. Resource heavy. Slower decision making. Business culture differences.

Direct Control. Quality maintained.

Recruitment of franchisees. Slower process of opening. Ongoing support procedures & time.

Master franchise Initial Master fee. Capital and human resources to expand. High local knowledge. Reduced risk and responsibility. In country support and management.

Trust. Goals not aligned. Loss of control & quality may affect the whole network. Lower revenue than direct. Dispute resolution & enforcement difficulties.

Area Representative In - country support & local feedback. More control . Greater revenue compared to Master.

Recruitment of suitable candidate. Time consuming.

Licensing Low intensity & Fewer resources. Low risk & Cost effective

No import/regulation barriers. New market segment opportunities.

Low level of market control. Risk of local competitors. Validating Licensee revenue. Inconsistent product quality

ENTRY METHODS COMPARED 2:

FIRST STEPS FOR OVERSEAS EXPANSION :

Basics: Resource capability

Operational systems in place

Draft Agreements ready:

Distribution agreements

FDD Master Agreements MoU/ LoI

Understanding of culture

Know what you want: Clear Goals Clear Timelines Milestones

FRANCHISE DISCLOSURE AGREEMENT (FDD):

1. The Franchisor & company key staff 2. Management’s experience 3. Bankruptcy and litigation history 4. Fees and initial investment 5. Region/Area 6. Responsibilities of the franchisor &

franchisee/ Termination clauses 7. Contact information of other franchisees 8. Restrictions on products/services

MASTER AGREEMENT MAIN SECTIONS:

1. Use of trademark, products and materials 2. Rights and obligations (training, operations,

advertising, support, procedures)

3. Duration, Renewal and Termination 4. Development terms 5. Sub-Franchise terms 6. Financial terms

MASTER AGREEMENT KEY POINTS:

1. Clear obligations/rights between 3 parties 2. Control (quality, store design, products, staff)

3. Business information feedback deadlines 4. Financial arrangements and pay schedule 5. Performance criteria 6. Sale/assignment/transfer of the agreement 7. Acceptable solutions for termination 8. Unrealistic development schedules 9. Manual for the Master

BENEFITS OF A MASTER PARTNER 1:

1. Confirmation of Capabilities (INternal)

2. Desktop Market Research (Country Focused) (INternal /EXternal) X

3. Decide viable countries (INternal) X

4. Primary Market Research (Country Focused) (EXternal) X

5. Supply chain & Logistics (INternal /EXternal) X

6. Planning and Strategy (INternal)

7. Clarify Goals (INternal)

BENEFITS OF A MASTER PARTNER 1:

8. Draft Financial check (INternal)

9. Draft Business Plan (INternal)

10. Domestic Secondary/Desktop Market Research (INternal) X

11. In country Primary Market Research (EXternal) X

12. Analysis of Primary with 9. Run a Feasibilty Study (INternal & EXternal) X

13. Build Detailed plan and Final Decision

14. PR and Pre entry Announcements

BENEFITS OF A MASTER PARTNER 2:

Local knowledge & experience

Local support

Compliance with local laws

Foreign direct investment problems

Overcome political difficulties

Low risk

Low resources needed

Capital injection

Agreed expansion plan

Limited responsibility

WAYS TO FIND A PARTNER :

EXPO & Trade shows

Events like these

Chambers of Commerce

SMRJ

JETRO (accepted applications only)

FC Matchmakers

Banks

Consultants & Brokers

Business Matching Events

KEY POINTS FOR A SUCCESSFUL PARTNER

Solid track record

Good local market knowledge.

Resources and contacts to source

Supply Chain and Logistical capability

Primary/Secondary and Mall locations

Experience in the same industry

Adequate cashflow to sustain initial loss period

Shared philosophy and values

Understand Japanese company culture and flexibility

to adapt to different cultures and business methods

Passion

Mutually agreed Goals, Timelines and Milestones and

clarified roles

REAL LIFE EXPERIENCE

Yoshinoya: China royalty problem. Employee contract. 7/11 Control of local shops with Japan HQ. Speedy support difficulties. Ootoya Chose Thailand as their 1st overseas country. Keep aspects of Japanese culture. Long term vision is required. Build local business model first.

REAL LIFE EXPERIENCE 2

CoCo Ichiban

Difficult to understand local tastes. Serving temperature difference. Be prepared to adjust menu depending on availability of ingredients. Family Mart

Return to profit will be slower because of initial capital outlay. Takes less than 50% when entering into a J/V agreement. Target Country: High birth rate; Big young population; Low regulations. By many Japanese franchises

Employee Problems: Motivating and retaining employees different to Japan. Disciplinary issues, procedures and penalties. Ensure Employee value. Clear criteria of conditions and benefits.

TAKE AWAY:

T rust

A greements

C ountry/control

S ystems