Booster Juice

International Expansion to Mexico

Prepared for: Dr. Darren Paproski

Class: MBA 523
Date: December 5th, 2011
Prepared by:
Executive Summary
Background
Booster Juice is a franchise based food service chain specializing in healthy fast food. The company
started in Canada in 1999 where it now has 265 store locations. It has expanded internationally into
several foreign markets and is considering expansion into Mexico. Their main products are fruit smoothie
type beverages with a ‘boost’ of protein or energy added in.

Key Points
 The Mexican economy is growing and there are adequate protections in place for investors.
 The North American Free Trade Act specifically protects the transfer of royalty fees and provides for
the protection of intellectual property.
 There is forecasted growth in the beverage sector, particularly for energy drinks.
 There is a large domestic market that is the world’s highest per capital drinkers of soda-based
beverages.
 Approximately 18.5 million tourists from Canada and the USA visit Mexico spending an estimated
$3.6 billion USD in 2010.
 The retail beverage marketplace in Mexico is fragmented and diverse with no clear market leader.
 The franchise structure for corporate expansion is a great method for reducing the risk and cost of
expansion while generating ongoing revenues in the form of royalty payments.

Key Objectives
 Greater international diversification of the royalty revenue stream to insulate the parent company
from fluctuations in any one domestic marketplace.
 Development of a broader and more robust supply chain internationally.
 Build brand recognition and saturation within Mexico to become a player at the national level.
Through this brand recognition, become a market leader in this segment.
 Increase the total number of franchise opportunities within Mexico thereby increasing revenue
diversification and total returns though royalty fees to the parent company in Canada.

Recommendations and Directions

 Offer franchise opportunities to Mexican based investors.
 Duplicate the Canadian marketing strategy in Mexico with some local adaptions.

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EXECUTIVE SUMMARY 2

INTRODUCTION 5

RESEARCH METHODOLOGY 6

SITUATIONAL ANALYSIS 6
COMPANY ANALYSIS 6
CORE COMPETENCIES 6
CUSTOMERS 7
COMPETITION 7
FINANCING 7
ORGANIZATIONAL ASSETS AND SKILLS 7
MARKET ANALYSIS 7
BUSINESS ENVIRONMENT ANALYSIS 8
NATURE OF DEMAND 9
COMPETITIVE STRUCTURE OF THE INDUSTRY 10

SWOT ANALYSIS 10
INTERNAL COMPANY STRENGTHS AND WEAKNESSES 10
STRENGTHS 10
WEAKNESSES 11
EXTERNAL MARKET OPPORTUNITIES AND THREATS 11
OPPORTUNITIES 11
THREATS 12
IMPLICATIONS OF SWOT ANALYSIS 13

OBJECTIVES 13
INTERNATIONAL OBJECTIVES 14
MARKET OBJECTIVES 14
FINANCIAL OBJECTIVES 14

RECOMMENDED MARKETING STRATEGY 14

TARGET MARKETS AND SEGMENTATION STRATEGY 14
MARKET POSITIONING 15
MARKET ENTRY STRATEGY 15

MARKETING MIX STRATEGIES AND TACTICS 15

PRODUCT AND BRANDING STRATEGY 15
PLACE / DISTRIBUTION STRATEGY 15
PRICE STRATEGY STRUCTURE 15
PROMOTION STRATEGY 16

PLANNING BUDGET 16
PLANNING ASSUMPTIONS 16
FORECAST SALES AND COSTS 17

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FORECAST PROFITABILITY 17
SENSITIVITY ANALYSIS 17

IMPLEMENTATION AND CONTROL 18

FORMAL PROJECT PLAN FOR IMPLEMENTATION OF RECOMMENDATIONS 18
MONITORING OF ACTION PLAN 18
FORMAL CONTINGENCY PLANS 18

REFERENCES 19

APPENDIX A - SITUATION ANALYSIS 21

COMPANY ANALYSIS 21
CORE COMPETENCIES 21
CUSTOMERS 21
COMPETITION 21
FINANCING 21
ORGANIZATIONAL ASSETS AND SKILLS 21
MARKET ANALYSIS 22
BUSINESS ENVIRONMENT ANALYSIS 22
NATURE OF DEMAND 25
COMPETITIVE STRUCTURE OF THE INDUSTRY 26

APPENDIX B - SWOT ANALYSIS 27

INTERNAL COMPANY STRENGTHS AND WEAKNESSES 27
STRENGTHS 27
WEAKNESSES 27
EXTERNAL MARKET OPPORTUNITIES AND THREATS 28
OPPORTUNITIES 28
THREATS 29
IMPLICATIONS OF SWOT ANALYSIS 30
SWOT MATRIX 30

APPENDIX C - EVALUATION OF ALTERNATIVE MARKETING STRATEGIES 31

STRATEGY ONE – EXISTING MARKETING STRATEGY WITH SOME LOCAL ADJUSTMENTS 31
STRATEGY TWO – TV, RADIO, AND NEWSPAPER BASED MARKETING CAMPAIGN 31
STRATEGY THREE – NO MARKETING ACTIVITIES 31

APPENDIX D – HISTORICAL EXCHANGE RATES 32

APPENDIX E - SUMMARY TABLE OF INTERVIEWS 33

PHONE INTERVIEW LOG 33
CONSUMER SURVEY RESULTS 34
INTERPRETATION 35

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Introduction
Summary - Booster Juice is Canada's largest chain of fresh juice and smoothie bars. The chain specializes
in health-conscious smoothies comprised of pure juice, fruit sorbet or vanilla frozen yogurt, frozen fruit,
fresh yogurt and ice. Founded in 1999 in Sherwood Park, Alberta (a suburb of Edmonton), the company
has grown to have 265 traditional store locations, including 20 non-traditional campus locations in
Canada. Worldwide they have 6 locations in the United States, 18 in India, 3 in Mexico, 3 in Saudi Arabia
and 2 in the Netherlands (Booster Juice, 2011).

History - In 1999, Dale Wishewan and his friend Jon Amack were camping along the Oregon Coast. Jon
asked, “Are there any juice bars in Canada?” This question opened the door of Booster Juice and to
success. Upon Dale’s return to Canada he wanted the idea to come true. After a couple of months of
planning, Dale opened his shop in his garage and basement with blenders, fruit and all the equipment. He
asked friends and neighbors to test his creations. After five months of 18 hour days of research and
development, he had a clear vision of what the Booster Juice brand would be (Booster Juice, 2011).

In November of 1999, the first Booster Juice location opened. Booster Juice then opened another 15
locations in the next year primarily in Alberta, and by the end of 2001 they had reached 50 stores in
Western Canada. Continuing to hone their recipes and food offerings, Booster juice reached 265 stores
stretching coast to coast across Canada by the end of 2003 (Booster Juice, 2011).

Mission Statement - The company’s mission is to ‘Provide customers with an incredible, healthy
alternative to fast food that’s great tasting, convenient and nutritious making it perfectly suited for
today’s active lifestyle. Their stores and products are energetic, fun, natural, and addicting!” (Booster
Juice, 2011)

Main Goal - The companies main goal is ‘making sure every customer leaves with a smile.’ (Booster
Juice, 2011) On the companies website they highlight a life style and their ad is capped by a MLB baseball
player with the slogan: ‘Bats right! Throws right! Lives right!’ (Booster Juice, 2011)

Main Products - The company’s main product is not only smoothies and juices but also food. To make
smoothies Booster Juice uses fresh fruit, adds in pure juice and then blends in low- fat frozen yogurt or
non-fat sorbets, then they add whatever ‘booster’ the customer wants. In addition, they also provide six
kinds of food including Quesadillas, Panini’s and Wraps (Booster Juice, 2011).

A few differentiating features of the product include:

1. Up to twice the fruit and half the ice of the competition.
2. No artificial sweeteners, colouring or additives.
3. Organic live active yogurt cultures (a probiotic) and prebiotics.
4. Smooth, natural sorbets which use inulin (a probiotic) to reduce sugar and add many health
benefits (no sherbets or ice creams)
5. Featured “superfoods” such as Matcha Green Tea and Açaí Power Berry
6. Over 100% of the daily requirement of fruit and pure juice.
7. A free Booster (nutritional supplement) in every smoothie.

Markets
North America: North America is the main market for Booster Juice. There are 256 stores and this number
is gradually increasing (Booster Juice, 2011).
 United States: Six stores in various states.
 Canada: Alberta: 65 stores in BC: 58, Manitoba: 9, New Brunswick: 2, Newfoundland: 8, Nova
Scotia: 6, Ontario: 84, Quebec: 4, Saskatchewan: 11

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International: Booster Juice is trying to expand their brand internationally. They currently have franchises
in: India: 18, Mexico: 3, Netherlands: 2, Saudi Arabia: 3

Entry Strategy – Booster Juice uses a franchise-based structure for expansion. This allows the parent
company to expand with very low risk to the parent while maintaining control of the brand. Word of
mouth, web, and social media provide the main introduction to the product for new consumers.

Research Methodology
Data for this plan was gathered primarily from secondary sources of information including Internet based
sources, those available in the business literature, and from books and compendiums. Further to this,
specific information was gathered from interviews with an existing franchise holder in Canada and a
survey of people within the target demographic living in Mexico. Detailed Data can be found in Appendix
E – Summary Table of Interviews.

Key Assumptions – Within the consumer survey (Appendix E), information regarding the gender,
age, and educational level of the respondents was used as a benchmark to determine how accurately the
population sampled represented the population as a whole, in comparison to demographic data. From
this we know that the population sampled is not representative of the Mexican population as a whole but
it does bear resemblance to our target demographic within Mexico. We infer this from the educational
level of the respondents, which is usually correlated with higher than average earning. For the purposes
of this report, we will assume that the responses to the survey are in fact reflective of the target domestic
demographic except where the use of more general demographic data is appropriate.

Situational Analysis
The situational analysis includes many factors important to both the Booster Juice parent company and
the individual franchise holders. Without success at the franchise level, Booster Juice Corporate will not
realize significant returns from its royalty revenue streams or sales of franchises. The analysis here
contains only the important points. For a more complete review, please see Appendix A.

Company Analysis
Booster Juice is a privately owned firm established in 1999 under the control of its founders, Dale
Wishewan and Jon Amack. Both are engineers and were friends before their decision to open a business
together. There is no publically available financial information for this company and when the project
team phoned the head office to ask questions regarding the franchise, they were passively refused. As
such, we do not have reliable data on their staffing, in house expertise, or organizational structure and
areas of responsibility. Fortunately, we are able to infer much of the needed information based on
information available on Booster Juice’s website (Booster Juice, 2011).

Core Competencies
Booster Juice’s smoothies are its flagship product. They are 90% of the menu offerings and come in a
wide variety of flavours with several ‘boosters’ to choose from. In addition to these, Booster Juice offers
juice, panini’s, wraps, and other ‘hard’ foods. Some pre-packaged snack food is available as well. Booster
Juice’s distinctive advantage comes from the recipes for it’s smoothies and it’s production processes that
allow drinks to be made quickly and consistently across the entire chain.

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Customers
Booster Juice is business to consumer. While it does not specifically state what its target demographic is,
we can infer from its website that it is female consumers between 15 and 50 years of age. Its target
consumer appears to be health and fitness conscious and lead active lives. This product is positioned as
fast food for health conscious individuals (Booster Juice, 2011).

Competition
Generally speaking, this business is considered to be in the fast food industry and competes for market
share with other national brands like Tim Horton’s, MacDonald’s, etc. More specifically, Booster Juice is
in a niche market for healthy food and has many direct competitors both nationally and internationally in
the form of other fast food outlets offering similar products. These include Orange Julius, Boost Juice,
Jamba Juice, and others.

Currently, Booster Juice is the market leader in Canada within its niche but is not competitive on the
national scale in the fast food sector (Booster Juice, 2011).

Financing
While there is no publically available information on the company’s finances, it seems logical that Booster
Juice corporate has uncomplicated financing requirements. All new franchises are fully financed by the
franchise holder. Booster Juice receives revenue from both the build out of new franchises and from
ongoing royalty fees from each franchise. While financing was likely a major obstacle for a start-up cold
beverage restaurant in Edmonton in the winter, it is probably self-funding at this point.

Organizational Assets and Skills

Booster Juice has brought several distinctive competencies to the table that have underpinned its success.
These are the product, the production process, and its marketing activities.

The Product - The product itself is a hit with consumers. It tastes good and delivers on its nutritional
promise. This has generated positive word of mouth advertising for the brand.

The Production Process – The production process is fast and efficient. Drinks can be made quickly and
consistently across the entire chain. This delivers on the fast-food promise and maintains the brand
quality and image.

Marketing Activities – Booster Juice leverages the web and social media in its marketing program. It does
not spend money on TV, radio, or newsprint advertising. Its marketing activities are based on word of
mouth marketing. If properly managed, the web and social media (like Facebook) and the prefect vehicle
for expediting word of mouth marketing. Essentially, the corporate head office is making it easy for
consumers to tell their friends about the products. In addition to this, the company focuses on guidelines
for store placement that guarantee good visibility for the franchise making the storefront a significant
advertising presence.

The combination of these factors has moved Booster Juice to a market leading position within its niche.

Market Analysis
The Mexican marketplace is a logical extension of Booster Juice’s current international expansion.
Booster Juice currently operates in both Canada and the US, which leaves Mexico as a logical expansion
target within the North American Free Trade Zone. The company is afforded many key protections under
the North American Free Trade Act (NAFTA) including protections for the repatriation of royalty fees and
protection for intellectual property.

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In addition, local market factors appear to be favourable for the company’s product. Industry research
(MexConnect, 2011) states that Mexicans are the world’s highest per capita consumers of soda based
drinks and further states that there is positive growth potential within this market. It shows a gap in the
energy drink sector, which Booster Juice could fit into.

Business Environment Analysis

Political / Legal / Institutional Factors

Mexico has adequate measures in place to protect investors and it’s legal system functions in handling
business related issues. Unfortunately, the endemic nature of corruption and bribery may pose a risk for
the individual franchisee, as it will affect local business dealings and possible supply chain elements as
well. If the exposure to bribery becomes too large it may affect the financial viability of the franchises
leading to failure in the marketplace.

Regulatory Environmental Factors (Present and Anticipated)

From the point of view of the parent company there should be little regulatory impediment to success in
the Mexican marketplace. Indeed, recent changed to the health legislation with respect to food services
(World Health Organization, 2002) will favour a more systematic approach to food production and leave
Booster Juice in a favourable position.

Economic Conditions
Economically, the business and consumer environment in Mexico seems positive and stable. The
economy in general supports entry into the Mexican marketplace.

Social and Cultural Factors

Mexican society has a diverse ethic composition. The tourist industry is well entrenched in the middle
and southern parts of the country.

Demographic Trends
The CIA estimates Mexico’s population to be 113,724,226 at July 2011. 65.2% of the country’s population
consists of 15-64 year olds (35,842,495 males and 38,309,528 females), 28.2% of its population are 0-14
year olds (16,395,974 males and 15,714,182 females), while the remaining 6.6% are 65 years and over
(3,348,495 males and 4,113,552 females). The Mexican labour force consists of 19% female and 81%
male (Pay Scale, 2011) and its minimum wage is approximately $5 per day (Contadores, 2010).

Demographically, there is a large and diverse population to provide labour for the proposed franchises
and also as consumers.

Technological Environment and Trends

The country possesses strong levels of technological adoption which ranks 58 th out of 142 economies and
scores 5.2 out of 7 in terms of availability of latest technologies according to the World Economic Forum’s
(WEF) 2011 Global Competitive Index (GCI). There should be no impediments for franchise holders in
terms of electricity, internet, and phone service.

Natural Environment
The natural environment is one of the main draws for the tourist market that generates in excess of 3.5
billion dollars a year in revenue for the Mexican economy (VISA, 2011). This tourist sector will form an
important part of the target market for Booster Juices product.

Physical Environment (Infrastructure Indicators)

Mexico scores 4.2 out of 7 and ranks 73rd out of 142 economies in terms of quality of overall
infrastructure. The country has a good transport infrastructure which ranks 47 th out of 142 economies,

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but the quality of roads in Mexico scores 2.6 out of 7 and ranks 68th out 142 according to the WEF’s 2011
GCI.

The infrastructure in Mexico is adequate to support the type of logistical network necessary for the
transport of equipment and supplies to the franchises. There should be no impediments to franchise
holders.

Nature of Demand
Booster Juice’s primary product is a general lifestyle product and a fast food commodity. While this sort
of product is not broadly adopted within an entire society, it does produce sales into many demographic
segments including both male and female and 15 years old through to 65+ years old. Our positioning of
the product is a mid to upper level product offering so we do not expect those of the lowest income levels
to necessarily choose this product on a regular basis. The two main target demographics we will be
pursuing are:

Domestic Market
Our domestic target market includes middle to upper income Mexicans with busy lifestyles, typically
employed or raising children full time. Based on the results of our survey (Appendix E), we know that this
demographic typically looks to social media and the newspaper for information several times per day.

Tourist Market
Tourists from Canada and the USA make up our second target demographic. In 2010, 17 million Americans
visited Mexico and 1.5 million Canadians visited Mexico (Mexican Embassy in Canada, 2011). Tourists will
search for information in a variety of manners. Some will use the web and social media while on vacation
to pick up recommendations and to search for product and service providers. Others will ask for
directions and use local print base advertising where available in a language they understand. The
language barrier may be significant with this group.

Size and Extent of Demand

We know from industry data (MexConnect, 2011) that Mexicans are the world’s largest per capita
consumers of soda-based drinks. Unfortunately, credible data on the size, extent, and value of the
beverage sector in Mexico is not available. Several sources quote rough values for the industry but the
fluctuations in these numbers suggest that there is considerable variation in the way in which the market
is categorized and the manner in which demand is measured.

By extrapolation, we can derive a rough idea of demand from the results of our survey (Appendix E).
When we asked consumers if they currently consume smoothie type beverages, 33% of respondents
indicated that they consumed a smoothie at least once per week. While clearly much lower than the
consumption of soda, participation on a weekly basis by 33% of the market does indicate a positive
outlook for this product, particularly in a country with 47 million people in the labour force.

Stage of the Product Lifecycle

One could characterize the stage of the product life cycle for Booster Juice’s product in two manners. As
a smoothie, the market is mature. Smoothies have been in the marketplace for decades and have
enjoyed good consumer success. In other respects, the value added nature of the ‘booster’ added to the
smoothies differentiates the product and gives it a new life in the consumer marketplace. In this respect,
the product is in the introductory phase of its development. Regardless of the specific nature of its place
in the product lifecycle, the product is recognized in the marketplace and has an existing base of demand.

Cost Structure of the Industry

The specifics of the cost structure of the industry will be the main area of concern for the potential
franchise holder. From the information in the Situational Analysis, we know that Mexico has adequate
infrastructure and technology to support the individual franchises. We also know that bribery and

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corruption will add an under-the-table component to the cost structure of the industry both at the supply
chain and operational level.

From the point of view of the parent company, we know that the country can support Booster Juice and
that there is demand for the product. Specifics of the cost structure of the industry will be up to the
individual franchise holder.

Competitive Structure of the Industry

Competitor Analysis
Based on industry data (MexConnect, 2011) we know that 75% of the sales in this product category are
done through small private retail outlets. A further 24% of sales are done through restaurants, night
clubs, hotels, and resorts. Chains and larger brands do not dominate this marketplace.

This leads us to believe that while diverse, the marketplace is fragmented and does not have a clear
market leader. There will be little consistency in product, quality, or pricing. This diversity means that
there will be no ‘one voice’ for the industry and that backlash toward a more systematic entry by a larger
chain may not happen.

Competition Analysis
With a fragmented marketplace there will be little if any brand competition. Competition will be
characterized by product-based competition and price based competition. As Booster Juice will be
positioning and pricing itself as a mid to upper level product entry, it will not engage in price based
competition. Product based competition will be the most likely risk to Booster Juice and the company will
have to put resources into the protection of its intellectual property.

SWOT Analysis
Internal Company Strengths and Weaknesses
Strengths
Franchise Based Expansion Model – Booster Juice has new franchise holders pay up front for the
complete store build out and then return a royalty fee of 6% of revenues per year. In this way, the
company never has capital or debt tied up in its stores and, in all likelihood, makes additional money on
the sale of equipment to the franchise holder in addition to the franchising fees. The financial risk of the
expansion is limited to the franchise holder. In Canada, the average turnkey cost for a store build out is
$250,000.

Existing International Expansion Experience – Booster Juice has previously expanded into the USA and
into markets further abroad. Expansion to Mexico is both logical and consistent with expansion to the
USA. Many of the skills gained in these previous expansions (real estate negotiation, legal hurdles,
customs and taxation issues, etc.) have been tackled, and the company is familiar with the NAFTA and the
protections that it does and does not offer. In addition, detailed information is available publicly
regarding Mexico and country based risks and opportunities.

Complete Control over Advertising and Marketing – In order to maintain its brand’s consistency, Booster
Juice controls all advertising and marketing activities including social media presences. In this way, brand
image is controlled globally despite the franchised ownership model.

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Legal / Insurance Risk Management – Each franchise is a legally incorporated entity and is responsible for
securing its own liability insurance. This structure provides a legal firewall between the franchise and the
parent company and will improve the chance of any lawsuits remaining at the franchise level.

Corporate Reputation – Booster Juice enjoys a good corporate reputation in the market place. It appears
to be perceived as a healthy alternative to fast food and with its tight control over advertising and social
media is in a good position to manage its brand reputation globally.

Local Customization – Booster Juice’s product can be customized to local tastes in two manners. The
recipe’s themselves can be varied to accommodate local tastes for different fruits and vegetables not
generally used in Canada. Further to this, the name of the individual products can be changed to give
them local relevance and respect local cultural beliefs.

Weaknesses
Difficulty Enforcing Corporate Standards in a Remote Franchise – Much of Booster Juice’s appeal lies in
the recipes and the taste of its beverages. There is a risk that the international franchisees may
intentionally or unintentionally shift the taste of the beverages to the point where they are not
recognizable as a Booster Juice beverage, and begin to loose their unique appeal. This will be particularly
damaging with the tourist market that are accustomed to the domestic standards of the brand.

Reputational Damage from Franchisee’s Activities - Booster Juice’s reputation lies in the consistency and
quality of its products, the cleanliness of it facilities, and the maintenance of its brand image. While
relatively easy to enforce in Canada, the remoteness of the Mexican marketplace makes it more difficult
to enforce quality and consistency based standards. There is a risk that a franchisee, or group of
franchisees, may degrade the quality of the brand through their actions, which may tarnish the reputation
of the company both aboard and at home.

Potential for Misrepresentation of Earning – Royalty fees are based on a percentage of yearly revenues.
This creates an incentive for the franchisee to under report earning or to skim cash from the system prior
to entry.

External Market Opportunities and Threats

Opportunities
Good Alignment of Product with Target Market – Industry research show that the beverage market is a
well established sector in Mexico with Mexicans leading the world in per capita consumption of soda
(Mex Connect, 2011). In addition, it is inferred that a cold beverage offering will do well in a country
whose average yearly temperature is in the 30’s (degrees Celsius).

Over 50% of Tourists to Mexico are from Canada and the US, where Booster Juice is Prevalent – Well
over 50% of the tourists to Mexico are from Canada and the USA where Booster Juice is a well established
brand. VISA (2011) estimates that these tourists spent approximately $3.6 billion USD in Mexico in 2010.
This same data also shows that this was a 28% increase over the 2009 figures and that a growth trend is
expected to continue in 2011. Tourism is the third most important economic activity in Mexico,
representing 8.3 percent of the nation's Gross Domestic Product. The country ranks 8th in the number of
international visitors and 10th in international tourism revenues, according to the World Tourism
Organization (2005).

New Mexican Health Regulations Favour a more Systematic Approach to Food Production – In 2002, the
Mexican Government passed new health regulations specifically to address food safety issues (World

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Health Organizations, 2002). This increased emphasis on food safety favors a more systematic approach
to food production where quality is emphasized in both the ingredients and the food production methods.
Booster juice’s established production methods are based on Canadian Food Safe regulations and will be
more than adequate to address Mexican health standards.

Large Labour Market with Low Wage Expectations – According to the CIA World Fact Book (2011) the
Mexican labour force is comprised of 47 million individuals, 63% of which are employed in the service
sector. With an official unemployment rate of 5.4% these is enough volume and mobility in the labour
market to provide a consistent workforce. In addition, the minimum wage in Mexico is approximately $5
CDN per day, which will help franchisee to run a successful operation (Wage Indicator, 2011).

Industry Studies Show a Gap in the Beverage Market for Energy Drinks – MexConnect (2011) states that
their research indicates that the market for energy drinks in Mexico is growing but that the marketplace
has not yet settled on a particular brand. This leaves room for an entrant with an offering in this area to
gain market share. Booster Juice is marketed as a health alternative but one that can provide an energy
‘boost’ with many of its beverages (Booster Juice, 2011)

There is Forecasted Growth in the Beverage Sector – Similarly, MexConnect (2011) forecasts that the
‘alternative’ drink segment (energy drinks, vitamin water, juice, and bottled water) is growing at 200% per
year in Mexico. While this assessment seems bullish, it does point to a general growth trend in this
market segment with the potential for a new entrant to gain significant market share.

High Quality, Low Cost Local Supply Chain – Local franchises in Mexico will not survive without a high
quality, low cost supply chain for key ingredients. Graber (2007) indicates that in 2003, Mexico was the
world’s 4th largest fresh fruit exporter by value, with $900 million, and the world’s 7th largest fresh fruit
exporter in quantity by 1.5 million metric tons in the same year. This supply chain provides a diverse
basket of supply that is fully capable of supporting the products provided by Booster Juice. In addition,
the local nature of supply production will decrease the transportation and logistical costs involved in
supplying local franchisees.

Large Domestic Market Size - Mexico has a large internal market size ranking 12th on the World Economic
Forum’s Global Competitive Report for 2011-2012, and according to the CIA’s (2010) estimate, Mexico has
a Purchasing Power Parity of $1.567 trillion with a 5.5 percent increase in the same year.

Threats
Legal Recourse for Non-Payment of Royalty Fees – While the NAFTA does afford some protection to the
parent company under Chapter 11, there is still the risk that a franchisee may decide to keep the franchise
and cease remitting royalty payments to the parent company. The parent company would then get
caught in a long and protracted legal battle against a foreign national in a country which is known for a
large degree of corruption in it’s governmental and legal system (Business Anti-Corruption Portal, 2011).

The Beverage Sector is a Well-Established Market – As previously mentioned, Mex Connect (2011)
indicates that Mexicans are the largest consumers of soda, per capita, in the world. The beverage sector
is well established in the consumer marketplace in Mexico. Because of this, it is also well serviced with
existing vendors. Mex Connect (2011) indicates that:
 75% of the sales are through mini markets, mom and pop stores, gas stations, and liquor stores
 24% of the sales are through restaurants, schools, night clubs, hotels and resorts
 Supermarkets represent 1% of sales

With this in mind, Booster Juice will be attempting to gain market share against local small businesses
across Mexico. While federal law dictates that all businesses must employ Mexican Citizens for work that

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a Mexican can do, there still may be a backlash in the consumer marketplace against a business that is
perceived as foreign.

Security Risks – According to official estimates, 60-70 people are kidnapped each year, but real numbers
are likely to be much higher. While foreigners are rarely the targets of abductions, wealthier Mexican
business people are frequently targeted. If a franchise owner were targeted in this manner, it would
disrupt franchise operations and threaten the royalty revenue stream to the parent company. (Doane,
2009)

Exchange Rate Risks – The value of international expansion for Booster Juice is in the diversified royalty
revenue streams it will generate. Before these revenue streams can be repatriated to the Canadian
parent, they will have to be converted from Peso’s to Canadian Dollars. While the NAFTA provide legal
protection for the free transfer of money in these circumstances (under Chapter 11), the value of these
transfers could be dramatically eroded if the exchange rate between Mexico and Canada worsens. See
Appendix D for a historical trend in the value of the Mexican Peso.

Bribery and Corruption – Bribery and corruption is endemic in Mexico (Business Anti-Corruption Portal,
2011). Bribes are required at all levels of transaction and frequently within the legal system as well
(Mexico Matters, 2011). This will represent a significant threat to Booster Juice in transporting equipment
to Mexico for store build out, securing real estate deals for its franchisees, and securing business licenses
for it’s franchisees.

Intellectual Property Rights and Protections – The NAFTA Chapter 17 provides for the protection of
intellectual property rights and interviews with existing franchise holders (Appendix E) indicate that all
franchise holders and employees sign a Non-disclosure Agreement with respect to the recipes for Booster
Juice’s beverages. However, in all reality, enforcing this kind of protection across an international
boundary would be complicated and time and resource intensive. Loss of the recipes and production
processes remain a key risk of entry into the Mexican marketplace.

A SWOT matrix appears in Appendix B.

Implications of SWOT Analysis

Based on the SWOT analysis regarding international expansion by Booster Juice into Mexico the following
points are of note:
 The franchise structure for corporate expansion is a great method for reducing the risk and cost of
expansion while generating ongoing revenues in the form of royalty payments.
 The NAFTA provides good protection for the royalty revenue streams and the intellectual property of
Booster Juice.
 There is a large and growing domestic market for the product, as well as a significant tourist market
for the product.
 The brand as a whole is well positioned for success in Mexico in combination with a good local supply
chain and lower labour costs.
 The risks associated with expansion into Mexico are manageable.

OBJECTIVES
The SWOT Analysis in the preceding section shows that the inherent strengths of the company are a good
match for the opportunities available in Mexico. While risks exist, they are manageable and the company
will be increasingly able to mitigate them with time and experience in Mexico. Going forward with this
international expansion, Booster Juice’s objectives in Mexico will be as follows.

13
International Objectives
The objectives in international diversification for Booster Juice are:
 Greater international diversification of the royalty revenue stream to insulate the parent company
from fluctuations in any one domestic marketplace.
 An increase in the total number of revenue royalty streams.
 Greater brand saturation and penetration across different economies.
 Development of a broader and more robust supply chain internationally.

Market Objectives
The market-based objectives of expansion into Mexico are twofold:
 Within the domestic market we will market to consumers with middle to high income that are health
and lifestyle conscious.
 Within the tourist market we will target Canadian and American tourists looking for healthy and
familiar fast food that won’t cause them gastrointestinal discomfort.

Financial Objectives
The financial objectives of expansion into Mexico are;
 Build brand recognition and saturation within Mexico to become a player at the national level.
Through this brand recognition, become a market leader in this segment.
 Increase the total number of franchise opportunities within Mexico thereby increasing revenue
diversification and total returns though royalty fees to the parent company in Canada.

RECOMMENDED MARKETING STRATEGY

Based on the information in Appendix C - Evaluation of Alternative Marketing Strategies, the project team
is recommending that Booster Juice continue with its existing marketing strategy from Canada with some
local adjustments.

To this end, Booster Juice Corporate will continue with extensive web branding and social media presence
in the target country to facilitate the spread of word of mouth marketing. To customize to the location,
Booster Juice Corporate will set up individual Facebook and MySpace pages for each franchise and work
with a distinctive web presence that not only reflects the local language, but local customs as well. For
further details, please see Appendix C.

Target Markets and Segmentation Strategy

Reflecting the current and future consumer base for this product, we have chosen two target
demographics for marketing purposes.

Domestic Market - Our domestic target market includes middle to upper income Mexicans with busy
lifestyles, typically employed or raising children full time. Based on the results of our survey (Appendix E),
we know that this demographic typically looks to social media and the newspaper for information several
times per day.

Tourist Market - Tourists from Canada and the USA make up our second target demographic. In 2010, 17
million Americans visited Mexico and 1.5 million Canadians visited Mexico (Mexican Embassy in Canada,
2011). Tourists will search for information in a variety of manners. Some will use the web and social
media while on vacation to pick up recommendations and to search for product and service providers.
Others will ask for directions and use local print base advertising where available in a language they
understand. The language barrier may be significant with this group.

14
Market Positioning
Booster Juices’ marketing strategy will position its product offerings as a mid to upper level market entry.
Based on our initial consumer survey (Appendix E) we will set the initial price point for the company’s
signature smoothies at $40 pesos ($3 CDN). Booster Juice will compete on product, not price.

Market Entry Strategy

Booster Juice will attempt to attract a potential franchise holder in a prosperous resort town that attracts
both Canadian and American tourists year round. From here, we will solicit franchise holders in similar
markets until the natural demand for the product begins to develop demand for the franchises.

MARKETING MIX STRATEGIES AND TACTICS

The marketing mix for Booster Juice in Mexico will be consistent with it current global marketing strategy
with customizations to reflect the local Mexican marketplace and laws and with due attention paid to the
results of the survey of the target demographic carried out in conjunction with the development of this
plan.

Product and Branding Strategy

The corporate look and feel of Booster Juice will be maintained in its Mexican franchises. The colour
scheme, store layout options, production equipment, and store presence will be maintained in
accordance with the Canadian standards.

This international expansion will begin with one franchise located in a tourist town popular with Canadian
and American travellers. The store will open with the recipes used throughout the chain. The franchise
owner will be responsible for administering a post purchase survey of customers to collect feedback on
the taste of the product, the look and feel of the cups, and the overall purchase experience. Based on the
results of the first month’s financial activity and survey results, a decision on whether to tailor the recipes,
packaging, or brand experience will be made. Immediate local customizations will include translation of
all materials into Spanish.

The brand will not be positioned to compete on price. It will be positioned as a mid to upper level
product offering with an improved customer experience over existing Mom and Pop style shops, which
dominate 75% of the current marketplace. The marketing will focus on the value added nature of the
‘booster’ added to each drink and the positive health benefits of the product, particularly in comparison
to the existing per capital consumption of soda drinks.

Place / Distribution Strategy

The key franchise holder for Mexico will be responsible for the development of the specifics of the supply
chain as specified in Booster Juice’s international expansion model (Booster Juice, 2011). Once a supply
chain and logistical system have been scoped, Booster Juice will audit the proposed structure onsite to
ensure that corporate standards for product quality and consistency can be met.

After the initial franchise and post consumer surveying detailed in the ‘Product and Branding Strategy
Section’, franchise expansion will begin. Initial preference will be give to towns with both a domestic and
tourist market base to improve initial adoption and boost revenues. Once a market position within
Mexico is established, expansion into towns that rely more on the domestic market can begin.

Price Strategy Structure

Our initial survey of the target demographic in Mexico (Appendix E) showed a range in consumer
willingness to pay ranging from $20 pesos to $60 pesos, with an average price of $31 pesos. Consistent

15
with the branded position as a mid to upper market product offering, the initial price for a smoothie type
beverage will be set at $40 pesos with other products benchmarked accordingly from this price. At
current exchange rates (November 2011) this represents a price of $3.00 CDN per smoothie as compared
to the price in Canada of $6 CDN per smoothie. Given the economic data and purchasing power parity
presented in the Situational Analysis, this represents a reasonable price in the Mexican marketplace that
will appeal to locals, represent a deal for tourists, and provide positive financial returns to the franchise
holder and through them to the parent company.

Promotion Strategy
Booster Juice Corporate will focus on two aspect of the promotional strategy.

Booster Juice Corporate will focus on the development of both a Spanish and English web presence that
accurately portrays the company’s values and focus. Concurrently, the company will create an individual
Facebook and Twitter page for each franchise that are managed jointly with the franchise owner. These
structures will assist in the propagation of word of mouth marketing and will be accessible to both the
domestic and tourist target market.

In addition, Booster Juice corporate will maintain it’s standards for franchise location to ensure that the
location is highly visible and promotes the brand to the public at large.

PLANNING BUDGET
Planning Assumptions
In implementing the proposed marketing plan from the corporate perspective, we assume that carrying
over our existing marketing presence from Canada to Mexico will not entail a great increase in the
resources devoted to marketing. This activity will follow the following steps and rough budgets.

Activity Description Corporate Estimated

Resources Cost
Acquire Local Working with the initial franchise holder, we will 40 hours from $2000
Resource. evaluate the existing web presence and make Marketing
changes to the content to reflect Mexican Executive at
traditions and culture. $50 / hr.

Translate and Once the content has been set, we will work with 10 hours from $500
customize existing the local franchise holder to ensure it is in Marketing
content. Mexican Spanish. Executive at
$50 / hr.
Create, launch and We will launch the new web and social media 100 hours $3000
review. presence, monitor feedback, and make changes coding and
as necessary. compilation at
$30 / hr.
Total Cost $5500 CDN

Other expenses including server time, server capacity, computer hardware, etc. are already sunk and as
such, are not relevant to the calculation.

16
Forecast Sales and Costs
Based on the market and competitive analysis (in the situational analysis) it is assumed that there will be
demand for franchises from both Mexican national and Canadian expatiates residing in Mexico (a.k.a Alan
Chappell). We see a ‘most likely’ scenario representing the sale to two franchises per year for the first
three years. If the brand gains a foothold in the marketplace, then we expect to the word of mouth
marketing pay off and the numbers of franchise requests per year begin to increase after year three. For
planning purposes, we will forecast three in the fourth year and five in the fifth year. Our five year profit /
loss statement is based on the following assumptions:
 Initial marketing costs are accurately represented in the preceding section
 Booster Juice Corporate profits on the sale of equipment to the franchise holder. We estimate
this profit to be $20,000 / build out.
 There will be ongoing marketing maintenance expenses per year of ½ the value of the initial
marketing expense.
 There will need to be an executive director in charge of international operations. We will charge
back 20% of their estimates $150K CDN salary to the Mexican operations. We assume they will
be able to handle all five years with 20% time and never ask for a raise.
 Two weeks of in store training for each new franchise will cost $10,000 for two trainers, airfare,
and accommodation.
 There will be a corporate liability insurance expense of $5000 / year.

Profit and Loss Statements – Booster Juice Franchise Sales to Mexico (in Canadian Dollars)

FY1 FY2 FY3 FY4 FY5

Sales
Franchise Fees 40,000 40,000 40,000 60,000 100,000
Equipment 40,000 40,000 40,000 60,000 100,000
Total Sales 80,000 80,000 80,000 120,000 200,000

Expenses
Marketing 5,500 0 0 0 0
Marketing Maintenance 2,750 2,750 2,750 2,750 2,750
International Exec. 30,000 30,000 30,000 30,000 30,000
In Store Training 20,000 20,000 20,000 30,000 50,000
Insurance 5,000 5,000 5,000 5,000 5,000
Total Expenses 63,250 57,750 57,750 67,750 87,750

EBITDA 16,750 22,250 22,250 52,250 112,250

Cumulative Profit / Loss 16,750 38,700 60,950 113,200 225,450

It should be noted that the calculations above do not include the royalty revenue stream. Royalties are
6% of sales, not profits, so we expect an additional positive return in the royalty revenue stream
beginning in year two.

Forecast Profitability
Based on the profit / loss calculations, the sale of franchises to Mexico is expected to have a positive
return in year one and break even upon sale of the second franchise in year one.

Sensitivity Analysis
No work on expansion into Mexico will begin until the initial franchise holder is confirmed. All expenses
related to the sale of franchises into Mexico will be incurred once the first sale is made. With this in mind,
the worst-case scenario is the sale of only one franchise in year one with no other franchise sales. This

17
scenario results in a loss to Booster Juice Corporate of $ 13,250 CDN. This is an acceptable risk. The
larger risk is the loss of reputation associated with a failed launch.

IMPLEMENTATION AND CONTROL

Formal Project Plan for Implementation of Recommendations
Activity Month
1 2 3 4 5 6 7 8 9 10 11 12
Identify and qualify first franchise holder
Franchise develops supply chain
Franchise identifies store location
Corporate approves supply and location
Franchise fee paid in full
Corporate revamps marketing
Equipment shipped
Store build out
In store training
Open for business
Review progress

Note: Blue = Franchisee, Green=Booster Juice Corporate

Monitoring of Action Plan

There will be two phases in the review process for new franchises. The initial review will take place during
the in-store training. During this time the trainers will evaluate the store build out, equipment
installation, and supply chain elements. They will draft a list of deficiencies for the franchisee to address
before they leave. Once the trainers have left, the store will be certified to open. Trainers may not stay
on to observe operations due to Mexican labour laws.

The second phase will occur after opening and will involve ongoing analysis and auditing of franchisee
activity using online accounting audits and analysis of yearly royalties.

Formal Contingency Plans

Give the remote nature of the franchise a series of risk management plans will be developed to cover the
following contingencies:
 Litigations and suits against the franchise
 Fire, flood, and earthquake
 Vandalism, arson, and civil disobedience
 Misrepresentation of earnings
 Safety and food safety incidents
 Financial non-performance
 Renewal of franchise

18
REFERENCES
Business Anti-Corruption Portal (2011) Mexico Regulatory Environment: Regional Differences in Corruption
and the Regulatory Environment [Internet] Available from: <http://www.business-anti-
corruption.com/country-profiles/latin-america-the-caribbean/mexico/general-information/mexico-
regulatory-environment/> [Accessed 18 November 2011]

Booster Juice (2011) Booster Juice Web Site [Internet] Available from:<boosterjuice.com> [Accessed 17
September 2011]

Central Intelligence Agency (2011) North America: Mexico [Internet] World Fact Book. Available from:
<https://www.cia.gov/library/publications/the-world-factbook/geos/mx.html> [Accessed 10 November
2011]

Contadores, Mauricio Monroy (2010) Mexico Raises 2011 Daily Minimum Wage by 4.1% [Internet]
Available from: <http://www.monroycp.com/newsfeed/files/b65112619a8a86b8dbd1d7443d09621c-
13.html> [Accessed 22 November 2011]

Doane, Seth (2009) In Mexico, Kidnapping a Persistent Threat [Internet], CBS. Available from
<http://www.cbsnews.com/stories/2009/04/16/eveningnews/main4951080.shtml > [Accessed 3rd
December 2011]

Encyclopedia Brittanica (2011) Mexico [Internet] Available from:

<http://www.britannica.com/EBchecked/topic/379167/Mexico> [Accessed 22 November 2011]

Encyclopedia of the Nations (2011) Mexico Transport [Internet] Available from:

<http://www.nationsencyclopedia.com/Americas/Mexico-TRANSPORTATION.html> [Accessed 10
November 2011]

Everbank (2011) Historical Currency Exchange Rates: Canada and Mexico [Internet] Available from: <
https://www.everbank.com/personal/mexican-peso.aspx> [Accessed 29 November 2011]

Masterson, B. (2001) Owning and Operating a Small Business in Mexico [Internet] Available from: <
http://www.peoplesguide.com/1pages/retire/work/bil-maste/starting-business.html> [Accessed 20
November 2011]

Mexican Embassy in Canada (2011) Record Number of Canadian Visited Mexico in 2010 [Internet]
Available from: <consulmex.sre.gob.mx/montreal/.../Bol08-11CanVistanMex-Eng.pdf> [Accessed 1
December 2011]

Mex Connect (2006) Setting up a business in Mexico [Internet] Available from:

<http://www.mexconnect.com/articles/217-setting-up-a-business-in-mexico> [Accessed 20 November
2011]

MexConnect (2011) Mexico Sales Alliance: Helping you sell in Mexico. [Internet] Available from
http://www.mexicosalesalliance.com/bconsumption.html [Accessed 11 October 2011]

Mexico Matters (2011) Some things in Mexico seem to never change: The Bite is Alive and Well in Mexico
[Internet] Available from:
<http://www.mexicomatters.net/retirementmexico/04_bribeslamordidainmexico.php> [Accessed 15
November 2011]

19
Organisation for Economic Co-operation and Development (2011) Overview of the Economic Survey of
Mexico 2011 [Internet] Available from:
<http://www.oecd.org/document/34/0,3746,en_2649_33733_47781730_1_1_1_1,00.html> [Accessed 1
December 2011]

Pay Scale (2011) Salary for Country: Mexico [Internet] Available from:
<http://www.payscale.com/research/MX/Country=Mexico/Salary> [Accessed 22 November 2011]

Schowalter-Hay, E (2011) The Environment & Climate in Mexico [Internet] Available from:
<http://traveltips.usatoday.com/environment-climate-mexico-59810.html> [Accessed 22 November
2011]

Trading Economics (2011) Mexico Inflation Rate [Internet] Available from:

<http://www.tradingeconomics.com/mexico/inflation-cpi> [Accessed 1 December 2011]

Wage Indicator (2011) Salaries, Wages, VIP Income [Internet] Avaiable from: <
http://www.wageindicator.org/main> [Accesses on 15 November 2011]

World Bank (2010) Doing Business in a More Transparent World: Economy Profile: Mexico Available from:
<http://www.doingbusiness.org/~/media/fpdkm/doing%20business/documents/profiles/country/MEX.p
df>

World Economic Forum (2011) The Global Competitiveness Report 2011-2012. Switzerland, SRO-Kundig.

World Health Organization (2002) Global Forum on Food Safety Regulations [Internet] Available from: <
http://www.fao.org/docrep/meeting/004/y2122e.htm> [Accessed 23 October 2011]

XE (2011) Mexican Peso to Canadian Dollar Rate [Internet] Universal Currency Converter. Available from:
<http://www.xe.com/ucc/convert/?Amount=1&From=MXN&To=CAD> [Accessed 1 December 2011]

20
Appendix A - Situation Analysis
Company Analysis
Booster Juice is a privately owned firm established in 1999 under the control of its founders, Dale
Wishewan and Jon Amack. Both are engineers and were friends before their decision to open a business
together. There is no publically available financial information for this company and when the project
team phoned the head office to ask questions regarding the franchise, they were passively refused. As
such, we do not have reliable data on their staffing, in house expertise, or organizational structure and
areas of responsibility. Fortunately, we are able to infer much of the needed information based on
information available on Booster Juice’s website (Booster Juice, 2011).

Core Competencies
Booster Juice’s smoothies are its flagship product. They are 90% of the menu offerings and come in a
wide variety of flavours with several ‘boosters’ to choose from. In addition to these, Booster Juice offers
juice, panini’s, wraps, and other ‘hard’ foods. Some pre-packaged snack food is available as well. Booster
Juice’s distinctive advantage comes from the recipes for it’s smoothies and it’s production processes that
allow drinks to be made quickly and consistently across the entire chain.

Customers
This enterprise is business to consumer. While it does not specifically state what its target demographic
is, we can infer from its website that it is female consumers between 15 and 50 years of age. Its target
consumer appears to be health and fitness conscious and lead active lives. This product is positioned as
fast food for health conscious individuals (Booster Juice, 2011).

Competition
Generally speaking, this business is considered to be in the fast food industry and competes for market
share with other national brands like Tim Horton’s, MacDonald’s, etc. More specifically, Booster Juice is
in a niche market for healthy food and has many direct competitors both nationally and internationally in
the form of other fast food outlets offering similar products. These include Orange Julius, Boost Juice,
Jamba Juice, and others.

Currently, Booster Juice is the market leader in Canada within its niche but is not competitive on the
national scale in the fast food sector (Booster Juice, 2011).

Financing
While there is no publically available information on the companies finances, it seems logical that Booster
Juice corporate has uncomplicated financing requirements. All new franchises are fully financed by the
franchise holder. Booster Juice receives revenue from both the build out of new franchises and from
ongoing royalty fees from each franchise. While financing was likely a major obstacle for a start-up cold
beverage restaurant in Edmonton in the winter, it is probably self-funding at this point.

Organizational Assets and Skills

Booster Juice has brought several distinctive competencies to the table that have underpinned its success.
These are the product, the production process, and its marketing activities.

The Product - The product itself is a hit with consumers. It tastes good and delivers on its nutritional
promise. This has generated positive word of mouth advertising for the brand.

The Production Process – The production process is fast and efficient. Drinks can be made quickly and
consistently across the entire chain. This delivers on the fast-food promise and maintains the brand
quality and image.

21
Marketing Activities – Booster Juice leverages the web and social media in its marketing program. It does
not spend money on TV, radio, or newsprint advertising. Its marketing activities are based on word of
mouth marketing. If properly managed, the web and social media (like Facebook) and the prefect vehicle
for expediting word of mouth marketing. Essentially, the corporate head office is making it easy for
consumers to tell their friends about the products. In addition to this, the company focuses on guidelines
for store placement that guarantee good visibility for the franchise making the storefront a significant
advertising presence.

The combination of these factors has moved Booster Juice to a market leading position within its niche.

Market Analysis
The Mexican marketplace is a logical extension of Booster Juice’s current international expansion.
Booster Juice currently operates in both Canada and the US, which leaves Mexico as a logical expansion
target within the North American Free Trade Zone. The company is afforded many key protections under
the North American Free Trade Act (NAFTA) including protections for the repatriation of royalty fees and
protection for intellectual property.

In addition, local market factors appear to be favourable for the company’s product. Industry research
(MexConnect, 2011) states that Mexicans are the world’s highest per capita consumers of soda based
drinks and further states that there is positive growth potential within this market. It shows a gap in the
energy drink sector, which Booster Juice could fit into.

Business Environment Analysis

Political / Legal / Institutional Factors

According to the World Economic Forums’ 2011 Competitiveness Report, Mexico ranks 36th out of 142
economies, and scores 6 out of 7 in terms of its strength to protect investors. However, regarding
favouritism in decisions of government officials, the country ranks scores 2.6 out of 7, and scores 3.6 out
of 7 with respect to irregular payments and bribes. Furthermore, in terms of the efficiency of its legal
framework in settling disputes, and reliability of police services the country scores 3.1 out of 7 and 2.6 out
of 7 respectively.

The Commission on Environmental, Economic and Social Policy’s 2005 business survey revealed that, 22%
of companies interacting with the federal level pay bribes in order to access public utilities. Of the
companies dealing with state level regulations, 20% report that they pay bribes to bend rules or to
circumvent regulatory measures. Finally, at the municipal level, 19% of companies report having to pay
bribes to access public utilities (Business Anti-Corruption Portal, 2011). In Mexico bribery is endemic to
almost all agencies of government: Treasury, immigration, customs, commerce commissions, police,
judges, planning departments and even lawyers who will "throw" your case to your opponent in a law
suit. It is a customary way of doing business in Mexico and most Mexicans treat it with a shrug of the
shoulders. They complain about it but accept it stoically as a way of life. "La Mordida", translation "the
bite" is the term used for a bribe in Mexico. It is the traditional and customary way of getting things done.
The bureaucrat who does your bidding takes a bite out of the cost of completing your objective. Mexican
reformers are trying to change this condition with little success. (Mexico Matters, 2011).

The endemic nature of corruption and bribery may pose a risk for the individual franchisee as it will affect
local business dealings and possible supply chain elements as well. If the exposure to bribery becomes
too large it may affect the financial viability of the franchises leading to failure in the marketplace.

Regulatory Environmental Factors (Present and Anticipated)

Under the Foreign Investment Law of 1993 and the North American Free Trade Agreement (NAFTA), most
economic activities in Mexico, whether in manufacturing or services, are open to 100 percent

22
participation by U.S. and Canadian investors (Masterson, 2001). This said, the Mexican government
prohibits foreigners from doing work that Mexicans are capable of and available to do (Mex Connect,
2011).

From the point o f view of the parent company there should be little regulatory impediment to success in
the Mexican marketplace. Indeed, recent changed to the health legislation with respect to food services
(World Health Organization, 2002) will favour a more systematic approach to food production and leave
Booster Juice in a favourable position.

Economic Conditions
According to World Economic Forum’s 2011 Global Competitiveness Report Mexico’s general
macroeconomic environment scores 5.2 out of 7 and ranks 39 out of 142 economies. The inflation rate
based on the consumer price index (CPI) in Mexico was last reported at 3.2 percent in October of 2011.
Mexico’s inflation rate has been relatively stable for 8 years only experiencing a slight increase in 2008
(Trading Economics, 2011). Its current exchange rate is lower than that of its other NAFTA counterparts
(Mexican Peso is equal to 0.0734092 US Dollar, and 1 Mexican Peso is equal to 0.0745125 Canadian Dollar
(XE, 2011)). This low exchange rate encourages the purchase of certain products from Mexico by Canada.
Following a deep recession associated with a strong global downturn, Mexico is experiencing a robust
recovery, with GDP growth of 5.5 percent in 2010 and 4.5 percent in 2011 (Organization for Economic Co-
operation and Development, 2011). According to the Organization for Economic Co-operation and
Development, export growth is expected to slow after the exceptional rebound of 2010, but stronger
domestic demand should keep the recovery on track. Several labour market indicators have improved,
although unemployment is decreasing only slowly. Mexico has already started to withdraw the fiscal
stimulus of 2009 and increased taxes to calm market worries about fiscal trends. If the recovery unfolds as
expected, the government should fully implement its plans to lower the budget deficit further through
spending restraint. Since inflation has come down, monetary policy can support the recovery by keeping
rates low in the near term (Organization for Economic Co-operation and Development, 2011).

Economically, the business and consumer environment in Mexico seems positive and stable. The
economy in general supports entry into the Mexican marketplace.

Social and Cultural Factors

Mexico is mostly comprises of Mestizo (Amerindian-Spanish) which a makes up 60% of its ethnic groups,
while Amerindian, white and other ethnicities makes up 30%, 9%, and 1% respectively. 92.7% of Mexicans
speak Spanish only, while 5.7% of Mexicans speak Spanish and indigenous languages (such as various
Mayan, Nahuatl, and other regional languages), 0.8% speak indigenous languages only, and 0.8% speak
several unspecified languages (CIA, 2011). A large majority of Mexicans practice the Roman Catholic
religion (Encyclopedia Britannica, 2011).

Demographic Trends
The CIA estimates Mexico’s population to be 113,724,226 at July 2011. 65.2% of the country’s population
consists of 15-64 year olds (35,842,495 males and 38,309,528 females), 28.2% of its population are 0-14
year olds (16,395,974 males and 15,714,182 females), while the remaining 6.6% are 65 years and over
(3,348,495 males and 4,113,552 females).

The Mexican labour force consists of 19% female and 81% male (Pay Scale, 2011) and its minimum wage is
approximately $5 per day (Contadores, 2010).

Demographically, there is a large and diverse population to provide labour for the proposed franchises
and also as consumers.

23
Technological Environment and Trends
The country possesses strong levels of technological adoption which ranks 58 th out of 142 economies and
scores 5.2 out of 7 in terms of availability of latest technologies according to the World Economic Forum’s
(WEF) 2011 Global Competitive Index (GCI). There should be no impediments for franchise holders in
terms of electricity, internet, and phone service.

Natural Environment
The Tropic of Cancer effectively divides the country into temperate and tropical zones. Much of northern
Mexico, including Baja California and the upper Altiplano, are arid or semi-arid, often receiving between
11 and 23 inches of annual precipitation. By contrast, tropical areas along the Gulf coast are quite rainy:
The southeastern state of Tabasco often gets close to 80 inches of rain a year. The high country of the
Sierra Madre ranges and the great volcanoes may be snow-covered part of the year (Schowalter-Hay,
2011).

Mexico has well-defined wet and dry seasons. Most of the country experiences a rainy season from June
to mid-October and significantly less rain during the remainder of the year. February and July generally
are the driest and wettest months, respectively. The country is famous for its sunny tropical climate and
its beaches are regular tourist attractions. Also residents and visitors alike are attracted to Mexico's
diverse topography and climatic regions in parks, preserves and other protected zones. The Sierra Madre
Occidental has one of the world's great canyon systems, the Barranca del Cobre, with its high altitude
breaks and waterfalls, the summits of Pico de Orizaba and some of Mexico's other iconic volcanoes to
name a few attracts mountaineers from all over the world (Schowalter-Hay, 2011).

The natural environment is one of the main draws for the tourist market that generates in excess of 3.5
billion dollars a year in revenue for the Mexican economy (VISA, 2011). This tourist sector will form an
important part of the target market for Booster Juices product.

Physical Environment (Infrastructure Indicators)

Mexico scores 4.2 out of 7 and ranks 73rd out of 142 economies in terms of quality of overall
infrastructure. The country has a good transport infrastructure which ranks 47 th out of 142 economies,
but the quality of roads in Mexico scores 2.6 out of 7 and ranks 68 th out 142 according to the WEF’s 2011
GCI.

The local, state, and federal Mexican road system amounted to 323,977km in 2002, of which 96,221km
were paved in 2002; most roads are engineered for year-round service. Mexico's ocean and coastal
shipping is significant. Of Mexico's 102 ocean ports, the most important are Tampico, and Veracruz, on
the Gulf of Mexico; Mazatlan and Manzanillo, on the Pacific coast; and Guayamas, on the Gulf of
California. These five ports together handle about 80% of total general cargo tonnage for Mexico. Most
Mexican ships are operated by the government-owned Maritime Transport of Mexico. Air transportation
in Mexico has developed rapidly. In 2001 there were an estimated 1,852 airports and airfields, 231 with
permanent-surface runways. Principal airports include Juan N. Alvarez at Acapulco, Cancun International
at Cancun, Cozumel International at Cozumel, Miguel Hidalgo at Guadalajara, Gen. R. Buelna at Mazatlan,
Manuel C. Rejon at Merida, Benito Juarez at Mexico City, Gral. Escobedo at Monterey, and G. Diaz Ordaz
at Puerto Vallarta (Encyclopedia of the Nations, 2011).

The infrastructure in Mexico is adequate to support the type of logistical network necessary for the
transport of equipment and supplies to the franchises. There should be no impediments to franchise
holders.

24
Nature of Demand
Booster Juice’s primary product is a general lifestyle product and a fast food commodity. While this sort
of product is not broadly adopted within an entire society, it does produce sales into many demographic
segments including both male and female and 15 years old through to 65+ years old. Our positioning of
the product is a mid to upper level product offering so we do not expect those of the lowest income levels
to necessarily choose this product on a regular basis. The two main target demographics we will be
pursuing are;

Domestic Market
Our domestic target market includes middle to upper income Mexicans with busy lifestyles, typically
employed or raising children full time. Based on the results of our survey (Appendix E), we know that this
demographic typically looks to social media and the newspaper for information several times per day.

Tourist Market
Tourists from Canada and the USA make up our second target demographic. In 2010, 17 million Americans
visited Mexico and 1.5 million Canadians visited Mexico (Mexican Embassy in Canada, 2011). Tourists will
search for information in a variety of manners. Some will use the web and social media while on vacation
to pick up recommendations and to search for product and service providers. Others will ask for
directions and use local print base advertising where available in a language they understand. The
language barrier may be significant with this group.

Size and Extent of Demand

We know from industry data (MexConnect, 2011) that Mexicans are the world’s largest per capita
consumers of soda-based drinks. Unfortunately, credible data on the size, extent, and value of the
beverage sector in Mexico is not available. Several sources quote rough values for the industry but the
fluctuations in these numbers suggest that there is considerable variation in the way in which the market
is categorized and the manner in which demand is measures.

By extrapolation, we can derive a rough idea of demand from the results of our survey (Appendix E).
When asked consumers if they currently consume smoothie type beverages, 33% of respondents
indicated that they consumed a smoothie at least once per week. While clearly much lower than the
consumption of soda, participation on a weekly basis by 33% of the market does indicate a positive
outlook for this product, particularly in a country with 47 million people in the labour force.

Stage of the Product Lifecycle

One could characterize the stage of the product life cycle for Booster Juice’s product in two manners. As
a smoothie, the market is mature. Smoothies have been in the marketplace for decades and have
enjoyed good consumer success. In other respects, the value added nature of the ‘booster’ added to the
smoothies differentiates the product and gives it a new life in the consumer marketplace. In this respect,
the product is in the introductory phase of its development. Regardless of the specific nature of it’ place
in the product lifecycle, the product is recognized in the marketplace and has an existing base of demand.

Cost Structure of the Industry

The specifics of the cost structure of the industry will be the main area of concern for the potential
franchise holder. From the information in the Situational Analysis, we know that Mexico has adequate
infrastructure and technology to support the individual franchises. We also know that bribery and
corruption will add an under-the-table component to the cost structure of the industry both at the supply
chain and operational level.

From the point of view of the parent company, we know that the country can support Booster Juice and
that there is demand for the product. Specifics of the cost structure of the industry will be up to the
individual franchise holder.

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Competitive Structure of the Industry

Competitor Analysis
Based on industry data (MexConnect, 2011) we know that 75% of the sales in this product category are
done through small private retail outlets. A further 24% of sales are done through restaurants, night
clubs, hotels, and resorts. Chains and larger brands do not dominate this marketplace.

This leads us to believe that while diverse, the marketplace is fragmented and does not have a clear
market leader. There will be little consistency in product, quality, or pricing. This diversity means that
there will be no ‘one voice’ for the industry and that backlash toward a more systematic entry by a larger
chain may not happen.

Competition Analysis
With a fragmented marketplace there will be little if any brand competition. Competition will be
characterized by product-based competition and price based competition. As Booster Juice will be
positioning and pricing itself as a mid to upper level product entry, it will not engage in price based
competition. Product based competition will be the most likely risk to Booster Juice and the company will
have to put resources into the protection of its intellectual property.

26
Appendix B - SWOT Analysis
Internal Company Strengths and Weaknesses
Strengths
Franchise Based Expansion Model – Booster Juice has new franchise holder pay up front for the complete
store build out and then return a royalty fee of 6% of revenues per year. In this way, the company never
has capital or debt tied up in its stores and, in all likelihood, makes additional money on the sale of
equipment to the franchise holder in addition to the franchising fees. The financial risk of the expansion is
limited to the franchise holder. In Canada, the average turnkey cost for a store build out is $250,000.

Existing International Expansion Experience – Booster Juice has previously expanded into the USA and
into markets further abroad. Expansion to Mexico is both logical and consistent with expansion to the
USA. Many of the skills gained in these previous expansions (real estate negotiation, legal hurdles,
customs and taxation issues, etc.) have been tackled, and the company is familiar with the NAFTA and the
protections that it does and does not offer. In addition, detailed information is available publicly
regarding Mexico and country based risks and opportunities.

Complete Control over Advertising and Marketing – In order to maintain its brand’s consistency, Booster
Juice controls all advertising and marketing activities including social media presences. In this way, brand
image is controlled globally despite the franchised ownership model.

Legal / Insurance Risk Management – Each franchise is a legally incorporated entity and is responsible for
securing its own liability insurance. This structure provides a legal firewall between the franchise and the
parent company and will improve the chance of any lawsuits remaining at the franchise level.

Corporate Reputation – Booster Juice enjoys a good corporate reputation in the market place. It appears
to be perceived as a healthy alternative to fast food and with its tight control over advertising and social
media is in a good position to manage its brand reputation globally.

Local Customization – Booster Juice’s product can be customized to local tastes in two manners. The
recipe’s themselves can be varies to accommodate local tastes for different fruits and vegetables not
generally used in Canada. Further to this, the name of the individual products can be changed to give
them local relevance and respect local cultural beliefs.

Weaknesses
Difficulty Enforcing Corporate Standards in a Remote Franchise – Much of Booster Juice’s appeal lies in
the recipes and the taste of its beverages. There is a risk that the international franchisees may
intentionally or unintentionally shift the taste of the beverages to the point where they are not
recognizable as a Booster Juice beverage, and begin to loose their unique appeal. This will be particularly
damaging with the tourist market that are accustomed to the domestic standards of the brand.

Reputational Damage from Franchisee’s Activities - Booster Juice’s reputation lies in the consistency and
quality of its products, the cleanliness of it facilities, and the maintenance of its brand image. While
relatively easy to enforce in Canada, the remoteness of the Mexican marketplace make it more difficult to
enforce quality and consistency based standards. There is a risk that a franchisee, or group of franchisees,
may degrade the quality of the brand through their actions, which may tarnish the reputation of the
company both aboard and at home.

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Potential for Misrepresentation of Earning – Royalty fees are based on a percentage of yearly revenues.
This creates an incentive for the franchisee to under report earning or to skim cash from the system prior
to entry.

External Market Opportunities and Threats

Opportunities
Good Alignment of Product with Target Market – Industry research show that the beverage market is a
well established sector in Mexico with Mexicans leading the world in per capita consumption of soda
(Mex Connect, 2011). In addition, it is inferred that a cold beverage offering will do well in a country
whose average yearly temperature is in the 30’s (degrees Celsius).

Over 50% of Tourists to Mexico are from Canada and the US, where Booster Juice is Prevalent – Well
over 50% of the tourists to Mexico are from Canada and the USA where Booster Juice is a well established
brand. VISA (2011) estimates that these tourists spent approximately $3.6 billion USD in Mexico in 2010.
This same data also shows that this was a 28% increase over the 2009 figures and that a growth trend is
expected to continue in 2011. Tourism is the third most important economic activity in Mexico,
representing 8.3 percent of the nation's Gross Domestic Product. The country ranks 8th in the number of
international visitors and 10th in international tourism revenues, according to the World Tourism
Organization (Vancouver English Center, 2005).

New Mexican Health Regulations Favour a more Systematic Approach to Food Production – In 2002, the
Mexican Government passed new health regulations specifically to address food safety issues (World
Health Organizations, 2002). This increased emphasis on food safety favors a more systematic approach
to food production where quality is emphasized in both the ingredients and the food production methods.
Booster juice’s established production methods are based on Canadian Food Safe regulations and will be
more than adequate to address Mexican health standards.

Large Labour Market with Low Wage Expectations – According to the CIA World Fact Book (2011) the
Mexican labour force is comprised of 47 million individuals, 63% of which are employed in the service
sector. With an official unemployment rate of 5.4% these is enough volume and mobility in the labour
market to provide a consistent workforce. In addition, the minimum wage in Mexico is approximately $5
CDN per day, which will help franchisee to run a successful operation (Wage Indicator, 2011).

Industry Studies Show a Gap in the Beverage Market for Energy Drinks – MexConnect (2011) states that
their research indicates that the market for energy drinks in Mexico is growing but that the marketplace
has not yet settled on a particular brand. This leaves room for an entrant with an offering in this area to
gain market share. Booster Juice is marketed as a health alternative but one that can provide an energy
‘boost’ with many of its beverages (Booster Juice, 2011)

There is Forecasted Growth in the Beverage Sector – Similarly, MexConnect (2011) forecasts that the
‘alternative’ drink segment (energy drinks, vitamin water, juice, and bottled water) is growing at 200% per
year in Mexico. While this assessment seems bullish, it does point to a general growth trend in this
market segment with the potential for a new entrant to gain significant market share.

High Quality, Low Cost Local Supply Chain – Local franchises in Mexico will not survive without a high
quality, low cost supply chain for key ingredients. Graber (2007) indicates that in 2003, Mexico was the
world’s 4th largest fresh fruit exporter by value, with $900 million, and the world’s 7th largest fresh fruit
exporter in quantity by 1.5million metric tons in the same year. This supply chain provides a diverse
basket of supply that is fully capable of supporting the products provided by Booster Juice. In addition,

28
the local nature of supply production will decrease the transportation and logistical costs involved in
supplying local franchisees.

Large Domestic Market Size - Mexico has a large internal market size ranking 12th on the World Economic
Forum’s Global Competitive Report for 2011-2012, and according to the CIA’s (2010) estimate, Mexico has
a Purchasing Power Parity of $1.567 trillion with a 5.5 percent increase in the same year.

Threats
Legal Recourse for Non-Payment of Royalty Fees – While the NAFTA does afford some protection to the
parent company under Chapter 11, there is still the risk that a franchisee may decide to keep the franchise
and cease remitting royalty payments to the parent company. The parent company would then get
caught in a long and protracted legal battle against a foreign national in a country which is known for a
large degree of corruption in it’s governmental and legal system (Business Anti-Corruption Portal, 2011).

The Beverage Sector is a Well-Established Market – As previously mentioned, Mex Connect (2011)
indicates that Mexicans are the largest consumers of soda, per capita, in the world. The beverage sector
is well established in the consumer marketplace in Mexico. Because of this, it is also well serviced with
existing vendors. Mex Connect (2011) indicates that:
 75% of the sales are through mini markets, mom and pop stores, gas stations, and liquor stores
 24% of the sales are through restaurants, schools, night clubs, hotels and resorts
 Supermarkets represent 1% of sales

With this in mind, Booster Juice will be attempting to gain market share against local small businesses
across Mexico. While federal law dictates that all businesses must employ Mexican Citizens for work that
a Mexican can do, there still may be a backlash in the consumer marketplace against a business that is
perceived as foreign.

Security Risks – According to official estimates, 60-70 people are kidnapped each year, but real numbers
are likely to be much higher. While foreigners are rarely the targets of abductions, wealthier Mexican
business people are frequently targeted. If a franchise owner were targeted in this manner, it would
disrupt franchise operations and threaten the royalty revenue stream to the parent company. (Doane,
2009)

Exchange Rate Risks – The value of international expansion for Booster Juice is in the diversified royalty
revenue streams it will generate. Before these revenue streams can be repatriated to the Canadian
parent, they will have to be converted from Peso’s to Canadian Dollars. While the NAFTA provide legal
protection for the free transfer of money in these circumstances (under Article 11), the value of these
transfers could be dramatically eroded if the exchange rate between Mexico and Canada worsens. See
Appendix D for a historical trend in the value of the Mexican Peso.

Bribery and Corruption – Bribery and corruption is endemic in Mexico (Business Anti-Corruption Portal,
2011). Bribes are required at all levels of transaction and frequently within the legal system as well
(Mexico Matters, 2011). This will represent a significant threat to Booster Juice in transporting equipment
to Mexico for store build out, securing real estate deals for its franchisees, and securing business licenses
for it’s franchisees.

Intellectual Property Rights and Protections – The NAFTA Chapter 17 provides for the protection of
intellectual property rights and interviews with existing franchise holders (Appendix E) indicate that all
franchise holders and employees sign a Non-disclosure Agreement with respect to the recipes for Booster
Juices beverages. However, in all reality, enforcing this kind of protection across an international

29
boundary would be complicated and time and resource intensive. Loss of the recipes and production
processes remain a key risk of entry into the Mexican marketplace.

Implications of SWOT Analysis

Based on the SWOT analysis regarding international expansion by Booster Juice into Mexico the following
points are of note:
 The franchise structure for corporate expansion is a great method for reducing the risk and cost of
expansion while generating ongoing revenues in the form of royalty payments.
 The NAFTA provides good protection for the royalty revenue streams and the intellectual property of
Booster Juice.
 There is a large and growing domestic market for the product, as well as a significant tourist market
for the product.
 The brand as a whole is well positioned for success in Mexico in combination with a good local supply
chain and lower labour costs.
 The risks associated with expansion into Mexico are manageable.

SWOT Matrix
Strengths Opportunities

 Franchise based expansion model.
 Existing international expansion experience.
 Complete control over advertising and
marketing.
 Legal / insurance risk management.
 Corporate reputation.
 Local customization.
 Good alignment of the product with the target
market.
 Over 50% of the tourists to Mexico are from
Canada and the USA, where Booster Juice is
prevalent.
 New Mexican health regulations favour a more
systematic approach to food production.
 Large labour market with low wage
expectations.
 Industry studies show a gap in the beverage
market for energy drinks.
 There is forecasted growth for the beverage
sector.
 High quality, low cost supply chain.
 Large domestic market size.

Weaknesses Threats

 Difficulty enforcing corporate standards in a  Legal recourse for non-payment of royalty

remote franchise. fees.
 Reputational damage from a franchisees  The beverage sector is a well-established
activity. market place.
 Potential for misrepresentation of earnings.  Security risks.
 Exchange rate risks.
 Bribery and Corruption.
 Intellectual property rights and protections.

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Appendix C - Evaluation of Alternative Marketing Strategies

Strategy One – Existing Marketing Strategy with some Local Adjustments

Booster Juice’s current marketing strategy leverages word of mouth, the web, and social media to
promote its product in conjunction with specific store placements to guarantee a certain amount of
natural visibility.

This strategy has many strengths. The increased costs for prime real estate are passed on to the franchise
holder and do not represent an expense for the parent company. Similarly, work of mouth marketing is
dependent upon store culture, customer services, and ultimately, the product. By implementing strict
standards for quality and production, the quality for the product can be predicted and from there, speak
for itself to the consumer. From this base franchise holders who bear the greatest consequence for poor
sales are highly motivated to ensure good and friendly customer services.

The final component, web and social media based marketing is wholly controlled by Booster Juice
Corporate office who bear the expense for this. With proper planning and execution this does not
represent a significant expense for the parent company. Approximate costs for the parent company are
the salary of a marketing executive who specializes in social media and contract programmers sufficient to
the task. These programmers can reside anywhere and many companies outsource this expense to India
based IT firms who can do the programming at a fraction of the cost of programmers in the domestic
marketplace. According to the survey results (Appendix E), we see that the average survey respondent
uses social media either several times per day or at least once per day. Properly leveraged, this represents
a significant pathway to the target consumer.

Overall costs for this strategy to the parent company represents $80,000 - $120,000 per annum for the
marketing executive and a rough budget of $50,000 / year for coding assistance related to web and social
media development.

Strategy Two – TV, Radio, and Newspaper Based Marketing Campaign

Rather than the existing strategy Booster Juice could choose to use a more traditional promotional
strategy and leverage the regular media including TV, radio, and newspapers. Survey respondents
(Appendix E) indicated that on average they look to the newspaper and flyers every day, local radio
stations ever day or week at least, and local TV channels once per day or at least weekly. There is
leverage within the tradition media for reaching the target demographic if you can catch them at the
correct time.

The costs for tradition media can be high. There is the cost associated with producing the TV, radio, or
print ad and the cost associated with broadcasting it. Ad’s then need to be refreshed or changed on a
regular basis to keep them in the consumers mind and to generate enough hits with the consumer to
build credibility. While we cannot find specific information on the costs of radio and TV advertising in
Mexico, these costs become very expensive and represent an ongoing cost to the parent company.

Strategy Three – No Marketing Activities

It is worth considering that word of mouth may be all the company needs for success. It may not be
worth investing further from a corporate point of view if the infrastructure for Strategy One is not already
in place in the parent company.

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Appendix D – Historical Exchange Rates

Figure 1: Historical Exchange Rates between the Mexican Peso and the Canadian Dollar (Everbank, 2011)

32
Appendix E - Summary Table of interviews

Phone Interview Log

This interview done over the phone with Cindy, a Victoria area franchise holder. Booster Juice corporate
would not answer questions regarding the company or the franchises, nor would many franchise holders.

Does all inventory come in frozen?

All the fruit comes in frozen to maintain consistency across the entire chain, but wheat grass and non-
beverage foods come in fresh or growing.

Does corporate build in some margin on the store build out?

Not disclosed.

How much advertising is handled by corporate and how much at the local level? How much control do
they retain?
All advertising is handled by corporate, even the social media. Nothing is handled locally. This includes
international franchisee’s.

Is the 6% back manageable or is that a high amount? Does Booster Juice have a method for auditing
financials?
6% is a lot for the individual franchise holder and does cause difficulties. The franchise holder would like
it to be lower. She would not disclose auditing specifics.

Where does liability end for franchisee’s activities?

Franchises are insured locally, not through the head office. Local insurance should be sufficient to handle
liability claims against the franchise holder. Each franchise is incorporated under the franchise holder.

What happens when the 10-year agreement is up?

You renew for another 10 years or you loose your store.

Do you have to sign a non-disclosure with respect to recipes?

All franchisees, managers, and workers have to sign an Non-Disclosure Agreement with respect to the
recipes, and production processes.

Overall, is this profitable at the franchise level in Canada?

Not disclosed.

33
Consumer Survey Results
During the survey period we received a total of nine responses to this survey. All respondents were
Mexican citizens residing in Mexico.

Questions 1-3 were designed to compare the survey respondents to the demographics of Mexico as a
whole to determine whether the sample was representative of the Mexican population as a whole.

Questions 4-7 were designed to find out where the population sampled looked for information and what
channels might be effective media for reaching the target audience.

Questions 8-10 were designed to establish current and potential consumer habits with respect to the key
product and to gauge consumer willingness to pay for the product.

The survey was administered using surveymonkey.com to collect responses. It was distributed to the
respondents by Mexicans living in Canada who consented to assist in the research. The survey was
limited to 10 questions as this was the limit allowed by the free version of the service. Questions and
answer were as follows.

1. Are you male or female?

Male 33.3%
Female 66.7%

2. How old are you?

1-15 0%
16-19 11.1%
20-29 22.2%
30-39 55.6%
40-49 11.1%
50-59 0%
60-69 0%
70+ 0%

3. What is the highest level of school you have completed or the highest degree you have obtained?
Less than high school 0%
Some high school degree or equivalent 0%
Some college but no degree 0%
Associate degree 0%
Bachelors’ degree 33.3%
Master degree 66.7%

4. How often do you read newspapers or flyers?

Every day 44.4%
Several times per week 22.2%
Once per week 22.2%
Several times per month 0%
Seldom 11.2%

5. How often do you visit a social networking site?

Several times per day 33.3%
Once per day 44.4%
Several times per week 11.1%

34
 Several time per month 0%
Seldom 11.1%
Never 0%

6. How often do you listen to local radio?

Every day 33.3%
Several times per week 22.2%
Several times per month 22.2%
Seldom 22.2%
Never 0%

7. How often do you watch local TV channels?

Several times per day 11.1%
Once per day 33.3%
Several times per week 33.3%
Several times per month 0%
Seldom 22.2%
Never 0%

8. How often do you drink fruit smoothie type beverages (fruit and ice blended together into a cold,
thick drink) either at home or from a restaurant / vendor stand?
Several time per day 0%
Once per day 11.1%
Several times per week 22.2%
Once per week 0%
Several times per month 0%
Once per month 11.1%
Seldom 55.6%
Never 0%

9. If you found a fruit smoothie type beverage that you really liked, how often would you buy one?
Several time per day 0%
Once per day 22.2%
Several times per week 11.1%
Once per week 0%
Several times per month 11.1%
Once per month 22.2%
Seldom 33.3%
Never 0%

10. What do you feel would be a reasonable price to pay for a fruit smoothie type beverage in pesos?
Raw Data 20, 20, 20, 20, 27, 30, 30, 50, 60
High 60
Low 20
Mean 31
Median 27
Mode 20

Interpretation
Base on the survey results we can see that the population surveyed is not normal when compared to
demographic data in the situational analysis. The educational level of respondents is too high and the
gender and age distributions are not normal.

35
For the purposes of this report we will assume that the population sampled is in fact representative of the
Mexican population and will use the survey data in designing our marketing approach, budgeting, and our
initial pricing.

36