Local franchisers lack commitment

JAKARTA (JP): Many local franchise operators lack the commitment and the ability to develop their businesses properly, a consultant said yesterday

Amir Karamoy said many of the local franchisers took the fees from the holders of their licenses but did not assist them in developing their businesses.

"Many of the local franchisers are known to sell their licenses to the franchisees and just leave them take care of the business themselves," he said.

These franchisers do not see the importance of helping with their franchisee's marketing or management strategies in order to see them bloom.

They only pursue short-term profits from the franchise fee instead of the longer-term benefits that can be accrued from holding the royalty.

Most franchisers also lacked the human resources to assist their franchisees, Amir said.

"As a franchiser, a company must be a consultant and an auditor as well," he said at a media conference after the launching of PT Sinar Eka Kreasi's new franchise package.

Sinar Eka Kreasi, operator of the dry cleaning and laundry service Laundrette since 1985, launched the new franchise package for those interested in opening another outlet in Greater Jakarta.

Amir, a consultant for PT Sinar, said the company was offering a package worth Rp 40 million (US$5,000) for small entrepreneurs or housewives to use a room at their homes or offices.

The package includes Rp 13.75 million for the franchise fee, Rp 4 million in a security deposit and the remaining amount for equipment, marketing, training, insurance, outlet design and location survey.

Potential franchisees will be required to pay 60 percent of the amount when they sign the contract, which will be effective for five years and two months.

They will have to pay another 30 percent when the room renovation begins and the remaining 10 percent a week before the outlet opens.

The franchisee must pay a royalty fee to PT Sinar worth 4 percent of their gross income.

Amir estimated the return investment for a Laundrette franchisee at 40 percent. He said the franchisee could book about Rp 16 million in net profit a year, with the assumption of 20 customers a day.

Laundrette currently owns two workshops which process the dirty clothes dropped at its 104 outlets and counters in Jakarta. (das)