Customer oriented outcomes for the franchising sector!

Compelling statistics No of franchise outlets Turnover $bl Annual growth No of employees Average value of loan Franchisee business loan market Franchisee home loan market AUM (Corporate & Individual) Yr 2000 Yr 2001 Yr 2002 Estimated 2005 Targeted market share of 2005 est. Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Total Cumulative market share target Source: RBA, Internal research, FCA Research &

 Local goodwill relates to franchisor’s, franchisee’s business and system as a whole  Goodwill on sale often determined amongst buyer, seller and franchisor  Goodwill on sale harder to manipulate for capital gains tax purposes  Goodwill is always present by virtue of marks & patents  Goodwill is limited to the term of the franchise grant  Goodwill generally belongs to franchisor Franchise Goodwill Credit sensitive attributes

US profile  SBA (small business administration)  AMRESCO  BUSINESS LENDERS  FMAC  TEXTRON  QUESTECH  DEUTSCHE  GE  SBIC (small business investment companies)

Australian profile  NAB  ANZ  GE  CITIBANK  HSBC  BANKWEST  CBA  WESTPAC

Diagnostic scope  Marketplace dynamics - High attrition rate of small stand-alone businesses -Rapid growth of franchising across all industry sectors -Relative low business risk -Captive market for cross sales -Government support -Unsophisticated capital markets -Unsophisticated capital markets

Marketplace Strategies  Broad goals Intent & Vision  Marketplace scope Products & Customers  Marketplace posture Modes of competing for differentiation  Objectives & goals Product development, Market share, Channels to market and technology

Broad goals  Intent & Vision To be a World-Class organisation providing innovative World-Class products to franchised businesses around the world and in so doing maximize customer value and shareholders wealth as a market leader.

Marketplace scope  Products & Customers - Integrate an offer of value added products to accredited franchise systems throughout the world -Commit to product innovation and application of those products to new markets

Marketplace posture  Modes of competing for differentiation - Innovate & tailor lending processes to the franchising sector by aligning products to meet our customers’ needs -Create & sustain a reputation for structured, cash-flow lending underpinned by collaborative risk management tools

Objectives & Goals  Product development -To introduce new products to new sectors within two years & modify existing products in readiness for market expectations  Market share -Customer acquisition through refinancing and customer creation through new loans. Market share targets are set at ……………….

Tactical tools  Zor Credit Rating Model  Zee Credit Rating Model  Benchmarking Model  Valuation Model  Business Plan Model  Finance Plan Model  E-Zee Loan Calculator  E-Zee Risk Management Model  Collaborative distribution sites

Channels to market  Fulfilled through franchisors  Access to corporate retirees & those with redundancy packages through financial planning  Originated from e-Zee franchise search web capability

Technological impact  To commit to e-Zee solutions in delivering: -Product functionality -Low cost to income around basis points below traditional market -Service & fulfil in line with our customers’ expectations

Why market buy-in ? The parallax view!  Franchisee’s viewpoint: Cannibalisation of name brand, toughest competitive threat and dilution of earnings. Business Imperative: Absolute revenue.  Franchisor’s viewpoint: Protect undeveloped and marginal markets, ongoingness of brand name protection, become industry dominant by having network density. Business Imperative: Marginal revenue.

Risk Management Model © e.Zee Capital Pty Ltd E l e c t r o n i c F a c e t o F a c e S i n g l e W e i g h t e d Q u a n t i t a t i v e M u l t i p l e W e i g h t e d Q u a n t i t a t i v e What are the risks?What we do to manage the risks?How we manage the risks? Q u a l i t a t i v e L e g a l R e p o r t i n g C o u n s e l i n g A c t i o n i n g DiagnosticStrategicTactical Procedural risks Circumstantial risks Behavioral risks e. z ee Capital

Credit imperatives  Management of business risks  Access to real time and accurate financial information  Mastering customer specific credit risks  Asset values as a going concern  Unfettered control over corporate assets  Dividend policies

Loan book security

Credit approval process  Credit rating by way of Zor Model  Rating must be approved by Credit Panel  e-Zee approves Zee according to Zor rating and Zee Model

Marketing imperatives  True cash flow lending  True business solution  Builds brand loyalty  Socially responsible  SME responsive

Security Realisation steps  Insurance excess fund  Mutual fund  Corporate assets  Personal assets  e-Zee Capital net assets

Case study Case study