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Dinesh Kumar Thapa Saroj BhandariMaria Marttila

Navaraj KarkiFazal Din

Franchising of R-Kioski

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Company Profile

• Nationwide, centrally managed chain of conveniencestore outlets.

• Founded in 1910 by trade and service enterprise Rautakirja, a Sanoma Company.

• Finland’s most visited retail chain with over 716 kiosks. 300 kiosks follow business format franchising allowing

private individuals to purchase the parent company’s name, trade mark and its on going business model.

Over 416 kiosks are managed directly by Rautakirja.• Goods range from entertainment to basic everyday

consumer products and services• With over 20 years of experience, the R-Kiosk chain is a forerunner in

franchising within Finland. • Net sales of the kiosk business were EUR 409.4 million in 2008.

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Internationalization

• In addition to Finnish R-Kiosk, Rautakirja’s businesses include kiosk operations in Estonia, Latvia, Lithuania, Russia and Romania. R Kiosk Eesti, a wholly owned subsidiary in EstoniaNarvesen Baltija, owned jointly and equally with the

Norwegian concern Reitan Group in LatviaLietuvos Spauda in Lithuania and R-Kiosk in Romania

owned directly by RautakirjaR-Kiosk, a joint venture in Russia

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Issues influencing the controlling of technology

• Issues taken into considerations when choosing control methods:

1. Basic principles2. Franchisor and Franchisee relationship3. Franchisee behavior4. Marketing mix5. Legal issues, ethics and reputation6. Aim to profitability7. Problems

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Issues influencing the controlling of technology

1. Basic Principles

• Nation-wide chain• Centrally administered operations• Good profitability• Strong market positions• Utilisation of chosen distribution channels• Remembering R-Kiosk’s macro-level goals:

create a wider international web of Franchisees

• Franchisors have two primary functions:

groom the offering attract, train and support quality franchisees.

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Issues influencing the controlling of technology

2. Relationship between R-Kiosk and franchisees

– Natural fit, defined roles, consistent behaviors, trust, honesty and fairness lead to most profitable results.

3. Franchisee behavior

– Franchisees can influence the brand image. • R-kiosk must monitor the franchisees to protect the brand.

– Preparation for cancellations and terminated contracts.• Strong brand recognition

– Experienced franchisees value security– Strong support chain and successful business concept

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Issues influencing the controlling of technology

4. Marketing Mix

One of R-Kioski’s competitive advantages is that the management follows marketing mix strategy very consciously.

• Product R-Kiosks provide various products from entertainment to basic everyday consumer

products and services for all age groups. E.g. DVDs, drinks, magazines, SIM cards and microwave meals

They influence their customers through the selection of products. More convenient for customers to buy these products than e.g. rushy and bigger

convenient stores. Their new marketing slogan is “Nopeaa ja mukavaa on asioida” (“It’s quick and easy to shop”)

• Price They deal their customers with normal prices and do not charge higher prices than their

direct competitors, e.g. ABC Service Station Stores. It is also a strategy to control their customers and their franchise mechanism.

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Issues influencing the controlling of technology

4. Marketing Mix

One of R-Kioski’s competitive advantages is that the management follows marketing mix strategy very consciously.

• Place R-Kiosks are usually easy to find. The stores have been established in places that people

can easily reach. E.g. in Seinäjoki there are 6 R-Kiosks. Their previous marketing slogan was “Kaiken lisäksi lähellä” (“On top of everything, were

close by”). Different market places require different concepts in order to maximize profits that can

be acquired from the area. R-Kiosk has different concepts in order to adapt to market places.

These concepts provide options for franchisees.

• Promotion More and more stores is another strategy to get more customers. R-Kiosk’s media selection: TV advertisements, magazines, newspapers, leaflets and

webpage. Promotion of e.g. products and their chain office stores.

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Issues influencing the controlling of technology

5. Legal issues, ethics and reputation• All R-Kiosk’s Franchising contracts must be in accordance to national legislation, European

Union legislation, certain ethical rules and possible additional sanction regulations within countries. In Finland, product prices cannot be decided by the franchisor alone. Franchisors can

only suggest prices. This has to be noted by R-Kiosk when advertising its products.• R-Kiosk has duties as a Franchisor to

1. Be the owner of the company name, trademarks or other business hallmarks or possess the legal right to use them.

2. Provide a private Franchisee with initial training and continuous commercial and technical guidance throughout the validity period of the contract.

• Possibility of legal work that means nothing. R-Kiosk takes caution in legal aspects of Franchising.

• Following legal obligations is important to R-Kiosk for several reasons. Failing to fulfill contractual obligations can have consequences in court or otherwise.– E.g. poor franchisor performance leads to negative comments by existing franchisees,

which can affect future franchise sales negatively.

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Issues influencing the controlling of technology

6. Maximizing profits• Motivation• One uniform concept and a nation-wide network generates trust and loyalty

amongst R-Kiosk’s customers.• Competitive advantages are key factors in staying as a market leader.

R-Kiosk must stay alert and be innovative.

7. Possible problems• In international franchising:

Possible problems concerning the lack of international profile. R-Kiosk seeks to reduce risks and expenses concerning internationalization

• R-Kiosk must consider alternatives to second generation franchising such as master franchising This can create problems in terms of finding a favorable business partner and

the time issues involved. • Which operation mode becomes more profitable and easier to use are essential

questions for R-Kiosk.

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Control Mechanisms

• Technology correspondence to Franchisors interest

• ”Key to success” service entity includes

Start packageTraining packageSupport service packageMerchant package

• Achievement of the desired level of control.

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R-Kioski does as franchisor to control the use of technology, the company makes available.

• use of available data (Internet info. Consultancy, statically data).

• Trust worthy partners.• Limited initial partners ( First,second

generation franchising).• Proper eye on franchisees and new

oppertunities for them.

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As franchisor, how they control the use of technology the company makes available?

• Legal issues (National, European, central ethical).

• Contracts and willingness.• Possession of company’s Hallmark and

business name.• Continuous commercial and technical

guidance.• Contractual obligations.

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Important to control technology

• Long term focus, control of duration.• Carefully designed, properly executed brand

formula.• Efficient operation manuals.• Two way communication.• Up- front fra. Fee, set up fee, capital

contribution.

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Why these issues are so important to Control?

• To retail market position

• To expand business

• For having best management

• To attract more customers

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THANK YOU!