New VCD franchise in Malaysia.....................
Zaroma to offer franchise system
The New Straits Times
ZAROMA Club (M) Sdn Bhd plans to strengthen its retail channel by introducing a franchise system aimed at individuals and companies wishing to set up a business with low capital.
According to the company's president Shamsul Ismail, the franchise system is a unique way of promoting video compact disks (VCD), video home system (VHS) or video tape movies, cartoons, educational documentaries and related products through retail and rental.
"Currently, we have about 10 franchisees and now we are looking for more than 60. This system can give business opportunities to retrenched workers and retirees, for example, especially now when the country is facing an economic downturn," Shamsul told Computimes in Kuala Lumpur last week.
The franchise system comes in various categories including outlet set-up (retail), outlet set-up (rental), home set-up (rental), catalogue retailing system, territorial franchising (State by State), promotion booth set-up (retail).
Investment for either an outlet set-up for retailing and rental costs is under RM20,000, said Shamsul.
"To set a home set-up for rental, the capital needed is RM13,000 and this consists of a complete set of library stack," he said, adding that a franchisee of any of the three categories will be charged a licensing fee of RM2,000 annually and a one-time RM200 processing fee.
According to Shamsul, a franchisee of the catalogue retailing system (selling or renting through catalogue), needs to pay RM500 for the licensing fee and RM200 for the processing fee.
The next category - the territorial franchising, denoting a master franchise and a subsidiary of Zaroma - will represent a State to distribute the VCDs. To start a business in this category, a franchisee needs a budget of more than RM20,000.
Finally, to start the promotion booth set-up (retail), a franchisee needs an investment of less than RM6,000. The franchisee also need to pay RM2,000 for the licensing fee annually.
Shamsul said Zaroma is looking for individuals or companies interested to sell VCDs at its promotion booth for the Kuala Lumpur Commonwealth Games '98.
According to him, among the benefits of participating in the franchise system are monthly updates and new releases (minimum 20 to 30 movies a month) and credit facilities. At the moment, Zaroma is in the process of working with the Entrepreneur Development Ministry to offer financial assistance to would-be franchisees.
"In addition, we also give support in management, product availability, product variety, exchangeable products, advertising and promotions, advice and consultation, marketing management and consultation, and training," Shamsul said.
"We have the latest concept and technology of retailing and rental. For example, if you have 10 outlets in Malaysia and you want to monitor your outlets from your home or any other location, we have the system to help you do so," he added.
The system is capable of monitoring and detecting the price of each product, the amount and time any item is rented, and rental revenues from any outlet, he said. The system comprises a computer software installed in an outlet's computer server that can be connected to a barcode or other tracking systems. To observe activities in an outlet, the owner can link the system using a modem and the telephone line to a personal computer (PC). Price of the system for one outlet is between RM30,000 and RM40,000.
According to Shamsul, the current economic situation encourages people to reduce spending on entertainment outside the home. However, he said, home entertainment becomes an alternative, creating a demand for video cassettes and VCDs.
Zaroma has so far brought in more than 5,000 copies of titles and is negotiating with companies like Warner to buy additional licences.
The company is aiming for between RM5 million and RM20 million in revenue this year.
It is also considering merging with a public-listed company in order to expand.
Zaroma will soon venture into the international market by exporting its VCDs to Australia and the United Kingdom, said Shamsul.
(Copyright 1998)
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