Multiplying

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National Franchise Program (NFP)
Multiplying Successful business Greece,
February 2008
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Preview
Multiplying successful business
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National Franchise Program

• In Mexico, small and medium-sized enterprises
  (SMEs) account for 99 of total established
  enterprises, generating 52 of GDP and about 72
  of total employment.
• That is why, the Mexican government through the
  Ministry of Economy has designed and implemented
  a program based on developing most successful
  businesses under the franchise model. The
  objective is to ensure their long-run survival in
  the market and to generate more formal
  employment.

Source SMEs Competitiveness Development Act,
Dec. 30th, 2002
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National Franchise Program

• Franchise Sector in Mexico
• According to Mexican Franchise Association (AMF),
  95 of franchised businesses survive at least for
  5 years, and 98 of those enterprises survive for
  about 15 years.
• On the other hand, 60 of non-franchise
  businesses do not survive 2 years.

• Mexico has the 7th position in franchises number,
  according to the World Franchise Council (WFC),
  and they generate about 6 of GDP.

• 68 of franchises operating in Mexico are
  mexican, 27 from the US, 3 from Spain and 2
  from other countries.

Sources World Franchise Council (WFC), Mexican
Franchise Association, Ministry of Public Finance.
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National Franchise Program
Franchises geographic distribution
Source Mexican Franchise Association

• The NFP can help us not only to develop new
  businesses but also to achieve a better
  geographical distribution of franchises that have
  not had the same opportunities to grow as
  compared to those established in the three
  largest Mexican cities.

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National Franchise Program
Franchises by activity
Source Mexican Franchise Association

• Food and services are the sectors that generate
  more employments per point of sale (POS) (from 8
  to 10 employments). These sectors will be
  particularly targeted.

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National Franchise Program(NFP)
Multiplying successful business
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National Franchise Program

• Promoting the generation of new franchisors

and making easier the possibilities for
entrepreneurs to acquire a franchise
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National Franchise Program
We support the growth of the franchise sector
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National Franchise Program

• This program is mainly oriented to mexican
  entrepreneurs...

who want to start a new business
who are aware that do not have any business
experience
.but who have the willingness to be guided by a
franchisor in the field they want to develop
and who have money to invest
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National Franchise Program

• Likewise, It is aimed at fostering successful
  businesses

with at least two POS with excellent results
.that have at least three years of experience in
their field
have the willingness to share their success
formula
and are determined to multiply their brand name
and business through the franchise model
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National Franchise Program
Source Ministry of Economy
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National Franchise Program
Categories of support Type
of support
Franchise Model transfer (More POS)
Financing for the Franchise Fee
Development of new Franchisors
Financing for specialized counseling on
franchising in order for succesful businesses to
turn into franchisors
Credit guarantees program to ease existing
Franchises access to banking credit
Financing for working capital and equipment
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National Franchise Program
Franchise Model Transfer Credits to support
Entreprenurs to cover up to 50 of the franchise
fee.

• Credit limit Up to 15,200.00 equivalent to
  the 50 of the franchise fee.
• Loan term 36 months.
• Entrepreneur will pay 20 of the credit the first
  year, 40 on the 2nd year and 40 on the 3rd
  year.
• Interest rate 0.
• Formal or real Guarantee Not required.
• Payments in advance Allowed.

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National Franchise Program
Model transfer requirements (Franchisor)

• 3 years business experience and 2 franchised POS,
  or 2 years business experience and 3 franchised
  POS.
• Deliver a Franchise Offer Circular (FOC)
• Details of openings, relocations, closures, with
  dates and reasons.
• Recommendation letter from a specialized
  franchise consultant.
• Expansion plan of the franchises network.
• Documents that prove franchisors legal status
  (IRS registration, address, etc.)
• Cash flow of operating units.

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National Franchise Program
Model transfer requirements (Franchisee)

• Franchisors acceptance letter.
• Credit bureau report.
• Any document with personal address (power
  receipt, phone bill, etc.)
• IRS registration

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National Franchise Program
Development of New Franchisors

• Credits for successful businesses to finance
  franchise-specialized consultants services in
  order to become a franchisor.
• Credit limit Up to 15,200.00 equivalent to
  50 of the franchise model development.
• Term loan 36 months.
• Rate 0.
• Real or formal Guarantee not requiered.
• Payments in advance Allowed.

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National Franchise Program
Development of New Franchisors requirements
(consultants)

• Records and backgrounds of consultants
  (curriculum)
• Demonstrate at least 3 years experience as
  consultant
• List of customers
• To have developed 10 franchisors with 3 POS each
  one.
• Quotation form.
• Consultant license
• Recommendation letters from their clients.
• Documents that prove consultants legal status
  (IRS registration, address, etc.)

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National Franchise Program
Development of New Franchisors requirements
(successful businesses)

• 2 years business experience and at least 2 POS.
• Proposal of development presented by an
  authorized franchise consultant.
• General information of the business to be
  developed
• Provide evidence of legal status (IRS
  registration, address, etc.)

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National Franchise Program

Franchisors

Approval
Banks and financial institutions
Supported with government guarantees, Mexican
entrepreneurs can access to loans at competitive
interest rates
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National Franchise Program
Banking credit

• Based on franchisors successful business
  records, banks will extend loans to the
  franchisees, which will be partially covered by
  credit guarantees granted by the Ministry of
  Economy. These guarantees can be claimed by banks
  in case of franchisees default.
• Franchisor is committed to the Ministry of
  Economy and would not be supported again if any
  of his franchisees do not honor his commitment.

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Thank you for letting us share our
experience! National Franchise Program Ministry
of Economy / Mexico Rafael Manzo Basto
Coordinator 52 (55) 5229 -6100, ext. 32140 y
32225 dgdeon09_at_economia.gob.mx