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Master Franchise in the UK

Franchise Opportunity

Creative Image Craft Painting studios have now become synonymous with the craft industry in South Africa and to date established 60 studios nationally as well as 3 international studios being in Mauritius, Zimbabwe and Namibia. Having recently sold the master franchise for New Zealand we expect to open 20 studios there, Over 3000 ladies attend classes nationally with a student life span of over 4 years (national average)

It is becoming increasingly clear to us that the trends in South Africa are no different than the rest of the world in our industry.

The craft industry has blossomed in the world. A number of factors have accounted for this including retrenchments, early retirements and the increase in the cost of living.

People attend our classes for a great variety of reasons some of which are.

  1. to learn to paint
  2. to relax and relieve stress
  3. to escape the world for a few hours
  4. to meet other like minded people
  5. to make new friends
  6. to be creative and make items for friends and family

Franchise Route to Empowerment

Teaching craft or painting is not a unique endeavor but co-ordinating it and managing it in a professional way are. Many people try to give lessons and generate income from this, but soon fall by the wayside because of a number of reasons

  1. The continuous advertising required to generate clients is costly
  2. The self motivation to create new ideas and patterns is too time demanding and leaves no time for teaching
  3. The non access to relevant products at realistic prices from one source
  4. No set program to work to
  5. No credibility in the market place
  6. No business skills to operate the business effectively
  7. No interaction with other teachers (as they are perceived as a threat)
  8. Cannot afford to attend major craft shows as an exhibitor

These are just some of the reasons that the small operator faces when starting a home industry.

Creative Image has turned the home industry into a business with professional advertising, design, marketing and product supply as well as ongoing training and motivation. Add this to our unique designs and operating procedure we create a winning formula.

In South Africa we have a limited number of people to market to as arts and craft as a hobby is predominately a white orientated pastime other than traditional arts and crafts practiced by the rural black population.

Having only 6 million white people in S.A. once this is broken down to the viable target group we finish with less than 1 million. We foresee the viability of opening up to 100 studios in S.A. as a feasible size market.

If one takes England and applies the same criteria, with its 112 million people the thought of the number of studios exceeding 200 is not only viable but also a realistic expectation.

We would expect each major city to have at least 2 studios and could accommodate the same number of studios as Johannesburg 15 ( we have 20 studios in the JHB/Pretoria area)with 1 or 2 for the smaller towns giving us a target of over 200 studios, without looking at smaller towns. Any town that has a population of over 7/10,000 is viable for a studio. The average life age of the population is 78, with less than 25% being under 16 and 10% being over 65. So a large portion of the population fits into the age group that we consider our target market 27/77. The home language is English where we have 11 official languages. Of the population over 80% live in urban areas, so this makes it easier to establish studios in the built up areas.

Given that the current birth rate is about 1% plus an immigration / emigration surplus of 1.5%the population increase will increase the size of the market over the next 5 years by approx 500.000 giving an even broader market than already exists. Comparing that with the immigration /emigration deficit we are experiencing in the white population in South Africa it makes for a good future. Having spent the last 20 years perfecting our ideas and testing them in the market place, we have eliminated all the pitfalls that are out there and have gone forward to the success of today.

Projected Turnover and Profitability for a 5 Year Plan

Year 1
5 STUDIOS @ £6000.00 £ 30,000.00
SALES @ £2000 PER STUDIO P/A X 5 £ 1,000.00
 
YEAR 2
5 STUDIOS @ £6000 £ 30.000.00
SALES @ £2000 PER STUDIO P/A X 10 £ 20,000.00
 
YEAR 3
5 STUDIOS @ £6500 £ 32,500.00
SALES @ £2000 PER STUDIO P/A X 15 £ 15,000.00
ROYALTIES ON 5 STUDIOS @ £1000 P/S £ 5000,00
 
YEAR 4
5 STUDIOS @ £6500 £ 32,500.00
SALES @ £2000 PER STUDIO P/A X 20 £ 40,000.00
ROYALTIES ON 10 STUDIOS @ £1000 P/S £ 10,000,00
 
YEAR 5
5 STUDIOS @ £7000 £ 35,000.00
SALES @ £2500 PER STUDIO P/A X 125 £ 62,500.00
ROYALTIES ON 15 STUDIOS @ £1200 P/S £ 18,000,00
 
This gives us a total over the 5 year period £ 305,000.000

The opening of a studio cost approx. 1000.00

The profit on stock is in excess of 50% so total profit including franchise fees over the 5 year period, less setup costs, will be in excess of 275,000

This assumes that the studios only reach 25 over the 5 year period but in reality it should be over 80this assumes the franchise fee increases only marginally, but we have increased our franchise fee by 30% since we started. It also assumes that the studios will only do 200.00 in sales, s0me of our local studios do treble this

Once you get into the 6/7/8 years as we are in South Africa the revenues increase drastically as you put more studios on with existing studios paying royalties and the stock sales multiplying.

If one takes the original cost of the franchise fee and offsets that over the next 10 years, plus the advertising costs of +/- 50,000 to get established a profit in excess of 1 million can be expected

In doing this exercise we have assumed a franchise fee of 6000 however we think that the fee could be 7/8000this can only be assessed when you test the market we started at 30,000 Rand

The master franchise operator needs to maintain a minimum purchasing record of 20,000pa to make the exercise viable

Not accounted for in the above figures is the revenue that is created by the ONLINE CLUB.

The ON LINE CLUB is an independent money earner that brings in locally 2,00per student regardless of which studio they are at Each studio is responsible for charging $2.00 per student on top of class fees. This is not optional for the student and it is built into the fees, so the student thinks that she gets this service free. The franchise operator then sends lists of the students with their email address to you and you send out newsletters to these people. The operator is then billed for the number of students

Eliminating The Need For Controling Mailing Lists Individualy.

You then send the student the newsletter, the newsletter contains all sorts of motivational things as well as Pictures, patterns, sales specials and general info to motivate the student and make her feel that she belongs to a caring group.

We will feed info to you and you will add a UK section then use this for ongoing transmission to your students.The newsletter does a number of things (1) It helps keep track of students into your data base; (2) It helps monitor each studio to see the actual number of students going through a studio. (3)It drives sales through the studio and helps get product awareness to the students without having to depend on the operator having all the products in stock.

With 25 studios and 50/60 students per studio this should bring in an additional +/- 30,000pa.

What Do You Get For Your Investment In The Master Franchise

We are offering the exclusive rights to market and sell the Creative Image concept, using the Creative Image name and logo, our designs and formats, manuals and marketing programs.

  1. Training in South Africa for three months to a standard that is acceptable to us to be able train other teachers who will be buying into the franchise. Plus the running of the master franchise
  2. Directors to be in the UK to assist with launch and training of new franchise operators
  3. Assistance in selling the first franchise and training of the first operator if during launch month.
  4. Design of all marketing needs for the UK franchise
  5. To assist with all marketing in a personal way via radio/tv and other media to help launch the franchise. These events to be co-coordinated by the operator during the launch month.
  6. To provide stock initially at export prices to start the franchise, there after to assist in obtaining local suppliers of products that are more cost efficient to source locally.
  7. Provide paint in bulk for local packaging in due course when supply demands.
  8. To provide access to new products on a regular basis.
  9. Directors to travel to the UK at least once over the three year period to assist with training and marketing
  10. Inclusion on website under UK heading
  11. Stock to the value of 7000,00
  12. Training manuals and patterns for 2 years then 3 yearly modules, supplied yearly
  13. Ongoing training for UK STAFF when in south Africa (every second year required) at franchisee expense
  14. Ongoing projects and new ideas posted or e/mailed.
  15. Rights to the ONLINE CLUB. This is an independent money earner.

Cost Of Master Franchise

The cost of the franchise has been worked out according to the viability of the country. We estimate that 200 studios can be put on over a 5/7 year period. Given that each studio will generate revenues in excess of 10,000 over the 5 year period the longer the studio operates (studios in S.A. are now in their 14 year with us) in total the revenues of the studios will exceed 5 million.

These figures may seem at first glance to be unrealistic but one only has to take the S.A. operation and do the simple math to see that over the last 10 years we have put on 60 studios.

Revenues from the local operation have exceeded 20 million rand.

The amount of money generated into the local economy is as follows. Each studio charges R260 pm for lessons with an average buy from each student of R150.00pm multiply this by 3000 students and you have a figure of 14.5 MILLION RAND PER YEAR. Multiply this by the 10 years of our local operation and R145 million has been put into the economy. This does not even take into account the money used in the supply of product and the number of jobs created in the supply chain.

These figures can be used for the calculation for the UK market

If you require finance and show this proposal to a bank they would see the logic in the concept with a proven track record.

Financing options are available on request including joint ventures.

Franchise package will be tailored to suit your needs. Contact us for an assessment.

Things To Be Aware Of

One must also be aware that additional funds will be required to promote the concept and do regular advertising. However there are a number of ways to get free advertising, which we will advise during training. The business should be self generating after the initial startup, but cash flow is vital to be able to maintain a good stock level to be able to service the studios. In South Africa we carry approx. 40000 of stock on hand to service the studios. With importing from South Africa you will also have to budget for the delivery time for sea freight. The current exchange rates should act in your favor in respect of stock purchases.

Last year we spent in excess of 380000 on advertising in national magazines and distributed over 550,000 pamphlets nationwide.

It is essential to know that this is a hands on business and will only succeed if it is attacked with gusto and passion. In the early stage it will be enticing to take on anybody with money to be a franchise operator but this will be to the detriment of the business as a whole. Your selection process and the standard of your operators will ultimately set the standard of your credibility in the market place.

You will need a basic infrastructure to operate the business.

  • Stock control and del.
  • Stock purchasing (Import control)
  • Training
  • Marketing and promotion
  • Advertising
  • Finance
  • Premises approx 50 sq metre for training area and 150 metres for stock
  • Infrastructure for stock room, packing and dispatch
  • These tasks can be done as separate functions with staffing or can be handled by one or two people.

The Temptation To Go It Alone

This will always be there and one will be tempted to say what the hell I can do this on my own. Yes this is an option but consider the benefits of belonging to a world wide group as compared to running your own show, over the last 20 years that we have been in the craft business, 11 of these in franchising. We have seen many people come and go, we have also seen the ones that try to copy us come and go. As well as franchises that we have canceled who knew all the basics of how Creative Image operates, not one has survived.

When we get established in UK our next target will be EUROPE and then you will benefit from the greater exposure and credibility in the market place.

The ongoing proven lesson formats that will be available to you, as well as new product ideas and concepts.

If you go alone every single lesson will be hit or miss, yes you will have some success and will feel that you are ready to go alone, but then again think of what else you could be doing to promote your business in the time that you are designing.

We have ten years of patterns ready to go that have proved successful not only in South Africa but in Namibia, Mauritius, and Zimbabwe.

The one constant that we have found in the world is that regardless of if a woman is White or Black, Coloured or Asian and what ever religion, they all seem to want the same things.

They want to belong to a group of like minded people or peers, they want pretty things that can be useful, they want to be creative and be proud of what they make, they need a place that is specially for them to escape the normal life of dogs and cats, husbands and sport .

In short what works in South Africa will work in UK it may require some tweaking or adapting but the basic format remains the same.

Our Mauritius franchise has been with us for 9 years and has never had the inclination to go alone even given the fact that the operator is a talented person in her own right, and has to adapt with us most of her lessons to suit the 95% Muslim based clientele that she has.

You will be encouraged to return to South Africa on a regular basis to be motivated encouraged and trained in new concepts and designs, as are all our local franchises
- The studios in Cape Town or Port Elizabeth have the same problem as you.
- They have to get their stock sent to them via courier
- They have to communicate via e/mail, post or phone
- They return to the head office once a year for ongoing training
- They have to motivate themselves in their own area with our distance help
- They have to produce their lessons without the backup of a group of people around them to feed off.
- They have to do promotions and advertising in their own area, independent of us but assisted by us.

In Conclusion

Creative Image could take you to great heights in this business. Once a relationship exists there is no reason that you could not be included in the larger European venture

It would create a huge business, we expect the size of the UK market to be 12 times the siz size of the South African market . With the right master franchise operator and a proven product, success is a forgone conclusion. One must ask the question “could I earn in excess of 3 million profit in the next 5 years doing anything else AND HAVING FUN DOING IT”?