Ice Ice Baby Proposal

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Ice Ice Baby Proposal

  1. 1. 2010 Youth Microfranchise Initiative: Ice Ice Baby Microfranchise Proposal This report analyzes the ice, water sachet, and popsicle markets; the development of a cold chain distribution system; and uses those analyses to propose a microfranchise system to employ at least 1,000 youth in Sierra Leone. Prepared for : Prepared by: oakley1008 Hewlett-Packard g e 1|Pa 1/1/2010
  2. 2. TABLE OF CONTENTS Executive Summary....................................................................................................................................... 4 Business Analysis........................................................................................................................................... 6 Description ................................................................................................................................................ 6 Popsicles .................................................................................................................................................... 7 Water Sachets ........................................................................................................................................... 8 Operations ................................................................................................................................................ 8 management ............................................................................................................................................. 9 Market Analysis........................................................................................................................................... 10 Target Customer Demographics ............................................................................................................. 10 Consumer Needs/Wants and Preferences.............................................................................................. 10 Market Size and Growth ......................................................................................................................... 11 Ice ........................................................................................................................................................ 11 Water .................................................................................................................................................. 11 Frozen Treats ...................................................................................................................................... 12 Industry Analysis ......................................................................................................................................... 13 Competitive Landscape ........................................................................................................................... 13 Supply Chains .......................................................................................................................................... 14 Microfranchise Plan .................................................................................................................................... 16 Introduction ............................................................................................................................................ 16 Microfranchise Evaluation .................................................................................................................. 16 Business Description ........................................................................................................................... 19 Phase 1 – Build Out (5 months) ............................................................................................................... 20 Phase 2 – Systematize (8 months) .......................................................................................................... 21 Phase 3 – Replicate (23 months) ............................................................................................................. 22 Microfranchisor Business ........................................................................................................................ 22 Management/Monitoring System ...................................................................................................... 22 Distribution ......................................................................................................................................... 24 Marketing and Branding Strategy ....................................................................................................... 25 Training ............................................................................................................................................... 26 Product ................................................................................................................................................ 26 2|Page
  3. 3. Expansion Plans................................................................................................................................... 26 Microfranchisee Business ....................................................................................................................... 26 Business Package ................................................................................................................................ 26 Funding Considerations ...................................................................................................................... 27 Marketing and Branding Strategy ....................................................................................................... 28 Program Funding Considerations........................................................................................................ 29 Timeline............................................................................................................................................... 30 Financials..................................................................................................................................................... 31 2010 Ice Ice Baby Budget ........................................................................................................................ 31 Projected Returns to the Microfranchise Business Model ..................................................................... 32 Microfranchisee Projections ................................................................................................................... 33 Conclusion ................................................................................................................................................... 34 3|Page
  4. 4. EXECUTIVE SUMMARY Ice Ice Baby is a simple venture-backed business in Sierra Leone. The company produces and distributes ice from its 28-ton Freetown facility. Manocap, a Sierra Leonean venture capital firm, acquired the company in 2008. Manocap’s core belief is that opportunities for profitable investment exist in post-conflict and emerging African economies alongside opportunities to meet development goals. These beliefs are very much aligned with the International Rescue Committee’s (IRC) initiative to create youth employment using the microfranchise model. Ice Ice Baby is a skilled and innovative partner poised for growth. Since Manocap acquired the company, Ice Ice Baby underwent a series of strategic improvements positioning itself for network expansion and higher sales. The company earned $421,885 in 2009, representing an 8% growth in dollar terms and 33% growth in Leones terms due to dollar appreciation. Ice Ice Baby is expecting 23% sales growth in 2010 and is well on a path to exceed this growth rate. Ice Ice Baby’s brand is widely recognized for top quality and the company is the only producer certified by the Ministry of Health. However, the company is constrained by storage capacity and its ability to distribute product efficiently. Ice Ice Baby’s management seeks to develop a cold chain distribution system throughout Sierra Leone to distribute not only ice, but also other cold/frozen products like popsicles and purified water sachets. During the dry season in Sierra Leone there is high value placed on frozen or cold products. The current market size for popsicles, purified water sachets, and ice is estimated to be $243 million. The competitive landscape for popsicles is characterized by a fragmented group of informal players. There is enormous opportunity to introduce a new popsicle product under the Ice Ice Baby brand and capture significant market share. Earlier, this year the Ministry of Health closed eight water sachet operations that did meet standards for water purification. This sachet industry is characterized by mistrust and consumers will gladly welcome a trusted company like Ice Ice Baby. Both water sachets and popsicles are simple products that will sell quickly throughout the course of the day. This is very important to youth franchisees, as there is a sense of security knowing that after working a full day he or she will earn an income. A microfranchise business model is extremely well matched for Ice Ice Baby. The company seeks to leverage its strong brand to develop a cold chain distribution system that will sell popsicles and purified water sachets to the “last mile” of clients. In order to do so a three-phase process is recommended. Phase 1 – BUILD OUT (5 months) – Ice Ice Baby opens 4 depots in high sales area to retail ice and prepare for deep distribution of popsicles and sachets. Phase 2 – SYSTEMATIZE (8 months) – Popsicle and sachet sales launched by 100 franchisees (25 per depot) and the Fairbourne Consulting Group (FCG) conducts the Live Market Test (LMT) to refine the microfranchise business model and achieve profitability. 4|Page
  5. 5. Phase 3 – REPLICATE (23 months) - LMT results in sustainable business model that can scale rapidly across Sierra Leone in strategic locations identified by Ice Ice Baby. Franchisee network is built to 1000 youth. In order to implement this approach FCG will create the Manager of Franchising position housed at Ice Ice Baby to oversee Depot Managers and Retail Staff. The franchisor/franchisee relationship is critical and it is the responsibility of this new position to ensure franchisees are effectively trained and integrated into the business system. The IRC will oversee the identifying and business training of the youth. However, Ice Ice Baby and more specifically the Manager of Franchising will train the youth in the specific Ice Ice Baby franchising system. The FCG will design and create the Ice Ice Baby Microfranchisee Business Package, which will provide the necessary support and equipment for franchisees to be integrated into the business model. Franchisees will receive a $200 microcredit loan at 0% interest to purchase the equipment necessary to launch their own franchise. It is recommended that this amount be repaid over the course of the year. Financial projections show that this amounts to 13.8% of franchisee’s 1st year revenue, approximately Le 15,200 or $3.85 per week. The three-phase approach will facilitate scaling outside of Freetown. Ice ice Baby is committed to expanding upcountry starting in Makeni and then moving into the Bo and Kenema regions. Currently, 12% of Ice Ice Baby sales are in the Makeni region (185 km outside of Freetown). Investment of time and resources of properly systematizing the microfranchise model in Phase 2 will ensure rapid scale in Phase 3. Developing a microfranchise model with Ice Ice Baby is an enormous opportunity for both the youth franchisees and the company. Both stand to gain in developing a deep distribution system for popsicles and water sachets. Youth street vendors aspire to affiliate with a larger more established company. Like any market, customers prefer high quality products, and Ice Ice Baby’s move to expand its product portfolio will quicken the company’s path to increased profitability. 5|Page
  6. 6. BUSINESS ANALYSIS DESCRIPTION Ice Ice Baby currently produces and distributes ice from its 28-ton capacity facility in Freetown. As the only producer in Sierra Leone certified by the Ministry of Health, the company is widely recognized for its top quality product. The ice is in very high demand from both fishermen and street vendors alike with daily revenue reaching on average Le 11.2 million ($2835) during the dry season split equally between the two customer segments. Fishermen use the ice to pack and transport fish from Tombo (1 hour outside of Freetown) and order by the truckload regularly. Street vendors purchase crushed ice by the 5-kilo bag (retail price Le 2700 or $0.68) to keep beverages cool for resale. Trucks sell ice daily on routes throughout Freetown to street vendors. Efficiently distributing ice is equally critical to the company’s overall profitability as producing high quality ice. As the product melts during transport, efficient allocation of resources is very important. Customers at the end of the distribution route complain of lower product quality, but regardless purchase the 5-kilo bag because it remains the best available alternative. Ice Ice Baby is constrained in its ability to effectively distribute product with a total of 5 trucks to service the region’s ice needs. The company’s management team recognizes this and seeks to improve upon their existing distribution methods. 6|Page
  7. 7. There is significant profit potential in establishing a cold chain distribution system in Sierra Leone that would not only distribute ice, but also other frozen or cold products. Once an efficient cold chain distribution system is in place Ice Ice Baby will supply popsicles and water sachets utilizing the microfranchise model. There is a complimentary relationship between the products selected for distribution through the cold chain channel. First, as referenced above 50% of Ice Ice Baby’s sales can be attributed to street vendors. Therefore by introducing popsicles and water sachets into new markets Ice Ice Baby will be selling more ice directly to microfranchise vendors as end consumers demand cold water and frozen popsicles. Second, the microfranchisee benefits from bundling water sachets and popsicles with some ice in a cooler, as frozen popsicles will keep the sachets ice-cold. Third, by selling water sachets, a high turnover product, microfranchisees increase touch points with customers and can use that interaction an opportunity to seed the popsicle market. POPSICLES Frozen treats and more specifically popsicles in Sierra Leone are a popular frozen snack food. In Freetown, the current popsicle is a frozen sugary mixture (approximately 3 ounces) funneled into a plastic bag. The product can be either dairy-based using powdered milk or traditional syrup based fruit flavoring. This frozen treat pictured below is an inferior substitute produced in unhygienic standards. These bagged popsicles retail for Le 500 ($0.13) from street vendors. Analogous to the segmented purified and unpurified water sachet market there is a sizable opportunity to introduce an equally affordable, yet superior product like the one pictured above. 7|Page
  8. 8. Ice Ice Baby is not currently in the popsicle business, but has expressed serious intent to venture into this adjacent market. Both the management team and Manocap, the venture capital firm owning Ice Ice Baby, have surveyed the popsicle market and are prepared to purchase equipment necessary to produce popsicles once the cold chain distribution system is established. WATER SACHETS Water sachets are single serving plastic bags of drinking water sold by street vendors and established stores alike. There is both an informal and formal market for the product. Customers will pay a premium for branded sachets that are trusted to contain purify water. Customers also highly value an ice-cold water sachet as opposed to room temperature, and will seek out vendors that can provide this. Informal water sachets (Le 100 or $.025) are filled with unpurified water from homes or community water taps and sold on the street. Many youth will sell unpurified water sachets on the street as the product turns over quickly and anyone can produce it. Purified water sachets (Le 200 – Le 400) are produced by local companies using a reverse osmosis process and are distributed in packs of 30 for retail by both street vendors and formal establishments. One challenge for the consumer with the water sachet market is trusting water quality. As “purified” sachets sell for more than double the price unpurified sachets some companies falsely claim to produce purified drinking water. Government agencies do loosely regulate this industry having recently shut down eight falsely purified operations in the past year. Moving in water sachet production and distribution is logical for Ice Ice Baby. This represents an enormous opportunity for company as its existing customer base is large, loyal and recognizes the company’s high standards for quality. OPERATIONS Ice Ice Baby is in the business of producing, selling and distributing ice. The company produces a high quality product for which there is high demand. Distributing the product from its Freetown facility could be improved. Establishing a cold chain distribution system will directly impact Ice Ice Baby’s 5-kilo bag retail business. It is possible that there will be some benefits for the fishermen operation as more trucks will be freed up to serve new customers. However, the remainder of this report will examine the 5-kilo retail operation within Ice Ice Baby. Ice is produced centrally in the 28-ton capacity Freetown facility. All water is purified prior making crushed ice for the 5-kilo bags. Ice Ice Baby owns 5 trucks for distributing product and travels as far Makeni (3 hours outside of Freetown) to sell product. During peak season management will hire other trucks for distribution to meet demand. The highest cost of producing and distributing ice is fuel and energy. Thus, ice is very much a commodity product that can fluctuate in price based on energy costs. For this reason the company charges a different price to customer’s in different regions. 8|Page
  9. 9. Daily the trucks are loaded in the early morning with up to 1,200 5-kilo bags. The trucks leave the facility in the early morning and follow an established delivery route. There is two staff per truck – one salesman and one driver. On one popular sales route to Waterloo the truck stopped 12 times. At each stop customers swarm the truck to purchase the 5-kilo bags. The salesman aboard the truck transacts with the customers along the route until there is no more ice left for sale. The company also retails ice from its production facility. Ice at this location sells for retail price of Le 4000 ($1.03). Customer value Ice Ice Baby’s high quality product and this builds significant brand recognition. Its distribution network, although beset with inefficiencies, creates significant value for the company. Delivering ice directly to the street vendors in close proximity to their business operations allows these street vendors to conduct business while waiting for the ice delivery. Microfranchises will be integrated into the current distribution network to bring ice, popsicles and water sachets to the “last mile” of clients. MANAGEMENT Ice Ice Baby management is innovative and solution oriented. Managing Director, Mohamed Kanan is responsible for daily operations. Through his efforts Mr. Kanan has increased sales to their highest levels ever. Mr. Kanan introduced the 5-kilo bag retail operation in the past two years and it has been widely successful. **Sales are in Leones ($1= Le 3,950) 9|Page
  10. 10. A local venture capital firm, Manocap, wholly owns Ice Ice Baby. Manocap provides advisory services to Ice Ice Baby’s management while ceding responsibility to Mr. Kanan for daily operations. MARKET ANALYSIS TARGET CUSTOMER DEMOGRAPHICS Ice Ice Baby will expand its ice business by improving its ability to distribute product through the creation of a cold chain distribution system. Doing so will minimize current distribution inefficiencies placing more product deeper into the market. Target customers for ice are street vendors that need ice to keep beverages cool. Youth microfranchisees will sell popsicles and water sachets. A cold chain distribution system with the ability to transport more than just ice would be desirable by many consumers. While ice tends to be purchased largely by informal businesses, most everyone desires to purchase a cold-water sachet or a frozen popsicle during the hot dry season. Regarding ice, street vendors are less discriminate about what type of ice (crushed, bars, cubes, etc) they have to keep their beverages cool. When questioned almost all street vendors purchased ice to keep soda, ginger beer and water cool for resale. When there is a power outage there is a high demand for ice because most everyone loses the ability to keep things cool and small informal producers cannot manufacture ice. However, Ice Ice Baby has a generator to meet all of its energy needs and is not affected by outages. Everybody buys water if they are thirsty and not near their home water source. Individuals that spend a lot of time outside working away from the home like taxi drivers, other street vendors and laborers may represent a higher portion of the customer base, but either way water is a necessity for all and everyone buys it as needed. The size of a customer’s disposable income will dictate whether or not a customer purchases purified or unpurified water as there is a premium for the purified product. With limited selection of products in the frozen treats category a large portion of the population purchase this product. Target customers include school-age children and mothers. Popsicles retail at an accessible price point at Le 500. As a point of reference a bottle of Coca-Cola retails for Le 1200. CONSUMER NEEDS/WANTS AND PREFERENCES There is a high demand in Sierra Leone for anything frozen or cold. Customers prefer specific types of ice (blocked, cubed, crushed, shaved) based upon their business needs. All customers demand “strong” cold ice. Customers use the word “strong:” to refer to a hard and densely packed 5-kilo bag. Upon distributing ice many customers at the end of the distribution route tend to complain about ice quality as some of the ice has melted after a few hours of transport. However, left with no real options to purchase ice, customers quickly purchase what ice remains. 10 | P a g e
  11. 11. There is no more basic need then water. Consumers need to satisfy their thirst and highly prefer cold water when given a choice. Customers require an accessible price for this most basic product. Low-cost convenient packaging and lack of purification in the informal sector make this easily attainable at Le 100. Customers in the formal purified water market highly value the brand and are willing to pay a premium for safe drinking water. A well-known trusted brand is highly valued by consumers of purified water sachets. When purchasing a popsicle consumers are not only satisfying their hunger for a sugary treat, but also receiving comfort from the heat. The product size also makes it readily available to be bought and sold on the street at an accessible price point. Popsicle vendors also value the low price point and portability because it makes for quick product turnover. Quick turnover is important as the product melts during the course of the day. MARKET SIZE AND GROWTH ICE Current estimated revenue just for ice is $880,000 annually per conversation with Amadeus, Ice Ice Baby’s General Manager. He provided sales amounts for the dry season at 11.2 million Leones daily, and we estimated the wet season at half that. There is also opportunity for deeper distribution within Freetown, possibly 3 times the current 5-kilo bags distribution which is half of the current revenue, so an additional $1,320,000. Total estimated market size on current routes with deeper distribution is $2,200,000. Building out new production facilities in 4 other sites to establish a larger network of 5 total facilities to blanket the country could bring the total estimated nationwide market size to $11 million. There is opportunity for exponential growth in the ice market, as producers cannot meet demand both in and outside Freetown. Within Freetown deeper distribution networks would greatly expand the customer base to many street vendors in need of ice. Riding alongside Ice Ice Baby’s salesmen on a daily distribution route to Waterloo in Freetown, literally hundreds of customers were calling for ice from the side of the road and yet did not receive ice as the truck only stopped at specific locations. Outside of Freetown there are many customers whose needs for ice are not being met. In addition, should Ice Ice Baby be able to reduce the cost of its ice, it may be able to further grow the overall market size. In the long run however, it is expected that ice sales will decline as power becomes cheaper and more reliable within the country. WATER Estimated Water Sachet/Bag Market Size Location Avg Price Population Water/Day Penetration Market Size (L) Market Size ($) Urban 200 2,394,000 3.5 70% 428,166,900,000 107,041,725 Rural 250 3,906,000 3 40% 427,707,000,000 106,926,750 Total 855,873,900,000 213,968,475 11 | P a g e
  12. 12. Growth will be driven by increased distribution through expansion by existing companies and new entrants and by general population trends. Using just the historical population growth of 2.2% and the estimated market sizes above, the water sachet market could hit $606M by 2014. FROZEN TREATS Fan Milk, a similar company in Ghana sells ice cream using a microfranchise model. Last year the company reported $66 million revenue from selling ice cream in Ghana (population 24 million). Using Fan Milk’s experience in Ghana as a comparable business, the market size for popsicles in Sierra Leone is estimated at least at $18 million. 12 | P a g e
  13. 13. INDUSTRY ANALYSIS COMPETITIVE LANDSCAPE Competition in the ice market is not intense as the market absorbs all ice that can be produced. There is room for much more capacity. Whether that capacity comes from current market players or new entrants is a function of capital costs to set up facilities and distribution routes with trucks. First movers that can set up deep distribution routes and build a strong brand will capture significant market share. Currently, Ice Ice Baby is the only major player in this industry. There are many small and informal local vendors as well. However, customers clearly prefer Ice Ice Baby due to product quality and brand recognition. These producers sell minimal amounts as they have limited capacity to pay the utility bill to freeze and store ice. Ice Ice Baby is the only company that is certified by the Ministry of Health to sell ice for consumption. Other ice producers were shut down due to poor water quality earlier in this year. Remarkably, the company is also certified by European Union to service the fishermen in the event the fishermen can export fish. Most anyone can produce and sell unpurified water sachets. All that is needed is access to tap water and a supply of plastic bags. The ability to sell cold-water sachets does come at a higher expense to the producer, but this producer will sell sachets much more quickly. There are numerous established companies producing purified water sachets including:  Nour  Mama Pure Water  Family Care  Global H2O  Magram Water  UbesWater Educated consumers prefer to drink purified to unpurified water, but the decision of which sachet to purchase is purely economic. Customers purchase what they can afford. For the most part, the purified and unpurified water sachet markets are two distinct markets with little to no competition between them. However, fierce competition exists within both the purified and unpurified sachet markets. Customers are fairly loyal to their water preferences and if they can afford to pay for premium purified water sachets they will avoid buying informal water sachets. Likewise, customers who regularly purchase informal water sachets typically do not decide to buy a branded product without a significant rise in disposable income. That does not mean that relatively affluent customers do not purchase unpurified water sachets, but rather customers tend to stay true to their preferences as dictated by disposable income. 13 | P a g e
  14. 14. Competition within the informal water sachet market is completely saturated. The streets are lined with many vendors selling unpurified water sachets. Customers typically buy from trusted person and when no such person is available they will purchase from whoever has the coldest water nearby. The product turns over quickly with one street vendor selling 20 unpurified sachets in approximately one hour. Many youths sell these sachets before and after school to help support their educations. Competition between formal players is equally fierce with more than 10 companies fighting for market share. Purified water sachets are sold both by street vendors as well as more formal storefronts. Brand and trust are the two drivers of customer purchases for purified water sachets. There are issues of unpurified water sachets misleading consumers and lying about water quality on packaging. This does present some problems for formal players. There are no formally established businesses operating in the popsicle or frozen treat space. The industry is characterized by a fragmented informal group of producers and distributors. There is a loosely organized Ice Cream Seller’s Association comprised of approximately 15 ice cream street vendors. The association shares 2 extremely old ice cream producing machines which are in constant need of repair. Ice cream vendors complain of unreliable supply for sale. There are no other close substitutes for popsicles or frozen treats. SUPPLY CHAINS The production capacity outside of Freetown is rather limited. Therefore, Ice Ice Baby will ship ice as far as Tombo and Makeni. No other established company is servicing the ice needs of communities past the Makeni. The transport costs combined with Ice Ice Baby’s limited number of trucks discourages transport of the product farther then Makeni. The company is eager to expand into these areas and would build another facility in the region to do so when ready. Distribution in and around Freetown follows more of an “ice cream man” distribution route. The ice truck follows a daily route in the morning making stops in strategic locations to meet street vendors to sell 5-kilo bags of crushed ice (Le 2700). As traffic is a big problem on the road to Waterloo the ice truck 14 | P a g e
  15. 15. is limited on where it can stop to avoid being ticketed by the police. Many customers will call to the truck from the side of the road requesting ice, but the truck will not stop. Once the truck is stopped many vendors will run up to the truck to purchase the product. In the case of Ice Ice Baby the truck will make as many as 12 stops before making it out to Waterloo. It is possible that all of the ice will be sold out before even making it out there. The salesman on the ice truck will be sure to reserve ice for customers that routinely purchase larger quantities. Otherwise, it is likely that the ice truck will arrive in Waterloo with no ice. Water sachets both purified and unourified are made at the water source – for the informal producer this is the home and for a formal player this would be the manufacturing facility. Informal street vendors head directly to the street and sell product straight away. Formal players have more developed supply chains. Purified water sachets are plastic wrapped into cubes of 30 and loaded onto trucks for distribution to markets, small street vendors and individuals. Currently, popsicles have extremely limited distribution. Majority of production takes place in downtown Freetown. Street vendors pick up the product and are free to distribute where they choose, but ultimately do not venture too far away from the area of production. For popsicle production ingredients include sugar, water, powder milk and flavoring. All inputs can be obtained easily for local markets in large quantities. Current production methods require access to either block ice or a freezer for cooling. Upon freezing, product is distributed to street vendors. Vendors typically sell on credit and return cash and unused product at the end of each day. Street vendors pay Le 400 to producers and retail the product at Le 500, making a 20% margin. 15 | P a g e
  16. 16. MICROFRANCHISE PLAN INTRODUCTION MICROFRANCHISE EVALUATION Three factors were examined in evaluating Ice Ice Baby’s potential for microfranchise success – quality of partnership, scalability of the business and profitability/sustainability for both the franchisee and the franchisor. Upon surveying nineteen business opportunities in Sierra Leone, popsicles and water sachets sold through Ice Ice Baby’s cold chain distribution proved to be one of the most promising opportunities for microfranchising . P ARTNERSHIP Ice Ice Baby is an innovative and skilled partner with a widely recognized brand for quality. The company was acquired by Manocap, a local venture firm in 200X and since the acquisition Ice Ice Baby experienced stable sales growth. Mr. Mohamed Kanan, managing director, can be credited with the company’s sales growth as he has taken many steps to cut costs and open up new markets for their ice products. The company is well capitalized with five trucks and is seeking to build out new distribution systems for both popsicles and water sachets. Also, Mr. Kanan worked with the IRC and the youth franchises during the pilot phase of the Youth Works Project and is therefore quite familiar with the initiative. Ice Ice Baby may very well be the strongest brand for any local product in Sierra Leone. The company’s customers say it has a reputation for top quality. Ice Ice Baby is the only company approved by the Ministry of Health to produce and sell purified ice. In the water sachet market where consumers question water purity such brand strength will translate into increased sales for franchisees. Most importantly, management’s vision of establishing a cold chain distribution network for the “last mile” of popsicles and water sachets customers is extremely well matched for microfranchising. The company is willing to develop new business processes and to acquire new capabilities that will help it accomplish this vision. S CALABILITY Scaling will require some capital expenditures, be it lighter trucks and/or strategically located storage facilities. Deeper distribution from these strategic points will also require some pushcarts or possibly bicycles for the microfranchisee. Equipment to produce both purified water sachets and popsicles needs to be procured. This machinery can be acquired at relatively low costs. Overall, these expenses should not be prohibitive, as they will ultimately lead to increased sales and higher profit for Ice Ice Baby. 16 | P a g e
  17. 17. The company will need to acquire new production and management capabilities associated with microfranchising in order to reach full scale. It will be very easy for Ice Ice Baby to integrate new production capabilities into its current operations. The Fairbourne Consulting Group will work directly with the franchisor to systematize and refine microfranchising management techniques. The first two products identified for sale through the cold chain distribution system – sachets and popsicles – sell easily throughout the course of a day, which is very attractive to franchisees. Although there are already many competitors in the purified water sachet business, a strong brand in the purified sachet business will be able to scale quickly. In the informal sector popsicles are produced in Freetown and then transported as far away as Makeni. There is high demand for this product that extends beyond Freetown. Regions outside of Freetown, like Kenema and Bo, struggle with unreliable access to electricity, which could impede the freezing process. This challenge could be overcome by using generators and/or ice blocks. Also, simple packaging improvements to more of a sachet form of popsicle would minimize product loss due to thawing. Overall, the company’s vision for expansion, the management team’s ability to acquire new capabilities and the products ease of sale will facilitate rapid scale throughout Sierra Leone. S USTAINABILITY /P ROFITABILITY Ice, water sachets and popsicles are in very high demand and there is not sufficient supply to satisfy the market. The first mover to establish deep distribution will open up and capture market share. Managing capital expenditure and growth of the distribution network will be a critical factor in Ice Ice Baby’s profitability. Since products like water sachets have low profit margins, microfranchisees will benefit from quick product turnover. The ability to generate income daily is very important to the youth franchisees. There is significant value for both the franchisor and the franchisee in selling multiple products as there is a complimentary relationship between frozen popsicles and the customer’s desire to purchase ice- cold water sachets. This product synergy will benefit the franchisee, as non-franchisee vendors that sell only sachets or only popsicles need to purchase ice to keep their individual products cool. There is significant opportunity in the water sachet market. Customers will welcome a company with a trusted brand for high quality. A company, like Ice Ice Baby, with a well recognized brand would capture significant market share. Currently, both informal popsicle vendors and producers make adequate profit to sustain. Vendors make Le 100 per unit sale and according to multiple distributors they can sell up to 200 units per day during the dry season, equating to a total take home profit of Le 17 | P a g e
  18. 18. 20,000 (approx USD 5). The product is in high demand and the current supply is unreliable, unhygienic and virtually unbranded. As there are no formal players producing popsicles there is an enormous opportunity for a new entrant to capture market share. C OMPARISON TO OTHER MICROFRANCHISES The FCG has worked with or studied nearly every microfranchise model in operation. Through this journey we have catalogued a list of best practices of what makes a microfranchise successful. We have also worked through worst practices of what doesn’t work. When selecting potential partners we considered all that we have learned and built the best practices into the two models. We used out filters to sift out the weaker models and redesign business models be stronger. We identified similarities and differences with many successful microfranchises. Ice Ice Baby has many strengths similar to Fan Milk, the most successful microfranchise in West Africa. Fan Milk is one of the only microfranchises that primarily employs youth and is Ghana’s leading producer and distributor of dairy products. Scandinavian investors founded the company in 1960 to produce milk for Ghanaians, many of whom suffered from protein deficiencies. Today, Fan Milk is listed on the Ghana stock exchange and employs roughly 10,000 microfranchisees, who sell milk, ice cream, yogurt, and popsicles from atop their carts or bicycles throughout Ghana. Fan Milk has sister companies in Nigeria, Togo, and the Ivory Coast, but the business remains most developed in Ghana. We have studied and worked with Fan Milk for five years and have worked through the business plan to incorporate similar systems that have brought success to the frozen treat retailer. Some strengths that IIB has over Fan Milk is that we have incorporated distribution characteristics from Fan Milk without having to go through the trial and error phases, it took Fan Milk 50 years to get to its current model that we are piggy backing off of. We are also able to build in key lessons learned from other microfranchises. However, Fan Milk’s 50 years of operations has established them as a household brand, which increases the success rate for new microfranchises. IIB has a strong brand as well, but not as strong as Fan Milk. With that said, IIB has potential to have a similar brand presence as Fan Milk, as IIB currently has one of the strongest brands in Sierra Leone. With best practices there are also key mistakes to avoid. Some of the common mistakes that would-be microfranchisors make are the same mistakes that many new businesspeople make. First, they do not spend enough time on proper business development. A microfranchise is like any other business: It must identify and address market failures. Microfranchisors must likewise perform exhaustive market analyses to test their theories about what products low-income consumers want. IIB is willing to put in the time to build out a proper model that works. Another interesting comparison to IIB microfranchise is the Academy for Creating Enterprise in the Philippines. The Academy takes in 30 youth at a time, houses them for two months, and provides them with a mini MBA. They have refined their educational materials over the years and have a solid offering. Regardless of their successful training, the Academy found that only a small percentage of their youth were what they called AMPers which were the financially successful graduates. Most of their graduates went back to working the same business that they originally operated, few created new enterprises. The Academy realized that not all people are entrepreneurs, that many don’t know what types of businesses will increase their financial success. So, they experimented with plugging some of the youth into microfranchises and saw that those that became successful soon dominated the AMP group. They were 100% successful. This is with two months of training and then plugged into a proven model. IIB and 18 | P a g e
  19. 19. Splash both have this added benefit as IRC provides the initial business training and IIB gives them a unique and successful opportunity. In all, after putting IIB through the rigors of our business filters and added key design modules to make IIB a strong microfranchise candidate. IIB’s low barriers to entry is a positive feature as well; low start- up costs, easy to train, market demand, well established brand, focus on youth, strong management team, and capital to expand. The biggest risk for working with IIB is that this new business is a start-up and there is always a chance for failure with start-ups, even with the strong brand. BUSINESS DESCRIPTION Ice Ice Baby’s microfranchises will sell both popsicles and purified water sachets. Currently, the company does not produce or distribute these products. The company’s management is poised to acquire the necessary machinery to do so. The market will quickly take to these product line extensions as the Ice Ice Baby brand is very well recognized. The Fairbourne Consulting Group will work with Ice Ice Baby to develop the system necessary to manage the microfranchise management system and to develop a “last mile” distribution system. The “last mile” distribution will be integrated into Ice Ice Baby’s existing distribution system by using a 3 Phase approach. 19 | P a g e
  20. 20. PHASE 1 – BUILD OUT (5 MONTHS) There are four objectives for Phase 1. First, Ice Ice Baby needs to establish four depots in high sales areas. Simply put, depots are points of sale that can store ice on site. In this first phase depots will only retail 5-kilo bags of ice. In conversation with management three sites have already been nominated for depot placement – Poti, Shell and Waterloo. The Freetown facility will also double as a depot as there is already a retail space there. Each depot will require a depot manager and three retail staff. The manager will manage inventory and sales. 20 | P a g e
  21. 21. Establishing depots in high sales areas will improve Ice Ice Baby’s ability to distribute product. Depots can be stocked nightly, thus avoiding infamous Freetown traffic. This will free up trucks to service other less congested routes. The customer experience will be greatly enhanced as depots eliminate waiting for the delivery truck. By creating a formal establishment to retail ice customer no longer need to second guess where the ice delivery truck will stop on its route. As the route out of Freetown is very congested and lined with police officers passing out violations delivery trucks do not always stop consistently in the same place. Placing brightly colored depots in high traffic area will significantly increase brand awareness for Ice Ice Baby and will doubly serve to prepare the market for the franchisees in Phase 2. The second objective of Phase 1 is to train the initial 100 youth that will be franchisees for each depot in Phase 2. The IRC will need to identify and train 25 youth per depot. These youth will need to not only receive general business training, but more importantly they will need a solid understanding of the Ice Ice Baby popsicle and sachet franchise system. The third objective of Phase 1 is to develop the business and financing package. These two items will provide the youth the support they need to manage their own franchise and will be created by the Fairbourne Consulting Group. The details of the business package and financing will be discussed in more detail below. The final objective of this phase is for Ice Ice Baby with the assistance of the Fairbourne Consulting Group to conduct the research and development necessary to produce popsicles and sachets. Manocap has already expressed interest in acquiring the relatively inexpensive production equipment. PHASE 2 – SYSTEMATIZE (8 MONTHS) Phase 2 will mark the sales of launch of popsicles and sachets for the Ice Ice Baby’s franchisees. At this point in the venture the initial franchisees will have been trained, received financing to purchase equipment necessary to store and transport frozen product and initial inventory and received uniforms and related marketing material. The launch of sales also marks the Fairbourne Consulting Group’s launch of the Live Market Test (LMT). The LMT is an iterative process of refinements to all aspects of the microfranchising model including:  Marketing/Branding Strategy  Business Package Refinement  Product Development  Salesmanship Training  Inventory Management  Depot Operations Analysis  Franchisee Management  Franchisee Profitability Analysis During this phase the amount of youth franchises that each depot can support will be assessed. It is difficult to project at this point in the process how many youth per depot can earn a decent daily wage. 21 | P a g e
  22. 22. During the LMT franchisees, depot manager, depot staff and customers will be interviewed or asked to participate in focus so that their input is incorporated into the system refinements. Upon completion of Phase 2 each depot will be allocated more franchisees depending on how saturated the area is. By conducting the LMT The Fairbourne Consulting Group and Ice Ice Baby management will work together to develop a successful microfranchise system that can be quickly replicated. PHASE 3 – REPLICATE (23 MONTHS) During Phase 3 Ice Ice Baby will identify areas for strategic expansion. At this point the company understands how to efficiently and effectively construct depots, staff depots and plug franchisees into the system. IRC will continue to identify and train youth in regions where Ice Ice Baby wants to expand. The Fairbourne Consulting Group will aid the company throughout this process providing assistance with implementation as well as advisory services. MICROFRANCHISOR BUSINESS MANAGEMENT/MONITORING SYSTEM As building out the microfranchising distribution network is a large undertaking, current Ice Ice Baby management cannot be expected to maintain current operations and take on additional responsibilities. Therefore, the MasterCard Foundation will fund a new position at Ice Ice Baby, The Manager of Franchising. The chart below displays how the microfranchising system will be organized. Manager of Franchising - This position will be responsible for building out the microfranchising distribution system. In doing so, this individual will be responsible for the following:  Support Ice Ice Baby management during Phase 1 – Build Out with strategy and implementation  Conduct the Live Market Test (LMT) and systematize refinements in Phase 2  Develop the microfranchisee business package and microfinancing program  Supervise and train Depot Managers  Supervise the franchisee training o Coordinate with IRC for youth general business training needs o Trains youth in Ice Ice Baby franchise operations  Report to Ice Ice Baby Management and FCG Project Lead Depot Manager (4) – Each depot will have one depot manager who manages 3 retail staff. The depot managers will interact with microfranchisees on a daily basisDepot Managers are responsible for managing all depot operations including:  Manage daily operations to support depot activity: o 5-kilo bag sales o Inventory management o Bookkeeping o Supervise retail staff o Provide top notch customer service 22 | P a g e
  23. 23.  Execute sales and marketing strategy  Provide quality customer service  Support and coordinate with microfranchisee  Report to Manager of Franchising Depot Staff (12) – There will be 3 depot staff per depot. These staff will interact directly with microfranchisees and customers.  Conduct daily operations – ice sales, maintaining depot, stocking product  Provide top notch customer service  Support microfranchisees  Report to Depot Manager IRC Staff – IRC staff will coordinate with the Manager of Franchising housed at Ice Ice Baby. IRC is responsible for identifying and training you as needed. It is important to note that IRC training is not in Ice Ice Baby franchise operations, but rather general business training. Ice Ice Baby franchise system training will be handled by the Manager of Franchising with support of IRC. Also, IRC will be responsible for project monitoring and evaluating. FCG Project Lead – The Project Lead will coordinate with all involved parties to ensure the project is meeting critical milestones. The Project Lead will advise the Manager of Franchising in the creation of the microfranchising model, business package and microfinancing program. The Project Lead will also advice Ice Ice Baby on matters related to marketing strategy, deep distribution development and operational efficiency. FCG Staff (3) - Three local staff will be hired to support by the Fairbourne Consulting Group to assist the Manager of Franchising as needed. FCG staff will coordinate with Depot Managers on matters related to franchisee support. 23 | P a g e
  24. 24. DISTRIBUTION The distribution system is designed with three priorities in mind – increased sales, efficient use of trucks and ease of operation. By placing depots in high sales areas Ice Ice Baby is establishing a local footprint that will allow the company to service customers locally all day long, while minimizing the time trucks spend on deliveries. In the current distribution model trucks serve as a mobile quasi-depots, selling product for a finite amount of time each morning in multiple sites. A lot of time and fuel is wasted in Freetown traffic and still not all customers are able to purchase sufficient ice. By building out a network of strategically placed depots trucks can stock depots nightly as needed to avoid traffic. With inefficiency comes opportunity. The improved distribution model on the next page will increase sales, facilitate efficient use of resources and develop a new sales channel for popsicles and water sachets. 24 | P a g e
  25. 25. The above image is an example of a distribution route upon launching the Live Market Test (LMT) in Phase 2. During the Phase 1 - Build Out four depots will be placed in high sales areas as indicated by Ice Ice Baby management. Initial suggestions for the depot locations include the existing Freetown facility, Poti, Shell and Waterloo. All four depots are located upon the existing delivery route from the Freetown facility to Waterloo. In Phase 2 popsicles and water sachets will be delivered to the depots for distribution by youth franchisees. Depots will serve as headquarters for franchisees. Youth will report to the depot at a regularly scheduled hour to pick up product for the day. As needed throughout the day youth franchisees can restock or exchange thawed popsicles or warm sachets. By conducting the LMT in Phase 2 Ice Ice Baby and FCG will understand how to replicate depots for deep distribution. Throughout the LMT the Fairbourne Consulting Group (FCG) will determine how many franchisees each depot can sustain. Other distribution points are indicated on the diagram above. Trucks will continue deliver ice to these points, however it is possible that through the LMT FCG and Ice Ice Baby conclude that customers travel the to the depots from other distribution routes. Thus, eliminating the need to deliver ice on this route all together. MARKETING AND BRANDING STRATEGY By constructing depots in high sales areas Ice Ice Baby will be establishing a strong local presence. Currently, customers only interact with salesmen aboard the delivery truck as the truck passes by each morning. With the strategy to build out the depots customer experience will be greatly improved. No longer will customers need to wait for the delivery truck and then surround the truck alongside other customers waiting to purchase ice. With depots Ice Ice Baby will be able to build a brand that values customer service. Depots should be painted a bright color with the polar bear logo and depot staff will wear uniforms. 25 | P a g e
  26. 26. TRAINING Franchisor training is critical to the success of the venture. In focus groups (May 2010) with pilot youth franchisees youth acknowledged that franchisors did not have the abilities and/or skills necessary to manage a franchise system. The franchisor and specifically Depot Managers and their retail staff will be trained directly by the Manager of Franchising to ensure that Ice Ice Baby staff understand how to work with franchisees. Depot staff will receive training in inventory management, bookkeeping and franchisee management. PRODUCT Ice Ice Baby will sell 5-kilo bags of ice from the depots while franchisees will sell both popsicles and purified water sachets. There is a strong complimentary relationship between frozen popsicles and ice- cold water sachets. Frozen popsicles will keep sachets cold while a franchisee sells. Throughout the course of the day as popsicles thaw and water warms franchisees can return to the depot to exchange warm product for cold product. Ice Ice Baby will need to acquire the machinery necessary to produce popsicles and sachets. The machinery needs to be acquired prior launching Phase 2. It would be possible to import popsicles for distribution if there is no interest in producing them in Freetown. However, it is unlikely that importing popsicles will be cheaper than producing them locally. EXPANSION PLANS The strength of this microfranchise model is that Ice Ice Baby is building a cold chain distribution system. There is significant value in simply building out a distribution system. Once the distribution system is functioning – depots are constructed and retailing ice, franchisees are selling popsicles and sachets – any product could be integrated into this sales channel. MICROFRANCHISEE BUSINESS BUSINESS PACKAGE The Fairbourne Consulting Group (FCG) is directly responsible for creating the microfranchisee business package. The Manager of Franchising, an FCG employee, will design the business package in conjunction with Ice Ice Baby. The business package is a combination of tools and assistance that will ensure franchisee success. The business package will include:  Branded equipment to transport and store product  Ice Ice Baby franchisee uniform  Unique access to Ice Ice Baby products  Microcredit loan to support purchase of equipment and initial inventory  Operational support from FCG 26 | P a g e
  27. 27. The franchisee will need equipment to transport inventory to and from the depot. This could be in the form of a bicycle or a pushcart. Whatever type(s) of transport equipment is determined most effective during the LMT must be branded with the Ice Ice Baby logo and appear very professional. Attached to this equipment will be a cooler of sorts to keep popsicles and sachets cold. It is important that the company’s logo is highly visible on the cooler as well as the mode of transport. Franchisees will receive a franchisee uniform. It is important that the franchisees stand out in the marketplace to customers. A brightly colored uniform, ideally the same color, as the Ice Ice Baby depot will strengthen the brand locally. A uniform will also legitimize the franchisee in the eyes of the customers. Franchisees will not be able to sell product unless they are the proper uniform. Therefore, it is important that franchisees have multiple uniforms to ensure ample outfits for washing. With significant investment made to build the Ice Ice Baby brand it is important that only franchisees have access to retail popsicles and water sachets. This unique access to Ice Ice Baby products signifies an agreement between the franchisor and the franchisee. Franchisees will agree to uphold the brand of high quality products and customer service and the franchisor agrees to provide unique access to Ice Ice Baby products. All of the items referenced in the business package will be paid for by the franchisee with a 0% interest microcredit loan. The business package could be partially subsidized, but franchisees must invest in their own microfranchise. It is important that the business package is not simply given away to franchisees. Typically, items given away are viewed as having no value. This business package is a business opportunity and thus has an associated cost. FUNDING CONSIDERATIONS The franchisee will receive a microcredit loan in the amount of Le 790,000 ($200) to cover the initial startup costs. The loan will not accrue interest, but pay franchisees will be subjected to follow a strict repayment schedule. The repayment schedule will be designed to match with franchisees income stream accounting for an initial learning curve and the inherent seasonality in sales. During the LMT the optimal repayment scheme will be developed, be it daily or weekly, variable amount or fixed, etc. There should be financial incentives built into the repayment schedule to encourage on-time and early repayment. Below is a table of estimated franchise startup costs. Microfranchisee Startup Costs Item Expense Transport Equipment $100 Storage Equipment 40 Initial Inventory 30 Three Uniforms 30 Total $200 27 | P a g e
  28. 28. MARKETING AND BRANDING STRATEGY In general the value of a brand is very important for a franchisee. When a businessperson decides to invest in a franchise business, he or she is purchasing rights to not only a operate business system, but also affiliate with a brand. In Sierra Leone, where there is an entirely informal economy individual street vendors aspire to affiliate to a larger established company. For example, in the picture below a popsicle street vendor in Freetown has taken extra steps appear more professional using what resources he had at his disposal. Ice Ice Baby franchisees will surely benefit by the legitimacy the Ice Ice Baby brand provides in the marketplace, ultimately equating to higher sales. As mentioned above, franchisees will be required to wear uniforms and use equipment with the Ice Ice Baby logo. The specifics of the uniform will be refined during the Live Market Test (LMT) by the Fairbourne Consulting Group. 28 | P a g e
  29. 29. PROGRAM FUNDING CONSIDERATIONS Here is a rough sketch of what the funding contributions from IRC and IIB will look like for in-country operations. Budget projections will need to be modified as more detailed responsibilities are outlined. Expenses IRC IIB Staff $75,000.00 $40,000.00 Training site rental Food during trainings Training materials Total $75,000.00 $40,000.00 Equipment IRC IIB Freezers $50,000.00 Generators $2,000.00 Popsicle all $100,000.00 Water all $100,000.00 Total $0.00 $252,000.00 Microfranchisee IRC IIB Cooler (bike/cart) $50,000.00 Product start-up $50,000.00 Uniforms $5,000.00 Total $105,000.00 $0.00 Miscellaneous IRC IIB Maintenance $20,000.00 Transportation $100,000.00 Travel Staff $30,000.00 Total $130,000.00 $20,000.00 Total Expenses IRC IIB 310,000 312,000 29 | P a g e
  30. 30. TIMELINE Ice Ice Baby Year 1 Year 2 Year 3 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 Distribution Route Build Popsicle and Water Facilities & Staff Market Reseach and Product Development IRC Staff Recruiting Phase 1 Design Refine Business Training (IRC) Design System/Business Recruit & Train 100 Youth (Freetown) Launch 100 Youth (Freetown) Recruit & Train 100 Youth (Freetown) Launch 100 Youth (Freetown) Phase 2 Launch LMT w/Small Group Test Monitor Best Pratices Refine the model Train others on Best Practices Build out processes Systematize Implement best practices Phase 3 Systematize franchisor operations Systematize franchise operations Hire and train in-country staff Recruit 900 & Train 600 Youth (Freetown) Launch 300 Youth (Freetown) Baseline Study Replicate Midline Study Phase 4 Endline Study Idenditfy Geographic Locations Provide Loans Constant refinement of model 30 | P a g e
  31. 31. FINANCIALS 2010 ICE ICE BABY BUDGET **In US Dollars 31 | P a g e
  32. 32. PROJECTED RETURNS TO THE MICROFRANCHISE BUSINESS MODEL By implementing a microfranchise business model, IIB has the opportunity to achieve significant returns on investment, increasing the likelihood that they will continue using the model even after the IRC has finished its portion of the project. This is important as it will ensure that the employment opportunities provided are a sustainable improvement that can be scaled to provide thousands more youth the opportunity to start and grow their own IIB microfranchise. IIB Microfranchise Projection Model (All units in US Dollas) Year 1 Year 2 Year 3 Unit Assumptions Ice Sales 8,400 56,000 56,000 Margins & Costs Popsicle Sales 84,000 525,000 525,000 Ice Sales Margin 0.08 Water Sales 105,000 630,000 840,000 Popsicle Sales Margin 0.06 Total Revenues $ - $ 197,400 $ 1,211,000 $ 1,421,000 Water Sales Margin 0.06 Ice Costs 0.04 Ice Sales 18 6,300 42,000 42,000 Popsicle Costs 0.03 Popsicle Sales 120 56,000 350,000 350,000 Water Costs 0.04 Water Sales 120 52,500 315,000 420,000 Total Cost of Goods Sold 258 114,800 707,000 812,000 Business Package Start-up Product 40.00 Expenses Uniform 20.00 Business Package 10,000 - 40,000 - Cooler 40.00 Staff 25,200 25,200 36,000 36,000 Total 100.00 Training 1,000 - 4,000 - Staff Contribution Margin (36,458) 57,400 424,000 573,000 Salary per Staff 3,600.00 ROI 2892% Training Yearly Assumptions Cost per Microfranchisee 10.00 Microfranchisees 100 100 500 500 Ice Sales/Microfranchisee/Day 3 3 4 4 Popsicle Sales/Microfranchisee/Day 30 40 50 50 Water Sales/Microfranchisee/Day 40 50 60 80 Staff 7 7 10 10 32 | P a g e
  33. 33. MICROFRANCHISEE PROJECTIONS 33 | P a g e
  34. 34. CONCLUSION The partnership between the International Rescue Committee (IRC) and Ice Ice Baby to pursue a microfranchising business model for new products – popsicles and purified water sachets - is a win-win situation for the two organizations, which ultimately benefits the youth of Sierra Leone. By working together, both Ice Ice Baby and the IRC stand to accomplish their respective missions. Ice Ice Baby will open up new markets, expand its product portfolio, and create a deeper distribution model. The IRC with funding from the MasterCard Foundation will create employment for 1,000 youth across Sierra Leone, develop local economies, and increase the self-reliance of the franchisees. Ice Ice Baby is an ideal partner poised for growth. The company has a strong and innovative management team. Manocap, the venture capital firm owning Ice Ice Baby, provides strategic and analytical support to execute on long-term vision and management oversight. Ice Ice Baby’s strong reputation will lend legitimacy to the youth franchisees and will facilitate popsicle and sachet sales. The three-phase approach to extend the company’s distribution system to the “last mile” of clients builds off current routes and resources. It is very much aligned with the company’s own goals of increasing local presence and storage capacity. In essence, by utilizing the microfranchising model, Ice Ice Baby is creating something larger than simply a local market for ice, popsicles, and water sachets. Ice Ice Baby is creating a valuable distribution channel for cold/frozen products nationwide. From the perspective of the microfranchisee, popsicles and water sachets are excellent products to sell. Even though the products may have low profit margins per unit, franchisees can expect to sell many over the course of a day. The stability that comes with knowing that the franchise can make money daily is highly valuable to youth. Also, the youth stand to benefit tremendously from affiliating with a widely recognized company, like Ice Ice Baby. Both the general business training from the IRC and the franchise operations training by FCG and Ice Ice Baby will prepare the youth franchisees for success. The relationship between the franchisee and franchisor is critical. Therefore, the Fairbourne Consulting Group will employ a Manager of Franchising who will report directly to Ice Ice Baby management and will supervise Depot Managers. During the Live Market Test conducted by FCG in Phase 2 a series of refinements to the business model will be made based on feedback from all players. It is critical that both the depot and franchisee are profitable prior to moving into Phase 3 – Replication. Once the microfranchising system is refined, perfected, and packaged for replication, reaching the goal of employing 1000 youth is easily attainable. 34 | P a g e

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