Institute of Management Nirma University, Ahmedabad

Project Management SEPTEMBER 3, 2011

Project : TO ESTABLISHED A FRANCHISE STORE OF CARTRIDGE WORLD Submitted To: - Prof. H.K.Shrivastava

Submitted by:ADITYA LODHA (101159) MBA FT II

INDEX

S.NO 1 2

TABLE OF CONTENTS INTRODUCTION SERVICES AND PRODUCTS

PAGE NO 3 4

WORK BREAK DOWN 5 STRUCTURE

4 5 6 7 8 9

PROJECT MILESTONE 6 NETWORK DIAGRAM 8 WBS DESCRIPTION 9 Franchise Support 10 COSTING BREAK-EVEN ANALYSIS 13 15

PHASE 1 INTRODUCTION Project Objective: To established a franchise store of Cartridge World in jodhpur city. . Current status of the Project: The project is still at its initial stage and hence various secondary researches are being carried.

ABOUT THE COMPANY Introduction Cartridge World is the world leader in recharging and remanufacturing of inkjet and toner cartridges. The multi award bagging company, headquartered in Australia, has a strong franchise network in over 51 countries with more than 2000 stores. All cartridge World stores are independently owned and operated by franchisees.

Cartridge World Stores in the Indian Sub -Continent The Cartridge World brand, business format and product offerings are available in the Indian Sub-Continent through AFL Pvt. Ltd the leading logistics, cargo and courier company (www.afl.co.in), an exclusive Master Franchisee of Cartridge Wor ld in this region.

Over 90 franchisees have already been appointed and 75 stores have been launched across Mumbai, Navi Mumbai, Pune, Nasik, Nagpur, Indore, Bhopal, Ahmedabad, Baroda, Surat, Bangalore, Chennai, Hyderabad, Secunderabad, Cochin, Coimbatore, Vizag, Hubli, Pondicherry, Tirupur, Mysore, New Delhi, Jaipur, Gurgaon, Noida, Lucknow, Varanasi, Kolkata, Ranchi, Guwahati, Shillong, Maldah. The Brand has already won 7 prestigious awards in its 3 year of operations in India viz. New
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Concept in Franchising & Concept of the Year 07 & Best Business Services Brand 2008 awarded by Franchising Association of India and The Franchising World Magazine respectively. Jury Special Award at the Reid & Taylor Awards for Retail Excellence 2009 and their CEO Mr. Naveen Rakhecha won the Youth Achiever of the Year award at the Youth

SERVICES AND PRODUCTS

A Cartridge World store, positioned as a ONE STOP SHOP for all Printer needs, offers the following range of services and products to its customers:

Services: Recharging used Inkjet Cartridges with 100% money back guarantee Recharging used toner Cartridges with 100% money back guarantee Free Cartridge care education Printer Repair Services MPS: Managed Print Service Free Collection & Delivery

Products: Original Printer Cartridges of all popular brands viz. HP, Canon, Epson, Brother etc. Printers of all popular brands Business Direct Cartridges / Re-man cartridges Compatible Cartridges Printer Accessories Regular and Specialty Paper Office & Fax supplies Storage Devices

PHASE - 2

WORK BREAK-DOWN STRUCTURE:

Initial Meetings & Discussions regional manager

APPLIER

Submission of Financial Statement FOR THEIR ANALYSIS BY US

Signing of LOI and remit Franchise Fees FRANCHISEE SELECTED APPLIER

Site Selection and Approval NEARNESS TO BUYER COVERAGE OF CITY Agreement Signing & remit Training Fees official paper work payment of fees - Recruitment of staff Selection of staff (2 worker,1 manager, 2delivery boys initially) Store construction / development as per set up of store as per CW requirement - Attend Training in Mumbai and get certified training session for staffs and management at mumbai

Release of SOP manuals and access to

STORE SETUP AND CERTIFICATION

STORE LAUNCH

PROJECT MILESTONE ACTIVITY DESCRIPTION DURATION START END TIME TIME PRECEDENCING ACTIVITY NONE

Initial Meetings & Discussions

1 WEEK

Submission of Financial Statement

1 WEEK

SIGNING OF LOI AND REMIT FEES

1 WEEK

SITE SELECTION AND APPROVAL

3 WEEK

AGREEMENT SIGNING AND REMIT TRAINING FEES

.5 WEEK

3.5

RECRUITMENT OF STAFF

3 WEEK

STORE CONSTRUCTION

8 WEEK

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AS PER CW

TRAINING AND CERTIFICATION

8 WEEK

14

LAUNCH

2 WEEK

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PHASE 3

NETWORK DIAGRAM

Initial Meetings & Discussions SITE SELECTION AND APPROVAL Submission of Financial Statemen AGREEMENT SIGNING AND REMIT TRAINING FEES SITE SELECTION AND APPROVAL RECRUITMENT OF STAFF TRAINING AND CERTIFICATION LAUNCH

STORE CONSTRUCTION

WBS DESCRIPTION : MEETING WITH REGIONAL MANAGER

A s the first step towards the goal, Franchisee Cartridge World asked us to fill a candidate information form*, and there after a meeting was arranged on 17/7/2011 with head of network development of Cartridge World to discuss about the further process and know-how about the services and product in detail. SUBMISSION OF FINANCIAL DATA : Various aspects of business was discussed in the meeting, to move forward submission of statement of financial data like last three years income tax return data, who will be heading the business i,e name qualification and experience of the management team. They require this os as to confirm weather applicant would e able to manage business or not. SIGNING OF LOI AND REMIT FEES Applicant who is selected is called in the head office and various letter of intent document needs to be filled. Together with the franchisee fees of 3 lakhs refundable(see exhibit ) needs to be submitted.

SITE SELECTION AND APPROVAL Next is selection of site i.e location of store, this is one of the major requirement.Every Cartridge World store is a retail space attached to a micro -manufacturing unit. A ground floor road facing visible retail space is ideal. It requires 27 to 40 sq. mtr. of retail space is required. FEW POINTS TO BE CONSIDER WHILE SELECTION OF STORE : Population of target customer : Hospitals, Banks and cyber cafes Land cost : low rented space Competitors : there is major competition from unorganised sector. Taking all into the account we have selected a site which is at the bank street in jodhpur.
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The size of the shop is 20*20 feet which is equal approx 37 square meter. The rent of this shop is rs. 10,000. It has a big location advantage has 3 banks, 4 hospital and few hotels are within the radius 1 km which are the major clients of CW. This site was sent for approval and after a week it was inspected by the CW official and it was approved after 2 days. AGREEMENT SIGNING AND REMIT TRAINING FEES After the approval of site, all final agreement need to be signed and payment of training fee of 2 lakhs need to payed. RECRUITMENT OF STAFF Initial requirement of staff are 1 manager 2 service boys(one who will refurbhished the cartridges0 1 delivery boys(to delivery person) 2 marketing guys STORE CONSTRUCTION AS PER CW The store selected is then decorated and designed according to the norms of the company

TRAINING AND CERTIFICATION While the store is constructed staffs are given two months training and ooen moth training for manager is given by the company. After the successful completion of traning staffs are given certification.

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Franchise Support
A Cartridge World franchisee can look forward to take advantage of:

Brand Name A well-established international brand name with business systems that have been proven internationally and nationally

Business Orientation and Technical Training Programs A 2 week Technical Training program conducted at our state -of-the-art Learning

Centre in Mumbai for 2 Franchise Owner + 4 Technical Staff A one week Business Orientation training program conducted at our state -of-the-art Learning Centre in Mumbai for 2 managerial level staff (including the Franchise Owner)

On going Technical Support Technical know-how and ongoing access to new developments in printing and cartridge technology as a continuous process. 24x7 access to know-how and troubleshooting (Secure Extranet) Additionally, on the job training sessions are held in various stores for refresher/advanced training. We have operational staff on hand at Head Office in Mumbai and at our regional offices in India to provide ongoing support Store Development assistance Store & Ambience development manual will be released and assistance provided in the development and store set -up by our Regional and Head office teams Point of Sales systems addressing all requirements of data capture and report generation, include key CRM elements. Manuals

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Franchisee will be provided with following Manuals which will help in starting and running the Cartridge World business as per the Standard Operating Procedures

Store Development and Ambience Manual Store Set-up Manual Retail Store Operations Manual Sales Manual Brand Manual Local Store Marketing Manual Technical Manual covering Laser & Inkjet cartridges and equipment handling Procedures

Buying Power Access to Global vendor relationships for effective buying of raw materials.

Finance assistance - Assistance in procuring finance from SBI. Our project has been evaluated and approved for financing by SBI **

Marketing Support - We provide requisite marketing support to propagate the various services ofCartridge activities - Marketing training is continual and advice may be sought by franchisees as and when required World stores through national and regional PR programs and

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COSTING : Fixed cost :

PARTICULARS INVESTMENT in lakhs
Franchise Fee Training Fee

DETAILS

3 2

FOR 3 YEARS MANAGMENT-2 TECHNICAL 2 TO 4 PERSON MOTHS

Marketing & Operations Kit Marketing Collaterals & Uniforms Equipment, Machinery, tools,

0.52 0.30 1.5 PART OF FRANCHISEE START-UP KIT

Store Interior & Development Local Purchases & Requirements like Computers, Test printers Miscellaneous Total

3.3

ESTIMATE MADE BY EXPERIENCE PEOPLE

0.90

0.10 11.72

Other then the above mention cost following two more revenue sharing conditions are laid by the franchisee :
Royalty is charged at 6% of recharging sales and 6% of profit on sale of Allied products everymonth Contribution to National Ad Fund at 3% of recharging sales and 3% of profit on sale of Allied products(other then cartridges) every month

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Operational cost (monthly): Particulars Rent Salaries Investment 10000 15000(manager) 5000(service boys) 3000(delivery boy) 8000(marketing) Total=15000+10000+3000+16000=44000 Electricity+ Phone bill Advertisement 10000 Misc. Total 5000 73000 4000

Profit margin of various products : PRODUCT OEMS PRINTER MARGIN(PERCENT)/unit RANGE(IN RS) 10 600-3000 80-600 300-400 100(MINIMUM) 70% 400(MINIMUM)

OEMS CARTRIDGE 10 REFURBHISHING PRINTER SERVICE SUPER SAVER 70-80%

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BREAK EVEN ANALYSIS

Its has been found that 90% of the total sales of CW comes from super saver. This is its major product so carryinh out break even analysis from only

Only from super saver(90% of total sale) Total operating cost = 77000 Profit = 400/unit

Break-even(units) = 77000/400 = 193 units

FROM ALL THE PRODUCT

Since this would be a new franchisee, its is not expected to have high sales in its first few months. So after asking the experts of the same industries it would take around six mothns for estabhlished and sales to pick there we have calculated the pay-back period by dividing period in two parts sales of first six month and sales after six mont

for first six months Product OEMS PRINTER OEMS CARTRIDGE REFURBHISHING PRINTER SERVICE SUPER SAVER 150 1200 10 30 450 150 50 800 total 400 no. of unit(expected) 10 20 avg. price 10000 1000 900 100 350 100 3000 60000 78500 avg. cost 9000 profit/unit 1000 100 2000 3500 net profit 10000

operating

cost net profit

87000 -9500

NET PROFIT FOR FIRST SIX MONTH

-57000

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AFTER SIX MONTHS product OEMS PRINTER OEMS CARTRIDGE REFURBHISHING PRINTER SERVICE SUPER SAVER 300 1200 20 30 450 150 50 800 400 toal no. of unit(expected) 20 30 avg. price 10000 1000 900 100 350 100 3000 120000 153000 avg. cost 9000 profit/unit 1000 100 3000 7000 net profit 20000

operating

cost net profit

77000 76000

TOTAL INVESTMENT = 11.72 lakhs

PAY PACK PERIOD(MONTHS) =6 + (11.72-(-57000))/76000

= 22.17 = 23 MONTHS APPROX

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