According to statistics compiled by the Ministry of Economic Affairs, only 20 percent of small businesses would survive in the competitive retail market, but the success rate for franchise holders stands at 80 percent.
The differences between these two business models are that franchisees obtain operational know-how and assistance on marketing, financial and personnel management, as well as professional counseling from headquarters. This helps reduce the possibility of failure.
Although it sounds enticing, how to choose from a dazzling array of franchise brands is a decisive factor determining whether the hundreds of thousands of NT dollars tossed in can be retrieved.
PHOTO: SEAN CHAO, TAIPEI TIMES
Kuei Shih-ping (桂世平), adviser to the National Association of Small & Medium Enterprises ROC (中華民國中小企業協會), suggested that those interested in joining franchise business choose brands that have expanded to more than 10 branches and visit their outlets first to obtain first-hand information from other franchisees.
"Innovation is also important. The headquarters must present creative products and marketing methods to boost competitive edge," Kuei said.
Combining these features, the bakery shop called Billie Chick (比利小雞) and Condom World (保險套世界) have been two of the most popular booths in the Taipei International Chain and Franchise Exhibition held at the Taipei World Trade Center Exhibition Hall I. The four-day show wraps up today.
Billie Chick
Established 10 years ago, Billie Chick has developed in eight directly run outlets and five franchises in Taiwan. Starting last year, it expanded its turf overseas by granting operation authorization to an Indonesian company, which has opened one outlet in the Southeast Asian country.
"Creativity is an important element. We want consumers to feel 100 percent of the time surprised when they see our cakes," said Sofi Wu (吳季庭), vice president of marketing at Billie Chick.
The bakery established its name by producing unique products, like cakes in the shape of a skull, a car, and a bikini-clad chick whose private part will explode when opened.
The owners only started to think of selling franchises after the brand's eight directly run stores successfully raked in over NT$100 million per year.
Adopting an aggressive strategy, the company expects to add 15 to 20 new locations annually and is evaluating the possibility of entering the massive Chinese market, Wu said.
During the four-day expo, Wu said those expressing interest in joining their franchise network have mostly been in the 30-to-40 age bracket, which also includes housewives.
With NT$1 million franchise capital, franchisees obtain headquarters' assistance in vocational training for three to five days, assessment of store locations, offering store furnishings, and suggestions for business hours and operational methods, as shops near MRT stations and hospitals require completely different business modes.
Once all the preparation work is done, a new store can be born within 15 days of a contract being signed, Wu said. Generally, Billie Chick shops can break even within six months to a year.
"There would be no problem for our franchises to make between NT$800,000 and NT$1 million in sales per month as consumers have developed confidence in our brand. But to raise performance to between NT$1.2 million and NT$1.5 million, franchisees would need extra efforts, like offering member services," she said.
Condom World
When it comes to condoms, brand names like durex might be the first thing popping into people's minds. Are there different choices?
"Sure. We make condoms more interesting and value-added," said Jim Wong (翁文俊), founder of Condom World, which was first established in 1996 as an online store and opened its first shop two years ago.
The chain now operates 30 outlets nationwide and plans to set up a new company in Shanghai to branch out this year, Wong said.
People from the US, UK, Hong Kong and Australia have asked for franchise permits, Wong rejected their offer now hoping to strengthen the company's constitution first.
Different from pharmacies or convenience stores, the company does not sell regular condoms in cartons. Instead, single condoms are packaged in colorful and interesting designs, such as passports or photo frames, so that they make eye-catching gifts.
With a background in design and multimedia, Wong left his eight-year media career to test the waters in e-commerce nine years ago.
As entering the condom business does not require much know-how, Wong started selling own-designed sex-related products on his Web site.
"Taiwanese people use around 100 million condoms a year and the number is rising by 10 percent year on year," said Wong, expressing his potential.
By preparing NT$600,000, franchisees can join his network and break even within one year. Gross margins are a breathtaking 50 percent. But this does not mean everyone can succeed. Wong suggested that franchisees, no matter which business they are running, must believe in the headquarters' system and business spirit.
"One of my franchisees was suspicious over having to stock so many products from headquarters and thought we made too much money from him. In the end, his store closed due to poor performance," Wong said.
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