SOUTH AFRICAN LOCAL  Franchise Information

PREAMBLE

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Creative Image Paints has become synonymous with craft painting throughout South Africa through the tireless promotions for retail outlets conducted by Lesley and Ray Hogg. They have such an easy style at the art of painting on craft items, that people wanted to learn more and more. Inevitably this sparked off the need for a craft painting studio at a permanent venue. They started in a small way with six students operating around a breakfast room table. Within two months, a new studio had to be built to accommodate twenty students at a time. Ladies who started with the idea of attending once a month, soon became engrossed in their new found skills and started attending weekly and late twice a week. Lesley expanded her studio to give lessons four days per week, then six, plus Saturday morning and afternoon classes.

More and more people wanted to learn how to create in Lesley’s free flowing easy style, but were too far away to attend on a regular basis. For these people, she found it necessary to run full day classes, and provide lunch. So encouraged by what they learned and seeing the wide scope of what can be achieved, the ladies realized the need for ongoing creative assistance, moral encouragement and the enjoyment of the company of classmates. Such is Lesley’s magnificent style that others want to emulate her.

The need for additional studios became obvious and so the idea of franchising was born. Lesley’s way of teaching shows the most inartistic people how to achieve fantastic results. The preparation of lessons is meticulous, with the emphasis on style and professional appearance, to take craft painting far beyond the normal reams of the art. Each lesson has been tried and tested to be idiot-proof so as to make instruction easy. A full set of instructions and templates are provided for each lesson to make progress easy and help the instructor to develop her own sample range.

CREATIVE IMAGE PAINTS

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CK91/08651/23

This closed corporation, which was formed in 1991 after two years of growth and with an eye to the future has its only two members, Lesley and Ray Hogg. It was started in 1989 when Lesley was unhappy with the products then available.
Ray developed and manufactured a much more suitable product. This also required the design and manufacture of a suitable nozzle and low density bottle for the application. The range of paints has increased over the years and now has over 100 colours in the range. In the range are plain, pearlescent, flourescents and glitters as well as glue, plus over 300 other painting related items.
Lesley has also produced a number of design books and videos over the years as well as being invited to talk at various women’s organizations. Creative Image has been featured on national television by the Small Business Development Corporation. It has also been highlighted in numerous national magazines. Creative Image became international in 1999 with studios in Mauritius and Namibia..

THE CONCEPT

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The idea is to utilize the franchise to establish a craft painting studio, operating from a home environment with overheads at a minimum. The studio will run ideally with classes to be made up of housewives in the mornings, and working ladies in the evenings and weekends. A studio may be run with as many classes per week as the operator wants, but we have found that 6/8 classes per week with 10 students per class is ideal.

Craft painting classes are not new, but the establishment of professionally run studios with set lessons having dynamic designs and ideas for everything is completely unique. If you feel you are artistic, you could start a studio without help, but the advantages of being part of a dynamic group like Creative Image with its never ending supply of designs and ideas, as well as marketing backup, is unique in the industry.
Combine this with over 300 standard products available to you, it makes for a worthwhile investment in your future.

FRANCHISE

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WHAT YOU GET:

1. A two year renewable license.  Ongoing franchise fee after two year period is R800.00 per month.
2. The use of the name Creative Image Craft Painting studio.
3. Two years lessons provided completely prepared during your training session and your time with Creative Image.
4. The right to purchase products at special rates, only available to franchise holders.
5. Free design service for advertising layouts for your promotions.
6. Assistance with design and layout of your studio.
7. Area demographics for population.
8. Services of Lesley Hogg for month end client demo's that you organize in your area, when available.
9. Continuous training.
10. All materials supplied at competitive prices.
11. Stock and 10 light boxes to the value of R12 000.00
12. Letterheads, business cards and specific advertising material.
13. Assistance with marketing and promotions.
14. Inclusion in all general and national advertising and promotions.
15. Mail shot of 15000 flyers to selected area to announce your opening.
16. Press Advert to announce your opening.
17. Inclusion in the web site with all your details

MARKETING

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The figures shown in appendices 1 and 2 are based on full classes which should be achieved after three to four months. Remember that people will only beat a path to your door if they know where the door is, and the success of the studio is totally dependent on your personality and hard work. The advertising for the studio should be started before attending the training course, so as to have a client base hammering that door down.

Avenues for marketing direction:

1. The franchise studios will be added to all advertising done in conjunction with the franchiser in woman's magazines and our regular newsletters.
2. Local press smalls adverts - effective and inexpensive.
3. Local press editorial-something new in the neighbourhood. (Assistance will be given in preparing text.)
4. Local store free notice boards.
5. Studio newsletter insertions-enquire at studio for fees.
6. Mailing to provided client list, from our data base.
7. Month end free demo.
8. Pamphlets and posters at local hobby and wool stores.
9. Talks to woman's clubs. (e.g. Rotary Annes, etc.)
10. Shopping mall promotions.
11. studio fetes.
12. Flea markets.

FINANCE

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The business is easy to operate with low overheads and high profit margins. The basic concept is to create a pool of students, i.e. Initially sixty students, or six lessons of ten pupils each, at a cost of sixty Rand (R60-00). This can be made up of thirty students attending twice a week, or sixty individual students. Each student purchases approximately three paints per week, with a profit margin of R5-00 per paint.

Each student purchases either a T-shirt, a bag, a table cloth or material to do the lesson on each week, with a profit of approximately
R3-00 per item. Each student also purchases miscellaneous habby including additional T-shirts, takkies, beads, bangles etc.
Profit in this department is dependent on the different types of stock you carry, but for this exercise we have set the figure extremely low.

The figures below are calculated on a 48 week year allowing for the Christmas holidays.  However some studios derive considerable income by remaining open while the students make Christmas presents.

This is a full scenario and reflects an approximate income in excess of R13 000 per month, but if your studio only does 50% of this, your income would be approximately R80 850-00 or R6730-00 per month.

Although sixty-five students is your target, our studios generally operate with numbers ranging from fifty to sixty-five, depending on the area. However, thirty to thirty-five students is considered enough to make your studio viable.

So, as reflected in the above figures, by increasing your student level by two extra per class, you can increase your income by approximately R36 400 a year. And accordingly for every additional student, your income increases proportionately. These figures reflect turnover and profit on goods sold. Your individual overheads will reduce these figures but should not exceed R800-00 per month, which is less than 10% of profits..

APPENDIX 3
LESLEY AND RAY'S ACTUAL CLASSES AT R300 PER LESSON: 1991 - 1996
Figures based on a 52 week year	Weekly	Monthly	Yearly
16 Students x 6 classes per week	R2400	R9600	R11 5200
96 Students x 3 paints per week @ R5 profit	R1440	R5760	R69 120
96 Students x miscellaneous sales	R500	R2000	R24 000
96 students x material @ R3 profit	R288	R1152	R13 284
All day classes one per month x 8 students @R 125		R1000	R12 000
		TOTAL	R234 144

The franchise fee is R75,000.00 (seventy five thousand ).  This amount is payable in full before training starts. Training will be an initial 2 weeks plus additional training scheduled during your training.  If you are near an existing studio, you will be required to attend 4 lessons at your cost to assess your abilities and to ensure that you are fully aware of what you are buying into, and the environment in which you will be operating.
If you wish to secure an area, a deposit of R15,000.00 (fifteen thousand) is required.

QUESTIONS

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Q. Will I be able to teach?
A. Yes.  If you are able to talk to people, we make the lessons so simple, all you have to do is follow the instructions.

Q. Do I have to be artistic?
A. No just the ability to follow the lesson.

Q. Do I need premises?
A. No, start in the playroom or study in your own house, and progress to a double garage and develop from there.

Q. Do I need staff?
A. No, very easy for a single person or couple to run.

Q. Can anyone attend classes?
A. Yes, but is best run with ages from 13 to 65 as children have very short attention spans.

Q. Do you only teach women?
A. No, both women and men attend classes.

Q. How much stock do I need?
A. The greater the variety of stock, the greater the impulse sales, but approximately R6000 to R8000 is adequate once classes are in full swing.

Q. How do I select stock?
A. We will advise you based on our actual sales.

Q. Where do I get stock from?
A. All items required will be supplied by CREATIVE IMAGE.

Q. How are payments made?
A. All purchases are COD. (This enables you to keep franchise costs down).

Q. Can I develop my own lessons?
A. The basic programme should be used because of its success rate, but add in your own ideas as extra project days.

Q. Do I need samples of finished lessons?
A. Yes.

Q. Do I have to do all the lessons on items rather then scraps?
A. Yes, as it is more visually appealing and generates sales.

Q. What guarantee is there of continuous supply of product and lessons?
A. The franchiser depends on you for orders, so it is within his interests to maintain supplies, and your productivity, plus our track record over the last 15 years speaks for its self.

Q. What guarantee do you have for the success of the studio?
A. This is totally dependant on yourself, and Creative Image cannot accept responsibility for your failure, but will clearly do everything in it's power to help with your success, because we need to keep you as a client.

Q. What happens after the two year period of the franchise, if I no longer wish to be a franchise holder, or you are not invited to renew?
A. All rights and supplies at franchise rates will cease.  you will be required to return all patterns, designs, manuals supplied to you.  You will also have a restraint of trade applied as per your contract of which you will be told in detail before signing.