July 15 – 17, 2009Antigua and Barbuda

CARICOM REGIONAL SYMPOSIUM ON SERVICES

‘Services – A Roadmap to the Future’

FRANCHISING SERVICES IN THE CARICOM SINGLE

MARKET AND ECONOMY

Presented by: G. L. Sydney Simmons

Presenter and sources

• >35 years exp. in practical service development

• Business Development Advisor throughout CARICOM, Europe and North America

• Consultant to Multi-lateral organisations, Institutions, Governments, Enterprise and Small Business

• “Services in CSME”, 2005

• Alex Konigsberg Q. C., internationally recognised authority on Franchising

Franchising Services in CSME

• “The technique of distributing a product or service through franchising can facilitate the more rapid penetration of markets with a service that can thrive competitively – something people want to buy, or can be persuaded to buy even if it is an unfamiliar one”

Alex Konigsberg, Q. C.

International Franchising Expert

SERVICES AS % EXPORTSSERVICES AS % EXPORTS

Source: IMF and ECCB

AntiguaAntigua 91.4%91.4% JamaicaJamaica 56.6%56.6%

MontserratMontserrat 91.0%91.0% DominicaDominica 55.0%55.0%

St. LuciaSt. Lucia 81.9%81.9% BelizeBelize 44.8%44.8%

BarbadosBarbados 79.6%79.6% HaitiHaiti 37.6%37.6%

The BahamasThe Bahamas 78.6%78.6% GuyanaGuyana 21.1%21.1%

GrenadaGrenada 72.1%72.1% SurinameSuriname 18.6%18.6%

St. KittsSt. Kitts 68.2%68.2% TrinidadTrinidad 12.5%12.5%

St. VincentSt. Vincent 66.9%66.9%

Franchising Services in CSME

A FRANCHISE:

“The agreement or license between two legally independent parties which gives:

• a person or group of people (known as “the franchisee”) the right to market a product or service using the trademarks or trade name of another business

• the franchisee the right to market a product or service using the operating methods of the franchisor

• the franchisee the obligation to pay the franchisor fees for these rights

• the franchisor the obligation to provide rights and support to franchisees”

International Franchise Association

Franchising Services in CSME

oFranchising will foster competition in CSME and encourages creativity, specialisation and the opening of new forms of distribution.

Franchising Services in CSME

o In more developed countries where service businesses are especially important to the economy, franchising has proved particularly important to small business growth. We believe that this can also develop the SME sector within the CSME.

Franchising Services in CSME

Types of Franchises:

I. Product Distribution Franchises – Under this type of franchise arrangement the franchisee simply

sells the franchisor’s products; there is basically a supplier dealer/retailer relationship. The franchisor has permitted the franchisee to use, under license, his logo and trademarks.

There is no management support or system for running the

business.

Franchising Services in CSME

Types of Franchises:

I. Business Format Franchises –

Under this type of franchise arrangement the franchisee not only uses the franchisor’s product, logo and trademarks, but is also provided with a complete system of conducting the business itself. This system will include total management guidance, such as marketing plans and full operational manuals.

This is the type best suited for the CARICOM situation.

Franchising Services in CSME

Franchising can serve as an engine for job generation at a time when the current economic upheaval is increasing levels of unemployment, as well as providing opportunities for foreign investment at a most critical time.

Challenges to Franchising in CSME

• Lack of sufficient data on current franchising in CARICOM

• Lack of general “franchisor culture” among CARICOM business interests

• No established or harmonised regional framework to address franchising

• No enabling/supporting institutional environment currently in place

Developing a Regional Franchising Model:

o A high level transfer of knowledge of running a successful business with global potential

o The development of the Region’s international business capacity and image, through the high visibility achievable by most world-class franchises

Developing a Regional Franchising Model:

o The leveraging of a highly trainable, highly educated and highly skilled force of knowledge workers

o The building of capacity to enable regional businesspersons to offer Caribbean stakeholders a range of high-value services in developing franchising systems

o The eventual creation of a cadre of franchisors and master franchisees with capacity to establish franchises in Canada, the USA, Europe, South Africa, Nigeria, Botswana, Ghana and other selected target markets

Developing a Regional Franchising Model:

oThe capacity to develop regional brands and licenses to stimulate the economies of Member States, increase regional business offerings and foster the growth of innovation.

Developing a Regional Franchising Model:

Franchising Services in CSME

Direct benefits to development of the Services Sector:

 

• the transfer of know-how proven in more mature markets

• in-depth training programmes

• technical management assistance

• influencing of public sector development project financing for franchise development.

Franchising Services in CSME

• Business Services Centers

• Overweight Packaging & Postage Service at airports

• Large-scale Pharmacies

• Optometrists

• Professional Services

• Car Maintenance

• Convenience Stores

• Private Education

Franchising Services in CSME

“Franchising has long been touted as a method of development for small

economies. Franchising brings to a local economy a wealth of expertise and a

system of doing business that may not be available otherwise.”

Franchising Services in CSME

• Trade Mark Matters

• Pilot Outlets

• Training Facilities

• Initial Franchise Fees

• Continuing Royalty Fees

Franchising Services in CSME

• Fees payable by Sub Franchisees

• Unit Franchise Agreements

• Loss of Control

• Granting of Exclusive Rights

• Duties & Obligations of the Franchisor

RECOMMENDATIONS

• The establishment of a single CSME Franchising Registry/ Single Regional Registration framework

• Single Regional Legal Framework addressing franchising (consideration should be given to UNIDROIT Model)

• Implementation of a Special Franchise Development and Enabling Project.

• The establishment of a Regional franchising body