Enterprise Development B ridging Economic Transformation F - - PowerPoint PPT Presentation

Enterprise Development –

Bridging Economic Transformation Franchising as an alternative

Roshqott

Content

B C D A

PwC

Content

Franchising – what is it about? A

Roshqott

Franchise Concept

Franchising the Energy sector is an unique concept where Roshqott grants ; The rights to use its complete business package containing all the elements necessary to enterprise a previously disempowered person into the Energy business ; To enable him or her to run it on an ongoing basis, efficiently and profitably according to guidelines supplied; Franchised Business models are diverse ,ranging from selected products and services agreements to the complete range that include Substation ,Overhead line construction and HV/MV network maintenance The franchisee is the key pillar in franchising ; HV/MV network construction experience and knowledge of local market are key assets for the business model ; The premise is that franchisees can achieve better results than in

• wn businesses, where franchising is used to grow the total

served market and achieve cost reduction

1 Roshqott

Entrepreneurship promotes franchisee’s best performance ey lements for Success

• Exclusivity: franchisee represents only Roshqott’s

Products and services

• Branding: Roshqott’s brand policy has to be

followed strictly

• Product portfolio: in most cases complete

Product /service portfolio is offered

• Engineering : full engineering including designs support
• Advisory services:Set up and on-going training of staff
• Entrepreneurship: franchisee are independent

entrepreneurs with full P&L and staff responsibility

• Costs advantage for the franchisee:

access to Roshqott’s procurement chain

2 Roshqott

A clear agreement about entrusted construction activities enables close monitoring of franchisees

Main obligations of the Franchisor Main obligations of the franchisee

• Supporting Franchisee drafting a Business Plan
• Engineering and design support
• Support Franchisee on Preparation of tenders
• Main Equipment - procurement and supplies
• Supporting business tools’ implementation
• Advising on IT systems to be acquired by franchisee
• Advising on Personnel,Plant, equipment required
• Providing detailed procedures and training
• Supporting franchisee on-site SHEQ issues
• Supervising and controlling franchisee’s activity
• Providing detailed catalogue of activities
• Managing and Performing business activities
• Providing business contingency plans
• Regional marketing
• Participation in training provided by Franchisor
• Recording and accounting for monthly, all

business transactions

• Following all regulations provided by the

Franchisee as per instructions and procedures documents

• Keeping in secret any information concerning

agreement details ,IP or client’s data

• Preparing monthly management accounts

documentation and submitting it to the Franchisee

• Ensuring monthly payments to Franchisee of all

fees/commissions and equipment supplies

Typical activities for the Franchisor and the franchisee

3 Roshqott

Engineering,Technical ,Commercial issues are covered by franchisor –

Construction management and on-site execution issues are covered by the franchisee

4

Franchising: Different roles on the value chain

Support functions: Human resources, finance, IT, general services etc. Suppliers

Operations Sales

Customers

Distribution/ Logistics

Functions Franchisor Franchisee Roshqott

Product selection flexibility allows smaller but effective investments

Offered Products :

• Turnkey substation projects : Franchise agreements

Will have as its focus turnkey HV substations

• Turnkey rural Overhead line projects :
• MV overhead line
• Networks and equipment maintenance : this will be

included as part of the standard package

• Protection and automation systems

5 Roshqott

PwC

Franchising models B

Roshqott

Engineering Franchise Conceptual Model

DTI Government Institutions

Private Sector SOC’S -BEE Subcontract Quotas T&F institutions

• BEE Funding

Government Institutions Market Model description

• Government through Department of

Trade & Industry and other Government organs dictates and influences SOC’s ,Municipalities and

• thers , levels of BEE and SLD quotas

that Government Institutions must introduce to achieve economic transformation .

• Often,these dictates are enforced

through tender and finance grants awards on pure BEE merit to companies without the necessary production , business skills and fiancial support .

• However well intended in the name of

BEE industrialization ,some of these contracts have disastrous results due to poor execution skills and/or contractors inability to raise the necessary funding .

• Engineering Franchise concept

bridges the expert production and business skill gap ,thus ensuring a positive outcome to all stake holders .i.e. The client get a quality and on time executed project , funding institutions are more pliable to issuing grants and seed capital to contractor and most important of all the impulse and development of profitable and successful small enterprise today , with probability and aspirations of a future large coperation in the future .

Licensed Franchisee’s

6 Roshqott

Bussiness Market Structure Model

Holding Company

T&F institutions - Funding Support SOC’S -Customer Support

Roshqott energy Enterprise Devlopment Pty Subsidiaries Stakeholders Model description

• Holding Company to be formed with

60/40 BEE Partnership•Subsidiary companies 100% ownership .

• Enterprise Development company will

be responsible for Franchisee acquisition and contracting:

• Recruiting
• Contract Formalization
• Know how transfer and Trainning
• Control and communication
• Roshqott Energy solutions company

will be responsible for Franchisee Engineering and product / equipment support:

• Equiment /Material technical specs.
• Drawings
• Main Equipment Procurement
• Project Management.
• Franchisee 100% owner equity

Holding company may take 20% equity BEE majority ownership.

• Bussines management.
• Balance of Plant Procurement
• Project Management
• Construction

SOC’s ,Trade and Finance institutions support is paramount .

• SOC’S “Buy-in” and prefferred

contractor stataus

• DTI, IDC finance and grants
• Equity fund investors

Licensed Franchisee’s

7 Roshqott

Roshqott Bussiness Organizational Model

Holding Company Roshqott energy Enterprise Devlopment Pty Subsidiaries

Enterprise Development Incubator

8 Roshqott

Engineering Franchises PRODUCTS & SERVICES

• Licensee Recruitent and contracts
• Licensed Products & Services
• Kow how transfer and Training
• Construction Resources
• Control and Comunication

Stage 2

The franchising concept can be divided into three stages

Franchising framework

3 4 Network Maintenance and Automation Overhead line and Substations

• Supplies
• Engineering
• S&M
• General management

1-2 Years

• Supplies
• Engineering
• S&M

3-5 Years

2 Stages S t a g e 1 Support services Phase Periods

9

Stage 3

• Supplies
• Engineering

6-7 Years

Roshqott

The franchising cooperation can be implemented on different levels

Engineering franchising cooperation model levels

Comments Franchisee sign for contracts and own in -house execution CIBD levels 6-7

Supply contractual products +Engineering

Level 3 – Upon Financial and market maturity

Supply contractual products +Engineering +S&M +General Management

Franchisor signs for contract and subcontract part supplies and services to Franchisee Level 1 – recommended for start up companies

• The franchisee undergoes incubation

period before being raised to franchisee status .

• Sign up as an Enterprise development

company • . Entrepreneur status (compulsory) CIBD levels 4-5 Franchisor and Franchisee sign for contracts and subcontract part supplies and services between one another

Supply contractual products +Engineering +S&M

Level 2 – Ideal for SME’s companies

• Franchisee contract directly with

customer

• Exclusivity
• Entrepreneur status (compulsory)
• Franchisee is involved in the

whole process

• Exclusivity

10 Detailed franchising case example Roshqott CIBD levels 1-3

Financial Investment Model

KPI Start up costs Royalties & Commissions CAPEX <R2’0 Million OPEX <R1’00 Million BM : 0% Eng.:0% Roylaties :0%

Pricing Model

Level 3 - Franchise stage 3 Level 2 - Franchise stage 1-2 Level 1 - Enterprise Development

Entry levels

CAPEX <R7’0 Million OPEX <R3’00 Million CAPEX <R11’0 Million OPEX <R7’00 Million BM : 0% Eng.:4% Roylaties :5% BM : 3% Eng.:4% Roylaties :5% Sales : R5-10Million Profitability:20% Pay back :N/A Sales : >R50Million Profitability:12,5% Pay back :3-5 Sales : R25-40Million Profitability:15% Pay back :3-5 Years

Roshqott 11

Roshqott

The implementation of a franchising concept should start with a clear plan and pilot phase – Execution in 12 months

Pilot timeline

2 – 3 months 9 months Pilot Design Launch preparation Initial/quick scoping Go/No-go

• n pilot

Incubation through subcontract if project awarded Franchise Roll-out Planning Franchise Agreement Launch pilot Positive preliminary results No/No-go on roll-out Unspecified

• Identify Territory
• Identify project
• Define operational risk
• Attraction of franchisees
• Start pilot 3-4 branches
• Attractive model that must get the buy-

in from stakeholders

• Competitive advantage thanks to a

scalable technological platform

• Test and learn in a larger network

12

Roshqott

Roshqott has created an Engineering franchise network concept to grow and gain market share faster

Key elements in Roshqott’s franchising process

• Requisites:
• Local market

knowledge

• Technical

knowledge

• Employees: •

There are three rolls:

• Project

Management

• Construction
• Office director

Enterprise development contract with an exclusivity clause Termination at end

• f subcontract

agreement

Know-how transfer/Training

• When the Enterprise Development contract is

signed the enterprise receives on-site construction training for employees and for themselves.

• The enterprisee can contract for additonal

business training and construction resources Control and communication

• Control is enforced through periodic steering

committee meetings from the central office and through business targets definition Reasons to cancel the contract:

• Substandard

project quality /project execution

• End of

subcontract Developed enterprise reaches financial maturity Know-how transfer/Training Exit Previous to signature Contract End

13

Contract formalization Recruitment Enterprise Development

Roshqott

Roshqott has created an Engineering franchise network concept to grow and gain market share faster

Key elements in Roshqott’s franchising process

• Requisites:
• Local market

knowledge

• Technical

knowledge

• Employees: •

There are three rolls:

• Project

Management

• Construction
• Office director

Engineering Franchise contract with an exclusivity clause Termination at end

• f subcontract

agreement

Know-how transfer/Training

• When the Engineering Franchise contract is

signed the franchisee receives training for employees and for themselves

• The franchisor transfers Business App. and

align franchisee with IT and branding requirements Control and communication

• Control is enforced through periodic auditing

from the central office and through business targets definition Reasons to cancel the contract:

• Substandard

project quality /project execution

• Growth below
• bjectives

If the contract is cancelled Roshqott would replace with another franchisee Know-how transfer/Training Exit Previous to signature Contract End

14

Contract formalization Recruitment Engineering Franchise

Trainning Centre

O p e n t r a i n n i n g R

• m

s B

• a

r d R

• m

R e c e p t i

• n

S a t e l i t e m e e t i n g r

• m

Premises and Trainning Facilities

Head office and Distribution Warehouse

Monte Carlo Kyalami Bussiness Park

Roshqott 15

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The franchising concept is a new and unique Concept in South Africa – Main objective is enterprise and skills development for Southern African Countries

Roshqott

PwC

Setting up and running a franchising model: risks and benefits C

Roshqott

Roshqott

Gain-Risk Analysis

18

• Threat of loosing own identity
• Pressure on Margins
• Dependence on Franchisor operational and

market power (products, procurement power, process, image) Franchisor Franchisee Risks

• Own business
• Brand and products already

established

• Independence
• Increased customer trust

Gains

• Amortization of costs
• Rapid expansion of regions possible
• Relatively low initial investments

required

• New client base achievement
• Enables sales and entrepreneurial

approach along with flexibility

• Lack of interested

entrepreneurs/partners – In traditional recruiting channels (own network) – Lack of brand recognition

• Lack of buy-in by Industry stakeholders
• Increased complexity of management
• Abuse of IP data by franchisee

PwC

Things to get right

Roshqott

D

Roshqott

The analysis of concepts has led to the identification of best practices from traditional franchising

Create trust and consistency Create true

• wnership and

accountability Create one voice

• Develop a model that ensures clear and equitable relationships
• Ensure that policies, procedures and practices treat the franchisee as a

partner

• Work together on joint business planning and allow for a model that

provides enough flexibility for both sides to succeed

• A franchisees association – associate and get together
• Participate in the organization process to ensure franchisor interests are

not damaged

Transferable best practices

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