5a_Franchise Business Model Introduction (2).pptx

franchise business

1. Mahara Goteka Head of Programs Young Africa International

2. THE CHALLENGE financing & sustaining TVET OUR SOLUTION the franchise model

3. What is the Franchise Model…

4. AIM OF THE MODEL The broad aim of the franchise business model is to shape every skills training and production unit into an economically viable and self-reliant enterprise with capacity to generate wealth and create jobs for the local community.

5. The Arrangement of the Franchise Model Takes up the responsibility to train young people in a trade (i.e. teach or employ and supervise teachers and expose trainees to 70% on-the-job training). Pays rent to YA for the use of the facilities (tools and equipment, workshop space or land, classrooms, services of janitors and receptionist etc. Shares a portion of operational costs (e.g. security, insurance, water and electricity bills, license fees, levies) As part of this model, YA invests in capital equipment for each production unit which is franchised to a local entrepreneur who runs it as his/her income-generating project- In turn the Franchisee

6. E lements and B enefits

7. YA’s unique franchise model The skills centres  achieve financial sustainability by renting out their training departments to the franchisees. The income generated is sufficient to cover the operational expenditure of fully-developed centres . All Young Africa affiliates implement this model. Young Africa International safeguards its quality standards through staff training, internal audits, policy development, curriculum standardisation and strategic partnership development.

8. Franchising is a social entrepreneurship A social enterprise skills training centre entrepreneurs with x 15 train Youths to be entrepreneurs or be employed by entrepreneurs x 500

9. The franchise model: cost-coverage at two levels Each training unit is self-reliant (whatever its size) Independent business unit is franchised out to an entrepreneur Franchisee produces and sells goods and/or services Franchisee and her/his staff teach students a vocational skill in the process of production Practical training materials Students pay school fees to franchisee (via central admin) Young Africa defines curriculum and checks quality of training The training centre pays for its own operational expenditure + INCOME FROM FRANCHISEES - EXPENDITURE FOR SALARIES + ADMIN (65%) - CORE PROGRAMME COSTS (35%) = SELF-RELIANCE Franchisees pay Young Africa rent for the use of facilities, services and the brand Total income of all rents pay salaries of the centre’s core management team, support staff, administration costs and core programmes

10. Training through production leads to self-sustainability A multiple win Entrepreneurs rent equipped workshops with zero-capital investment Students learn and work in professional environment: 70% practical, 30% skills theory classes Each training centre can reach financial self-sustainability through income generated from the rentals

11. Who is the Ideal Franchisee A SKILLED - A skilled artisan, with considerable relevant industrial working experience; A PASSIONATE teacher/trainer with a track record in vocational training/skills transfer; A HARDWORKING business person with big ambitions, willing to use the franchise opportunity to grow own business profile; A CARING social/development worker, capable of supporting young people with broken backgrounds to rise beyond their past and exploit their full potentials and flourish; A BRAND AMBASSADOR for YA, capable of representing the YA brand through high quality products and services and his/her own conduct.

12. Responsibilities of the Franchiser Investing in capital equipment and infrastructure Inducting franchisees and their employees to YA philosophy, vision, mission, goals, values Where possible, facilitate access to micro financing Capacity building of franchisees and their staff where necessary Create value for YA as a brand

13. R esponsibilities of the Franchisee

14. Performance Management

15. Performance Metrics for Franchisees

16. Sustainability of the Franchise Model

17. YA & financial sustainability: the franchise model o INCOME CAPITAL EXPENDITURE and OPERATIONAL EXPENDITURE per centre EXPENDITURE on PROGRAMME and ADMINISTRATIVE COSTS Institutional Donors YA International Local office & management team 15 Franchised training and production departments Capex $ $ Fundraising Set-up Capacity building Hand-over to local team Rent of premise, equipment & brand at centre $ School fees $ 100% self-reliance in Opex Young Africa skills centre 6-12 months training Technical skills Commer-cial skills Agri -cultural skills 1,000 students per year Hostels 4 Academic coaching 5 Community support 6 Art promotion 7 Festivals 8 Integral empowerment Incl. life skills education and entrepreneurship Skills training 1 Teachers training 2 Job placement and micro credits 3 Salaries and administration www.youngafrica.org non-negotiable: accessible fees for underprivileged $ Programmes Administration

18. YA’s business model is self-sustaining in operational cost Non-negotiable: Training should remain accessible for underprivileged young people Young Africa skills center CapEx Institutional Donors YA International OpEx YA center Each training & production department, rented out to an entrepreneur Income Expenditure Rent received from entrepreneurs: premise, equipment and brand at center (~$250,000) School fees from students (fees below 1 month’s minimum wage) Sale of goods & services Rent of premise, equipment and brand at center Salaries, admin and programs (-$250,000) Centers are 100% self-reliant in operational cost Self-reliance usually achieved after 6 years of operations OpEx consists of 65% management and administration, 35% program costs Organizational capacity building of YA International until hand over to a local team ~$3,500,000 www.youngafrica.org

19. End of Session 1