Background

According to a Channel News Asia website report on 5 December 2012, a plot of land at East Coast Park and opposite Parkway Parade will be redeveloped into a commercial and recreational hub. It was originally a golf driving range. National Parks (NParks) is revitalising this area by developing this into another lifestyle hub, where people can get to play, eat and shop. This new area will consist of 10 F&B and retail outlets.

There are several ways to start a business and one of them is to get a franchise. Some of the advantages of using franchising are brand-name appeal with a proven record and the proper training and guidance that are provided.

Question 1

On a group basis, formulate a comprehensive feasibility plan on a non-F&B Franchise your team is keen to introduce as one of the outlets to be located at this new lifestyle hub along the East Coast Park.

The Group Based Assignment (GBA) submission should be a word document as per the format provided at the end of this document.

(100 marks)

Guidelines and Assumptions

1. GBA groups are free to conduct desk research, field research, interviews, etc to identify possible business ideas and to collect the data required to assess the financial attractiveness of the opportunity.

2. The business idea must be a non-F&B Franchise.

3. The rental for the retail outlet space is assumed to be $10,000/monthly for the duration of 3 years. It is assumed that the depreciation for any capital investment is a straight line over 3 years.

4. The Comprehensive Feasibility Plan must be written in the form of a report using theformat shown below.

5. Assumptions made must be supported by appropriate references shown in “Appendix A: References for Assumptions Made” in the report. Sources from the Internet may be quoted.

6. Indicative report length is 17 pages (without appendices). Executive Summary must be only one (1) page long. All the three financial statements (Income Statement, Balance Sheet and Cash Flow) must be included in the main report. Approximately 10 marks may be deducted for every additional page. Quality of content is more important than length.

Dear Sir/Madam

For your information, East Coast Park in Singapore is a place where people of all ages and from all walks of life like to spend their time relaxing, have picnics, swimming & sun tanning at the beach, cycling, have barbeques, eating, etc. Parkway Parade is a shopping mall. There are residential areas - HDB flats, apartments, condominiums & private properties (our locals as well as expatriates live in these areas) and stores in the vicinity of Parkway Parade.

The franchise my group has chosen is: Flip Flop Shops

Dear Expert, kindly refer to this link for the various information when writing the report.

PLEASE DO NOT WRITE ON OTHER FRANCHISES!

You just have to answer the sections that are highlighted in red.

Part 1: Executive Summary – ONLY 1 page

Part 2: Technical Feasibility (2.1 & 2.2) – 1 page

Part 3: Market Feasibility (3.1, 3.2, 3.3, 3.4 & 3.5) 3pages

Please ensure that you write the report by following the format given.

Kindly ensure that all parts of the questions are answered accordingly for example, the Franchise Fees, Royalty fees must be stated in the report. Such figures MUST be factual according to my professor who will be marking my report! So kindly, refer to the link closely to gather information.

Most importantly, kindly adhere to the stipulated number of pages especially the Executive Summary MUST be 1 page! For Technical Feasibility and Market Feasibility, you can extend by half or one page more where necessary.

**DO NOT ANSWER PARTS 4, 5, 6 & 7! MY GROUP MEMBERS WILL BE DOING THESE SECTIONS.

GBA REPORT FORMAT

Table of Content

1 Executive Summary (maximum 1 page) 14 marks

2 Technical Feasibility (1 page) 10 marks

2.1 Description of the Product(s)/Service(s)

2.2 Value Proposition of the Product(s)/Service(s)

3 Market Feasibility (3 pages) 20 marks

3.1 Market Potential

3.2 Market Segmentation, Target Customer and their Characteristics

3.3 Potential Market Share and Sales Volume

3.4 Potential Sales Price, Franchise Fees, Royalty Fees and Infrastructure Costs

3.5 Promotional Activities

4 Financial Feasibility (8 pages) 25 marks

4.1 Assessment of Financial Statements

4.1.1 Income Statement (1st year – Monthly Statements; 2nd to 3 year – Quarterly Statements)

4.1.2 Cash Flow (Quarterly Basis)

4.1.3 Balance Sheet (Yearly Basis)

4.2 Break-even Analysis using the Graphical Method

4.3 Sources of Capital: Justification for proportion of Debt and/or Equity Funding

4.4 Expected Financial Returns: NPV and IRR

(Assume cost of debt = 4%, cost of equity = 10%, Corporate Tax = 17%)

5 Organisation Feasibility (1 page) 6 marks

5.1 Founding Members, Personnel Requirements and Perceived Gaps

5.2 Legal Responsibilities of the Franchisee

6 Competition Analysis (2 pages) 20 marks

6.1 Assessment of Industry using Porter’s 5 Forces

7 Conclusion (1 page) 5 marks

7.1 Attractiveness / Viability of Business

Appendix A: References for Assumptions Made

Total 100 marks

I look forward to an excellent report.

Thank you.

Regards

Ida