Different forms to go for a venture

A Successful Franchise Example

•
History
Founders Gary and Diane Heavin, having experience in the
fitness and advertising industries, are considered the
innovators of the express fitness phenomenon that has made
exercise available to more than 4 million women worldwide.
They share a passion for and commitment to women’s health
and fitness.

• The Heavins opened the first Curves in 1992 in Harlingen,

Texas. Their innovative, 30-minute fitness concept combined
strength training and sustained cardiovascular activity through
safe and effective hydraulic resistance. The club was an
overnight success, as it gave women a supportive and
comfortable atmosphere in which to work out. In fact, the
company’s unofficial motto became “no makeup, no men, and
no mirrors.”
• When their second club was also immediately successful, they knew
that they had tapped a market that wasn’t being served by traditional
gyms and that they could help millions of women worldwide.
However, they knew they couldn’t do it alone. They needed to find
passionate people who were interested in helping the women in their
communities and teach them how to run a Curves. They began
making plans to franchise the business and the first independently
owned and operated Curves opened in Paris, Texas, in 1995.

• Curves caught on like wildfire and opened clubs at an astronomical

rate, sometimes more than doubling its number of locations from
year to year. This was all done by word of mouth until Curves
launched its award-winning national advertising campaign in 2003.
What took McDonalds 25 years and Subway 26 years to do—open
7,000 locations—Curves did in under a decade.
• It was considered the fastest growing franchise in history. With
such exceptional success, it made sense to branch out globally,
and so the Heavins took their vision for an effective and
affordable workout international. Today, Curves has nearly
10,000 clubs in more than 85 countries serving more than 4
million members.

• With its scientifically proven exercise and diet programs,

Curves is the only “one-stop shop” where women can lose
weight, gain muscle strength and aerobic capacity, and raise
metabolism for good.
 About Curves
• Created specifically for women, Curves offers a complete
fitness and nutrition solution. The Curves 30 minute workout
exercises every major muscle group and burns up to 500
calories through a proven program of strength training, cardio
and stretching.
• In addition, club promotions and events encourage women to
support charitable causes, learn about health-related issues and
forge lasting friendships as part of the global Curves
community.
• Curves also provides weight management classes with the
Curves 30 Day Diet Plan. This in-club program provides
nutritional guidance.
• So we can say that, Curves is about fitness, health, and moving
away from disease. Curves is about gaining strength and
losing weight. Curves is about reaching your goals in a
community of support and encouragement.
• Ultimately; Curves is about Strengthening Women.
 Some facts about Franchises
• Curves began to franchise this wonderful concept and opened
the first franchise in 1995. At the end of the first year, there
were 50 franchise locations. Curves reached 1,000 locations
within 36 months and nearly 10,000 locations in just 10 years.
Now in over 75 countries around the world, Curves is listed in
Guinness World Records as
“The World's Largest Fitness Center Franchise.”
Entrepreneur Magazine named Curves "The Number 1 Best
New Franchise" two years in a row and "The Number 1
Fitness Franchise" for six years. In 2009, Curves International
was recognized as Franchisor of the Year by the American
Association of Franchisees and Dealers. Curves has helped
millions of women lose weight, get healthier and lead more
fulfilled lives.
 Franchisee Support
They has a saying; “You're in Business for Yourself, Not by Yourself”

• Before you open: You'll be provided with special tools that will help
prepare you for club ownership, as follows:
• Club Development Support Program - This specialized program
will provide you with all the support you need to know for daily
processes, along with the initial steps required to open a club, and
help prepare you for Club Camp. You will be trained by experts in
club ownership that will help jumpstart your Curves opportunity.
• Club Camp - A special, week long training, filled with information
from experts at Curves corporate office. When done, you'll understand
guest producing techniques, member retention and Curves club
essentials.
• The Curves Learning Experience - As a new franchise owner, you'll
be provided with a computer based program that teaches you all the
necessary procedures and processes for operational areas within your
club.
• After you open: You'll be provided with continued support
through these resources:
• CurvesCommunity.com - This extensive website is filled with
tools and resources used in the daily management of your club.
Providing you with materials for advertising, internal and
external promotions to generate business, and training
materials to keep you up to date with the latest Curves news.
• Area Directors and Corporate Help Staff - Area directors are
your personal link to the corporate office and will help with
any issues that arise while operating your club. As a secondary
means of support, you can submit questions about Curves
Programs and processes through CurvesCommunity.com and
get expert answers from Corporate Help Staff.
• Corporate Events - These special events occur annually and
provide you with inspiration and information for the future
with Curves.
 Curves in India
• Curves International, a US-based fitness club chain entered the
Indian market in 2010 with its maiden centre in Mumbai.
• It plans to open 250 fitness centres in India through its Master
Franchise- Curves India. These centres will be launched within
a span of three years and will be franchisee operated centres.
• Curves India has also signed a MoU (Memorandum of
Understanding) with Q-Mart Retail Ventures Pvt. Ltd, a
Hyderabad based food retailer.
• On 11th Feb, 2011; it opened its franchise centre in Hyderabad.
The new facility at Banjara Hills is the fitness chain's second
centre in India.
• Q-Mart Retail Ventures Pvt Ltd, the exclusive franchisee for
'Curves' in Andhra Pradesh, has plans to set up 18 centres in
the state. Apart from this, the company will open 30 sub-
franchised fitness centres in Mumbai and 50 in Delhi.
An Unsuccessful Franchise
Example
COMPANY PROFILE

MR. R SUBRAMANIAN
(FOUNDER)
 Company Profile of SUBHIKSHA
•Subhiksha which means prosperity in Sanskrit was one o
f the largest retail value chain India.

• It was started in the year 1997 by Mr. R

Subramanian.

• It was having 1600 outlets all over the country selling

groceries, fruits, vegetables, medicines and mobile
phones.
 Product Portfolio
• Supermarket:  It includes quality groceries, packaged foods, co
smetics and toiletries, household provisions.
• Fruits and vegetables:
Includes fresh fruits and vegetables sourced directly from farms 
on city outskirts & made available to the consumers at very
reasonable prices.
• Pharmacy:  It stores mostly basic medicines. All medicines are 
made available to consumers at a flat 10% discount.
• Telecom: They are also into mobile retailer business & offers
handsets, recharge cards & accessories from all leading
manufacturers at low prices.
 Expansion
• In March 1997 they started the first retail store in
Chennai.
• March 99: 14 stores in Chennai
• June 2002: 120 stores in whole of Tamil Nadu 
• June 2006:20 Stores in other big states in India na
mely Gujarat, Delhi, Mumbai, Andhra Pradesh and 
Karnataka.
• Dec 2007: 1000 stores across India
• October 2008: 1600 stores across India
SUCCESS OF SUBHIKSHA
 SUCCESS OF SUBHIKSHA
• 1999-2000 - from 14 stores to 50 stores

• 2000-02 - it had 120-130 stores across Tamil nadu

• 2004-05 – 420 stores in places like Gujarat, Delhi,

Mumbai etc.

• USE OF INFORMATION TECHNOLOGY

 USE OF IT
• Introduction of Subhiksham Card- These cards are issued to
customers of Subhiksha who get additional discount every
time they swipe the card at Subhiksha after making a
purchase.

• Implementation of home delivery system- A consumer can

place an order to Subhiksha on phone without mentioning any
detail of address, name and landmarks. All he needs to do now
is to just read out the Subhiksha Card number and the order
gets delivered right at his doorstep.
• Esablishment of online retail system- It entered into the field
of online retailing back in the year 1999. But the system was
not a success and was shut down in two years. One of the basic
reason was that average Indian consumers did not have access
to internet and were also very less aware of it.

• Wireless Retail solution- This technology will be used for the

real time data capturing and the coordination between the store
and supply chain.

• Use of Bar Code System- It has adopted the use of Bar coding
System which helps the identification and billing of a product
at the point of sale. This is used instead of punching in the
product codes manually.
FAILURE OF
SUBHIKSHA
 FAILURE OF SUBHIKSHA
• Financial Mismanagement- In the absence of funds to
maintain the expansion plan the management diverted working
capital to fund. Consequently, the vendor payments were
defaulted, who in turn stopped supplies and the shelves started
to run empty. This also resulted into other disadvantages like- no
fixed assets, working Capital mismanagement & non payment of
salaries, etc.

• No back up plan- Industry experts came in saying that the

management did not have a plan B, some were direct in saying
they were not careful in managing their money.
• Customer Management System- The focus was not on
improving customer experience over a period of time instead
keep them involved only on the price advantage which can be
easily dislodged when a new more focused competitor or a local
entrant comes into play. So we can say that there was lack of
focus.

• “Discount Format” Model- The only USP was “discounts”

which is not a sustainable competitive edge. Just by having a
discounted model all the time the business cannot be sustained.
Acquisition of Zandu by Emami
 Background on Emami
• The Rs 600 cr Emami Group is one of the leading Indian Groups
in personal and healthcare products industry.

• Established in 1974 Emami manufactures and markets trusted

power brands like Boroplus, Navratna, Fair and Handsome, Sona
Chandi, Mentho Plus, and Himani Fast Relief.

• Emami’s brands and their extensions occupy leadership in most of

the categories like antiseptic creams, cool oils and pain relief
ointments and it has been a pioneer in introducing the first fairness
cream for men in the world.

• Maintaining a CAGR of 25% Emami has footprints in 60

countries across the globe.
• The plants and production activities of the Group are currently in
West Bengal, Pondicherry, Assam, Gujarat, Orissa, Uttaranchal, and
Himachal Pradesh.

• Today, advancing with increased momentum, Emami is a popular

Rs 1600 crore Group.

• In East India Emami occupies leadership in sectors such as

newsprint, private hospital, edible oil, bio-diesel and real estate.

• Emami also has presence in ball pen tips manufacturing,

contemporary art and retail chain with Frank Ross and Starmark The
group has signed a memorandum of understanding (MoU) for
setting up a cement plant at Chattisgarh.
 Future Growth Plans of Emami
• Emami is on a look-out for further acquisition opportunities
nationally and internationally and ready to walk the path of
inorganic growth
• It plans to position itself as a “food products and personal care
major”. Food products and personal care comprise the biggest
slices of India’s Rs 96,000 crores FMCG pie, accounting for
43 per cent and 22 per cent, respectively
• It plans to diversify into over the counter herbal and ayurvedic
medicine which is an approx INR 7,500 crs market
• It wants to become a serious player in the FMCG segment and
it cannot become a serious player by merely changing or
rearranging the existing product categories
Background on Zandu (Target Company)
• Zandu- more than century, its an old household name in India
and leading players in the healthcare system of Ayurveda with
products including the popular Zandu balm, general fitness
medicine, Kesari Jivan, Zandu Chyavanprash and digestive
tonic Zandu Pancharishta. 
• The net sales for Zandu stood at Rs 168.8 crs for the year
ended March 2008, growing at a CAGR of over 11% over the
past four years. 
• The Company has strong research base with various products
in the pipeline at various stages. 
• Zandu has a number of world class manufacturing facilities
and technologies in the field.
 Why Zandu as a Target???

• Strong brand name, 100 year old company 

• Attractive target for domestic and international FMCG
players 
• Zero debt company 
• Product portfolio consists of more than 300 herbal and
ayurvedic products 
• Zandu has a tremendous business potential which can be
exploited with strong marketing, R&D and other operating
efficiencies coupled with long term entrepreneurial vision. 
• Emami with its strong marketing acumen and operational
efficiency can help Zandu reap its true potential
 Benefits to Emami upon Acquisition
• Before Zandu came into the fold, Emami was the market
leader in two niche categories: Boroplus cream, with 70 per
cent, led the Rs 190 crore antiseptic creams market, and
Navratna, with over 50 per cent, headed the Rs 397 crore
cooling oil category. 

• With the Rs 120 crore Zandu Balm in its fold Emami leads the
‘rubificient’ (local pain ointment) category with a combined
market share of more than 25% 
• Zandu’s Special Sona Chandi and Kesari Jeevan Cyawanprash
will give Emami a larger market share in the Rs 170 crore
Cyawanprash category, which is currently dominated by
Dabur having 61% of the market share 

• Consolidation in the ayurvedic medicine market which

currently is led by Dabur with 10% market share 

• It took advantage of product improvisation, customisation and

price variations 

• Stage to become a serious FMCG player

Fem Care’s merger with Dabur
 Dabur At – A - Glance
Dabur India Limited is the fourth largest FMCG
Company in India and Dabur had a turnover of
approximately US$ 750 Million (Rs. 3390.9 Crore FY
09-10) & Market Capitalisation of over US$ 3.5 Billion
(Rs 15500 Crore), with brands like Dabur Amla, Dabur
Chyawanprash, Vatika, Hajmola and Real. The company
has kept an eye on new generations of customers with a
range of products that cater to a modern lifestyle, while
managing not to alienate earlier generations of loyal
customers.
 About Fem Care
Fem Care Pharma, which has a leadership position in
the fairness bleach category and a strong market
position in hair removal and liquid soap category, is best
known for its brand ‘FEM’. The other brands in its
portfolio include Oxybleach cream, Botanica anti-
ageing cream and SAKA men’s bleach. The company
also has a sizeable international market presence in
markets such as Yemen, Maldives, Mauritius, Malaysia,
UAE, Oman etc.
 Merger
• India’s largest natural healthcare company Dabur India Ltd
announced on 27th 2010 that the High Court of Delhi has
approved the merger of Fem Care Pharma with Dabur India
Ltd. The High Court of Delhi has approved the scheme, which
was earlier approved by equity shareholders, secured &
unsecured creditors of Dabur and the Ministry of Corporate
Affairs.
• This approval represents a significant step forward for Dabur
in the strategy to accelerate growth in their core FMCG
business. Besides giving Dabur a strong foothold in the high-
growth skin care market with an established brand name FEM,
this merger also offers them a platform to enter newer product
categories and markets. The Fem Care Pharma Ltd acquisition
would offer substantial synergies for expanding the reach of
Fem’s brands in all their geographies.
• Dabur India Ltd had acquired 72.15% of Fem for Rs 203.7
Crores in an all-cash deal. After obtaining the regulatory
approvals, Dabur acquired additional 20% stake for Rs 56
Crores through an Open Offer. With the completion of this
transaction, Fem Care Pharma became a subsidiary of Dabur
India Ltd.

• On 18th June 2010, Dabur India announced the formal merger

of Fem Care Pharma Ltd with itself. With this, Fem Care
Pharma Ltd will now cease to exist.
Joint Venture of Hero-Honda
 The Market before JV
• The license raj that existed prior to economic liberalization
(1940s-1980s) in India did not allow foreign companies to
enter the market.

• In the mid-’80s when the Indian government started permitting

foreign companies to enter the Indian market through minority
joint ventures.

• The entry of these new foreign companies transformed the

very essence of competition from the supply side to the
demand side.
 What Was Hero Before JV
• Hero Cycles manufactured Over 16000 Bicycles a day.

• They Sold about 86 million bicycles in aggregate as of 2002.

• They had nurtured an excellent network of dealers to serve India’s

expansive markets.

• Over the years Hero Group had entered multiple business areas.
 Some Facts About Honda
• Honda’s initial plans called for both two-wheeler market and
the electric generator market.
• It first chose Kinetic Engineering Ltd. & formed Kinetic
Honda Motors Ltd. But this JV would work in field of
Scooters Manufacturing.
• It came to Hero Group as the Last compromise choice for its
motorcycle venture.
 Reasons for Selecting Hero Group
• Its engineering capability
• Relevance and salience of HERO brand
• Distribution network
• Commitment to Quality
• Know-how and experience in handling large volume
production and distribution
• Tight focus on financial and raw material processes
• Cordial Industrial Relations
 Some Facts about the Deal
• Honda agreed to provide tech. know-how to Hero Honda
Motors and setting up manufacturing facilities. This included
the future R & D efforts.

• Honda agreed for a lump sum fee of $500,000 & 4% royalty

on Selling Price.

• Both Partners held 26% of the equity with other 26% sold to
the public and the rest held to financial institutions.
 Success Story
• HHM grown consistently, earning the title of the world’s
largest motorcycle manufacturer after having churned out 1.3
million vehicles in 2001.

• World’s largest two-wheeler manufacturer with annual sales

volume of over 2 million motorcycles.

• Owns world’s biggest selling motorcycle brand – Hero Honda

Splendor.

• Over 9 million motorcycles on Indian roads.

• Deep market penetration with 5000 outlets

 Reasons for success
• The deep penetration network of hero largely
benefited the sales.
• Absence of major competitors in initial years.
• Sound and proven technical capabilities of
Honda and the reliability of Hero.
• Increased market for motorcycles:
– Better Fuel efficiency.
– Change in people’s perception.
– Decrease in price difference with scooters.
 Break-Up
• On 6th Dec 2010, It was confirmed that Honda Motor
Corporation is exiting Hero Honda, the joint venture between
Indian Hero group (Munjal Family) and Honda Motor
Corporation of Japan.

• However, the two companies, which renewed the agreement

for technology support from Honda to the JV in 2004, will let
the deal run till its expiry in 2014.

• Honda will sell its entire 26% stake at US $ 1.2 billion

(approx. 5,500 crore) to Hero group of Munjal family as
early as March next year and will not provide any technical
support after the expiry of technical agreement in the year
2014.
• The breakup of Hero Honda after a marriage spanning 25
years sent shockwaves across the entire Indian auto industry.
Hero Honda had brought the concept of a two–wheeler in
India’s collective consciousness. It is also regarded as the
largest manufacturer of two–wheelers in the world. Then
why the breakup of such a successful marriage?

• The most important reason being Honda, which provided the

technology to the company, was never too happy with its 26
per cent share of the dividends and royalty; it felt its
contribution was way bigger.
Ancillarisation
Hyundai plans ancillary units in AP
• Automobile major Hyundai is set to ink an MoU
with Andhra Pradesh Government to set up a spare
parts facility and other ancillary units in the state
entailing an investment of over Rs 1,000 crore. 

• According to a senior Government official, they

had a series of meetings with Hyundai
representatives and managed to convince the
company to set up units at Nellore, a district
bordering Tamil Nadu, where the South Korean
giant has a manufacturing plant at Chennai. 
• The company will invest Rs 500 crore in the first
phase and Rs 700 crore in the second phase. In turn
the government will offer 50 acres of land at nominal
price in the first phase and same size land in the
second phase.

• There is no major automobile-related industry in the

AP. This will become a model for other automakers.
Carmakers may show interest to set up manufacturing
facility once basic infrastructure is in place.

• Hyundai also has a research and development centre

in Hyderabad, which supports all back-end operations
across the company's car line-up.