Franchise Disclosure Document - Sme.tax
FRANCHISE DISCLOSURE DOCUMENT PASSION - KNOWLEDGE - INNOVATION Cornastone House, Mellis Court, 8 Mellis Road, Rivonia, Sandton, 2128 Tel: 010 003 8558 - Fax: 086 618 6507 - Email: info@phezulu.net - Website: www.phezulu.net Directors: L. D Drake; T. C Nel Phezulu Franchise Holdings (Pty) Ltd t/a Phezulu VBO Registration No: 2014/197439/07
Evaluating a Phezulu VBO Franchise We have compiled the following menu of questions and answers that you should be asking when purchasing a Franchise. Questions to ask the Franchisor History of the Business Question: Since when was your company established? Answer: 2006 Question: Who are your shareholders? Answer: Phezulu Group CC and Laurie Drake Question: Who are the directors? Answer: Tyronne Nel and Laurie Drake Question: When did you commence franchising? Answer: March 2010 Question: How many franchises have you sold to date? Answer: We have sold 18 franchises The Product Question: Has your product been tested in the market? Answer: Yes Question: Are your products protected through copyright? Answer: Yes, they are Question: Do you have a plan for future product developments? Answer: Yes, we are continually developing new products and refining our current offering The Market Question: Is your market growing, stable or in decline? Answer: Our market is in its infancy with massive growth opportunities. Question: What is your current market share? Answer: Our market share is currently miniscule, however it is growing. 2
Question: How do you intend growing your market? Answer: We will develop SME programmes to suit our current market. Financial Aspects Question: What is the total investment required? Answer: R150 000.00 upfront purchase price & a monthly 3% Marketing Fee and 7% Royalty Fee (all excluding Vat). Question: What does your fee buy me? Answer: The name, logo, and systems will be made available to you. You will receive ongoing sales, marketing and administration training. You will receive a turnkey operation relating to setting up a franchise. Question: How much will I have to invest in capital equipment? Answer: The R150 000.00 includes all the electronic hardware you will need to begin your franchise, however items like software licences, furniture, fixtures etc. are excluded. Question: How much working capital should I provide for? Answer: 3 - 6 Months of estimated overheads. See page 8 for a guide of estimated fixed monthly costs. Question: Will you provide me with sales projections? Answer: Yes, we will. See page 7 for our projections, which were based on our first year’s trading Question: Will you provide me with a set of financial projections? Answer: Yes, we will. See pages 10, 11 and 12 for our projections. Question: Am I allowed to spend additional monies on local advertising? Answer: Yes you are allowed to, however please clear your advertising with us first. Question: Is there a minimum amount I have to spend when buying from Head Office? Answer: No, there is not. Question: Do you have any other periodic or ongoing fees? Answer: The only other periodic or ongoing fees will be for training from outside institutions. Question: How has the franchised business grown in the last year? Answer: We have added 2 additional franchisees in the past several months and view this progress with optimism going forward. Question: Have these changes affected your ability to trade? Answer: No, however we have been able to streamline operations 3
Legal Aspects Question: Once I have received the disclosure document and the Franchise Agreement, do you observe a “COOLING OFF PERIOD” before I am permitted to sign the agreement? Answer: Yes, we do 10 (ten) days. Question: Am I permitted to show the documentation you will provide me with to my professional advisor? Answer: Yes, you may Question: Are you prepared to meet with them, should they request? Answer: Yes, we are Question: Will I be required to sign a “CONFIDENTIALLY UNDERTAKING”? Answer: Yes you will be Question: If so may I have a copy now so that I can review of at my leisure? Answer: Yes you may Question: Does the franchise agreement contain restraints? Answer: Yes, it does The Franchise Operation Question: Do you operate from a franchise support infrastructure and manual? Answer: Yes, we do Question: Am I allowed to visit the franchisees to discuss any aspect of the franchise? Answer: Yes you may, their details are as follows: Phezulu VBO - Ballito Tyronne Nel Ballito Business Centre, The Circle, Ballito tyronne@phezulu.net 010 003 8558 4
B & J Accountancy (Pty) Ltd t/a Phezulu VBO - Bryanston James Scott 14 Ballyclare Drive, Bryanston, Johannesburg james@phezulu.net 010 003 8558 North Wing Trading (Pty) Ltd t/a Phezulu VBO – Woodstock Peter La Grange The Old Biscuit Mill, Albert Road, Woodstock peter@phezulu.net 010 003 8558 IAccountancy (Pty) Ltd t/a Phezulu VBO – Pretoria East Nardus Venter 642 Cicely Street, Garsfontein, Pretoria nardus@phezulu.net 010 003 8558 Phoenix Capital (Pty) Ltd t/a Phezulu VBO – Phoenix Jason Sequeira Hyde Park jason@phezulu.net 010 003 8558 2016/010978/07 (Pty) Ltd t/a Phezulu VBO - Fairlands Laurie Drake 186 Sherwell Avenue, Boskruin laurie@phezulu.net 010 003 8558 5
Stoke Trading (Pty) Ltd t/a Phezulu VBO – White River Anthony Tanner 4 Tendela, Alma Street, White River tony@phezulu.net 010 003 8558 Initial Franchise support Question: Will you help me with site selection? Answer: Yes, if you wish Question: Will you supply specifications for the decorating of my franchise? Answer: Yes Question: Am I compelled to use your contractors? Answer: Yes, we have negotiated group rates Question: Do you provide initial training? Answer: Yes Question: If so, what does this entail? Answer: 30 days setup and Operations Training, thereafter monthly Development Training. Question: Will you train me in recruiting clients? Answer: Yes Question: Will you help me with the necessary registrations etc, to ensure that I do not inadvertently break any laws? Answer: Yes Ongoing franchise support Question: Do you supply me with an operations manual? Answer: Yes Question: If so, when has it been last updated? Answer: May 2015 6
Question: Do you have a regular programme in place for updates on the manual? Answer: Yes, every March or when new legislation is promulgated. Question: Do you make regular visits to the Franchisee’s? Answer: Yes monthly visits, and on request by the Franchisee Question: Do you have a formal internal communications infrastructure in place? Answer: Yes, e-mails, weekly telephone calls, newsletters, meetings. Marketing Question: Do you have a promotional programme in place? Answer: Yes, we do Question: If additional local advertising is either compulsory or necessary and I pay for it, would this be subject to any restrictions? Answer: Yes, all branding and marketing material must be approved by the Franchisor. Summing up Question: How did you settle on the financial projections that are used in this document? Answer: The figures used here are a combination of the following: Sales projections were based on our first year of trading Estimated monthly costs are an average based on current expense as incurred by our franchisees and us. Question: Are your books of account kept in accordance with the provisions of the Companies Act No. 71 of 2008? Answer: Yes, they are. Question: Assuming I sign a deal, what are the next moves and when could I expect to be operational? Answer: You will be required to sign the franchise agreement and pay over the franchise license fee. Once the funds have been authorized you will immediately start the process of training and establishing your franchise and will immediately begin trading. 7
Sales Projection Line of Business Retail Price (excl. vat) Estimated Earnings 1. CC under R3 million R 2 500.00 R 90 000.00 2. CC under R5 million R 3 500.00 R 115 500.00 3. PTY under R3 million R 2 500.00 R 155 000.00 4. PTY under R5 million R 3 500.00 R 168 000.00 5. Corporate Service R 61 500.00 6. Tax Returns R 850.00 R 32 800.00 7. Payroll R 60.00 R 30 600.00 8. One Off Audits 9. One Off Consultations 10. Catch Up Work 8 R 65 000.00 R 1250.00 /hour R 305 000.00 R 24 500.00
Office Setup Costs (estimates) Expense Cost 1. Telkom/ADSL/Internet Lines R 1 000.00 2. Posters, Paintings – Décor R 4 000.00 3. Kitchen Equipment & Cutlery R 2 500.00 4. Rental Deposit R 6 000.00 5. Miscellaneous R 2 000.00 Estimated Total Setup Costs (Excl. Vat) R 15 500.00 Estimated Start Up Monthly Costs 9 1. Bank Charges R 700.00 2. Insurance R 1 500.00 3. Petrol R 2 000.00 4. Rent & Electricity R 6 000.00 5. Staff Salaries R 10 000.00 6. IT Management R 500.00 7. Stationery R 150.00 8. Telephone & Fax R 2 000.00 Estimated Total Fixed Monthly Costs R 22 850.00
What you receive for your Initial Franchise Fee On full payment of your R150 000.00 Franchise Fee, the Franchisor will provide you with the following: 1. A full trading license 2. The use of our name, logo and technology 3. Full Business Training 4. Ongoing Support 5. An Operations Manual 6. A Training Manual 7. Software Set Up & Registration 8. Remote Office Set up 9. Fax 2 Email 10. Business Cards (1 Set) 11. Office Signage 12. 1 x Laptop 13. 1 x Network Printer 10
SALES BUDGET PRODUCT / SERVICE CATEGORY CC UNDER 3 MILL - R 2500.00 CC UNDER 5 MILL - R 3500.00 Month 1 MAR 2,500 Sales Budget from: Month 2 Month 3 APR MAY 2,500 5,000 3,500 3,500 Company Name: PHEZULU VBO FRANCHISE 01/03/15 Month 4 JUN 5,000 3,500 to: Month 5 JUL 5,000 7,000 28/02/16 Month 6 AUG 7,500 10,500 Month 7 SEPT 7,500 10,500 Month 8 OCT 7,500 14,000 Month 9 NOV 10,000 14,000 Month 10 DEC 10,000 14,000 Month 11 JAN 12,500 17,500 Month 12 FEB 15,000 17,500 Total Sales by Category 90,000 115,500 PTY UNDER 3 MILL - R 2500.00 PTY UNDER 5 MILL - R 3500.00 A 2,500 3,500 5,000 3,500 10,000 3,500 10,000 10,500 12,500 10,500 15,000 14,000 15,000 14,000 15,000 17,500 17,500 21,000 17,500 21,000 17,500 24,500 17,500 24,500 155,000 168,000 CORPORATE SERVICES 5,600 3,600 11,800 3,100 1,600 4,200 7,400 1,600 2,600 3,200 5,900 10,900 61,500 2,400 3,200 4,000 8,000 12,000 800 1,600 800 32,800 4,080 4,080 4,080 3,000 3,060 3,120 3,060 3,060 30,600 TAX RETURNS - R850.00 PAYROLL – R60.00 1,020 1,020 ONE OFF AUDITS 25,000 ONE OFF CONSULTATIONS 35,000 CATCH UP WORK TOTAL SALES 11 1,020 25,000 12,000 14,100 54,120 46,820 15,000 65,000 110,000 3,000 83,120 111,080 25,000 15,000 2,500 58,480 187,480 69,100 65,000 55,000 305,000 7,000 95,160 101,620 24,500 137,560 89,260 1,047,900
INCOME AND EXPENDITURE STATEMENT Income Sales Purchases Gross Profit (Sales - Purchases) Total Income Gross Profit % Company Name: PHEZULU VBO FRANCHISE Month 1 MAR Month 2 APR Month 3 MAY Month 4 JUN Month 5 JUL Month 6 AUG Month 7 SEPT Month 8 OCT Month 9 NOV Month 10 DEC Month 11 JAN Month 12 FEB 14,100 54,120 46,820 83,120 111,080 58,480 187,480 69,100 95,160 101,620 137,560 89,260 14,100 14,100 54,120 54,120 46,820 46,820 83,120 83,120 111,080 111,080 58,480 58,480 187,480 187,480 69,100 69,100 95,160 95,160 101,620 101,620 137,560 137,560 89,260 89,260 100 100 100 100 100 100 100 100 100 100 100 100 Total 1,047,900 0 1,047,900 1,047,900 100 Ordinary Expenses Vatable Expenses Advertising Bank Expenses Insurance Rent Royalties Stationery Telephone/Fax Management Fee IT Management 423 700 1,500 6,000 987 150 2,000 705 500 1,624 700 1,500 6,000 3,788 150 2,000 2,706 500 1,405 700 1,500 6,000 3,277 150 2,000 2,341 500 2,494 700 1,500 6,000 5,818 150 2,000 4,156 500 3,332 700 1,500 6,000 7,776 150 2,000 5,554 500 1,754 700 1,500 6,000 4,094 150 2,000 2,924 500 5,624 700 1,500 6,000 13,124 150 2,000 9,374 500 2,073 700 1,500 6,000 4,837 150 2,000 3,455 500 2,854 700 1,500 6,000 6,661 150 2,000 4,758 500 3,049 700 1,500 6,000 7,113 150 2,000 5,081 500 4,127 700 1,500 6,000 9,629 150 2,000 6,878 500 2,678 700 1,500 6,000 6,248 150 2,000 4,463 500 Vatable Expenses 12,965 18,968 17,873 23,318 27,512 19,622 38,972 21,215 25,123 26,093 31,484 24,239 31,437 8,400 18,000 72,000 73,353 1,800 24,000 52,395 6,000 0 287,385 Non-Vatable Expenses Salaries & Allowances Petrol & Oil Non-Vatable Expenses 10,000 2,000 12,000 10,000 2,000 12,000 10,000 2,000 12,000 25,000 2,000 27,000 25,000 2,000 27,000 25,000 2,000 27,000 25,000 2,000 27,000 25,000 2,000 27,000 40,000 2,000 42,000 40,000 2,000 42,000 40,000 2,000 42,000 40,000 2,000 42,000 315,000 24,000 339,000 24,965 30,968 29,873 50,318 54,512 46,622 65,972 48,215 67,123 68,093 73,484 66,239 626,385 -10,865 23,152 16,947 32,802 56,568 11,858 121,808 20,885 28,037 33,527 64,076 23,021 421,515 Total Expenses Net Profit/Loss Before Tax 12
CASH FLOW ANALYSIS Interest on Overdraft Rate % 18 Month 1 MAR Month 2 APR Month 3 MAY Month 4 JUN Month 5 JUL Month 6 AUG Company Name: PHEZULU VBO FRANCHISE Month 7 SEPT Month 9 NOV Month 8 OCT Month 10 DEC Month 11 JAN Month 12 FEB Opening Bank Balance 90,000 79,135 102,287 119,234 152,036 208,604 220,462 341,970 362,855 390,892 424,419 488,495 Inflows: (Excluding VAT) Sales: Cash Sales Debtors Sundry Income Input VAT Refund: Capital Items Total Inflows 14,100 0 0 0 14,100 54,120 0 0 0 54,120 46,820 0 0 0 46,820 83,120 0 0 0 83,120 111,080 0 0 0 111,080 58,480 0 0 0 58,480 187,480 0 0 0 187,480 69,100 0 0 0 69,100 95,160 0 0 0 95,160 101,620 0 0 0 101,620 137,560 0 0 0 137,560 89,260 0 0 0 89,260 24,965 0 0 30,968 0 0 29,873 0 0 50,318 0 0 54,512 0 0 46,622 0 0 65,972 0 0 48,215 0 0 67,123 0 0 68,093 0 0 73,484 0 0 66,239 0 0 24,965 30,968 29,873 50,318 54,512 46,622 65,972 48,215 67,123 68,093 73,484 66,239 Outflows: (Excluding VAT) Monthly Ordinary Expenses Purchases: Cash Purchases: Creditors Tax Payable Owners' Drawings Sub-Total of Expenses Finance Costs (Ex. VAT) Interest on Overdraft Bank Loan Repayments (Capital) Lease Payments Interest on Bank Loan Total Other Financial Expenses Sub-Total Finance Costs Total Outflows Surplus/Deficit 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 24,965 -10,865 0 0 0 0 30,968 23,152 0 0 0 0 29,873 16,947 0 0 0 0 50,318 32,802 0 0 0 0 54,512 56,568 0 0 0 0 46,622 11,858 0 0 0 0 65,972 121,508 0 0 0 0 48,215 20,885 0 0 0 0 67,123 28,037 0 0 0 0 68,093 33,527 0 0 0 0 73,484 64,076 0 0 0 0 66,239 23,020 Total Surplus/Deficit Closing Bank Balance -10,865 79,135 23,152 102,287 16,947 119,234 32,802 152,036 56,568 208,604 11,858 220,462 121,508 341,970 20,885 362,855 28,037 390,892 33,527 424,419 64,076 488,495 23,020 511,516 13
Phezulu Franchise Holdings (Pty) Ltd t/a Phezulu VBO Registration No: 2014/197439/07 . FRANCHISE DISCLOSURE DOCUMENT. 2 Evaluating a Phezulu VBO Franchise We have compiled the following menu of questions and answers that you should be asking when purchasing a Franchise. Questions to ask the Franchisor History of the Business .
Corporations required to file a franchise tax return, may elect to file a combined corporate income and franchise tax return. To make this election file Form 200-F. Corporations not filing Form 200-F must file a stand-alone Oklahoma Annual Franchise Tax Return (Form 200). Corporations that remitted the maximum amount of franchise tax for the
The disclosure document summarizes certain provisions of your franchise agreement and other information in plain English. Read this disclosure document and all agreements carefully. You must receive this disclosure document at least 14 days before you sign a binding agreement or make any payment in connection with the franchise sale.
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4 1.12. FCC shall mean the Federal Communications Commission, its designee, or any successor governmental entity thereto. 1.13. Franchise Agreement shall mean this document and any amendments, exhibits or appendices hereto. 1.14. Franchise Fee shall mean the fee defined in Section 7 of this Franchise Agreement. 1.15. Franchise Area shall mean the area within the corporate limits of Franchisors.
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