A STUDY REPORT ON CONDUCTING VOCATIONAL TRAININGS UNDER FRANCHISING MODEL

SUBMITTED TO KAILALI MULTIPLE CAMPUS, DHANGADHI Internal assessment for the degree of Master of Business Studies (MBS) Submitted By: RAM KUMAR CHAUDHARY MBS SECOND YEAR ROLL NO: - 25 REGD. NO:In the partial fulfillment of the requirement for the degree of Masters in Business Studies.

Date: 2065/11/20

KAILALI MULTIPLE CAMPUS

MANAGEMENT FACULTY RECOMMENDATION

This is to certify that the field work report Submitted By: Ram Kumar Chaudhary "A STUDY REPORT ON CONDUCTING VOCATIONAL TRAININGS UNDER FRANCHISING MODEL Has been prepared as approved by this campus in the prescribed format of the Faculty of Management. This field work assignment report is forwarded for examination.

Supervisor Name: Signature: Date:

Head of Department Name: Signature: Date: Campus Chief Signature:

TABLE OF CONTENTS 1. Acknowledgement 2. Chapter 1 1.1 Introduction 1.2 Background of the field work 3. Chapter 2 2.1 Business Concept 2.2 Description of enterprise 2.3 Business Growth Potential 2.4 Market and Target Groups 2.5 Competitors and Competitors Analysis 2.6 Monitoring of the trainings 2.7 Training trends 2.8 Proposals 2.9 Payments under Franchising 2.10 Financial Plan i. Opening Balance Sheet ii. Projected Income Statement iii. Projected Cash Budget Statement iv. Projected Cash Flow Statement 4. References 20 6-7 7 8 8 9 10-12 13 14 15-16 16-19 5 6 4

ACKNOWLEDGEMENT
I feel indebted to Professor Dr. Hem Raj Pant, Campus Chief of Kailali Multiple Campus, Dhangadhi for providing valuable comments and suggestions in writing the report. I also like to express thanks to Kailali Multiple Campus family for providing reference documents for writing the report. At last but not least, I would like to express lots of thanks to F-SKILL and Devotee Trade Center for providing valuable data and field officer Mr. Khadak Bahadur Dhami for his valuable comments and suggestions. In the same way I would like to thank to Mr Krishna Bahadur Mahara Chhetri, Mr Pramod Pathak, Mr Chetman Khadka and Mr Sanjay Chaudhary for providing valuable data and sharing experiences about working in the franchising model. I also like to thank my friends Binaya Chaudhary, Hira Chaudhary and Suresh Chaudhary for providing their valuable comments.

Ram Kumar Chaudhary MBS Second Year Kailali Multiple Campus Dhangadhi, Kailali

CHAPTER 1 1.1 INTRODUCTION Concept of franchising

Meaning of franchise: Formal permission given by a company to some body who wants to sell its goods and services in a particular area or formal permission given by a government to some body who wants to operate public services as a business is called Franchise. Franchising: Agreement between Franchiser and Franchisee is called Franchising Franchiser: A company or an organization who gives franchise to some body is called Franchiser. Franchisee: A person or a company and an organization that has given franchise are called Franchisee. Features of Franchising: 1. There are two parties in franchising. a. Franchiser b. Franchisee 2. Business agreement between franchiser & franchisee. 3. Franchiser is familiar in the society & has earned goodwill for the product. 4. Franchisee wants to collaborate with franchiser for product name, Brand name, technology. Management & others. 5. Franchisee pays a certain amount to franchiser as a royalty.

Agreement
1. Familiar 2. Goodwill 3. High coverage of Market share 4. High profit 5. Consumer Satisfaction 6. Qualitative Product Brand Name Technology Skilled Manpower Franchiser Management Royalty

Franchisee

Wanting Franchising with established company (Franchiser)

1.2 Background of the study

This is the day of economic achievement. The development of the nation depends upon the economic activities conducted within the country and outside the country. The business activities also directly depend upon the manpower available for the efficient operations of the business. As we see the population is increasing day by day and more and more people are entering in the employment market. The development is not taking as the pace of population thus creating unemployment problems. The traditional education is also not sufficient for competing in the employment market. Thus, there is need of technical education. In the developing countries like Nepal, most of the people are under poverty line and unable to afford for the education. They have problem of hand to mouth. In order to support these groups there is need of vocational trainings that can directly link them with the employment market.

CHAPTER 2
2.1 Concept of Business The conduction of mobile trainings based on the demand of employment market under franchising model is a good business for earning high benefits. The trainings are demand driven.

Core Working Principles F-SKILL Training package development Quality Management Regular updates on labor market
Introduction of innovative new trades

YOUTH AT Work

Input

Qualified Franchisees

Training and Employment F-SKILL Support: Selection of motivated trainees from disadvantaged groups Training modules compatible with OSS Skill test Quality management Monitoring Skill and Training plus Post training monitoring and assessment

Gainful Employment

F-SKILL Support: Rapid Market Assessment Qualified trainers Linkage and networking with employment market

Output

Process

Core competencies of Business Demand Driven Employment oriented Mobile Trainings Quality trainings Business Focus Built-in strong follow up support mechanism Skill plus and training plus mechanism

2.2 Description of Enterprise F-SKILL/Helvetas is very familiar in the society for mobile training package. Franchising Skill and Know How Imparted at Local Level (F-SKILL) by Helvetas have been involving in mobile skill training since 10 years; training package of skill Nepal matched the market demand. Because of 10 years experience and learning in mobile training F-Skill has goodwill in this sector. Mobile training is the product of F-SKILLL. F-SKILLL is franchiser that provides the brand name F-SKILL@ to franchisee. Franchisee can use this brand name for conducting the training.

Devotee Trade Center is a franchisee working with F-SKILL in conducting mobile trainings. This organization was established in 2003 B.S. by registering in the Chamber of Commerce and Industry, Kailali. This organization first commenced to work in Dhangadhi Municipality by piloting the basic electrical house wiring and brick molder trainings. Today this organization has benefited more than 2000 graduates by delivering skills and linking them in the employment markets. Working Modality under Franchising of F-SKILL 1. Conduct Mobile training package. 2. Support to franchisee (Financial, Trainers, Others) 3. Monitor and evaluation i. Pre-training evaluation ii. Mid-term evaluation iii. Post training evaluation 4. Emphasis on employment (Local skill requirement and employment possibility survey) 5. Systematic cash provide method i. 50% after training completion ii. 15% after job placement (after 3 months) iii. 35% after job continue (6 months) 6. Provide information to franchisee about potentiality of employment sector and training methodology (ToT)

2.3 Business Growth Potential

The franchising business is being popular day by day. We can say that there are dual benefits both to the service takers or graduates taking trainings and to the franchisee also by getting profits. As we see the population is increasing and the life style of people is getting changed, there is need of high earning with respect to the economic environment of the country. Most of the youths are uneducated and among them there are high school dropouts. Also most of the youths are unskilled labor. The technology of working has changed and the employers require skilled and semi-skilled workers for the reliable works. So, there is more chance of business growth. The trained graduates can not only get work with in the country but also in foreign countries. The construction work is increasing day by day. People residing in villages and urban areas require housing and bricks are utilized for those purpose. So, to produce the qualitative bricks and increase

efficiency the trained brick molders are required. So, there is good chance of the business growth.

2.4 Market and Target Groups

The target market for the franchising business in conducting vocational trainings is the uneducated and school drop out youths. The market for employment for the graduates is the brick kilns with in the country and neighboring country India. The target groups must be of age between 16 to 30 years. Target groups a) Dalits b) Janjatis c) Internally displaced people (IDP's), Widow, conflict effected, occasional casts d) Drop out from High schools etc.

2.5 Competitors and SWOT Analysis

This is the day of competition and a business cannot remain aloof from competition. Today, many business firms have been established to provide the vocational trainings from private and government sectors. We can see that Nepal Skill Testing Board (NSTB), Training for Employment Project (TfE) of Alliance Nepal, Domestic and Small Scale Industries and various private and governmental technical centers are the key competitors of this business. So, in order to compete in the market and be successor one has to be aware of the competitors. Strengths of the business Qualified and competent trainers Qualified managers and coordinators Qualified and competent field staffs

 Opportunities Threats

Sound economic status Availability of sufficient resources Good market linkages with the employers and stakeholders The demand of employment market gets changed quickly. Training courses needs to be updated as per the demand of the market which is expensive requires more time. The construction work is taking pace of development, so there is more chance of conducting large number of trainings. There is good possibility of intervention in new places. The political situation of the country is not so stable. Social environment may affect the trainings.

Weaknesses of the Business

2.6 Monitoring of the trainings

The monitoring of the training is must for the proper conduction of trainings and making the trainees qualified so that they can compete in the employment market. The monitoring will be done by the field staffs and the coordinators. In the same way time to time visit will be done by the management team and the F-SKILL staffs. Checklist for Monitoring S/N o 1 2 3 4 5 Task Training Schedule Course Information Lesson Plan Handouts (Reference Material) Training Manual/ Skill Train er Train ee Over all

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Standards 6 Evaluation records 7 Training/Trainee record 8 Motivation 9 Safety 10 Physical facilities 11 F-SKILL requirements 1. Training Schedule: Must be prepared by the trainer and displayed prominently at the training venue 2. Course Information: Must be distributed to all trainees in the first week of training 3. Lesson Plan: Must be prepared by trainer for each lesson 4. Handouts: Must be made available to all trainees 5. Training Manual / Skill Standards: Must be available with trainer 6. Evaluation records: Must be available with trainer 7. Training/ Trainee Records: Must be available with trainer 8. Motivation: To check whether the trainer is motivated, talk to him/her alone. Similarly the monitor can talk to the trainees in group or personally to some 9. Safety: Check whether the training complies with required safety standards 10. Physical facilities: training hall, lighting, bathroom, availability of water etc. 11. F-SKILL requirements: Banner, Fact Sheet, Rules etc. displayed prominently. All trainees should be aware that training is for them.

MID-TERM EVALUATON FORMS

Franchisee Name: ____________________________________________________ Training Venue: ______________________Trade Name: _____________________ Date: ______________________ No. of Trainees Present: ___________________

1.

What items do you think are the most useful till now?

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2.

Which items do you think are difficult till now?

3.

Is the training as per your expectation or not? If not why?

4. Do know the name of organization/s providing the training? please write down name/s of the organizations.

If yes,

1. 2. 3.
5.

_________________________________________________________ _________________________________________________________ _________________________________________________________

Do you have any grievance related with this training, please mention.

6.

Please mention your suggestions, advices and comments for making this training more effective.

POST TRAINING EVALUATION FORMS

Franchisee Name: ____________________________________________________ Training Venue: ______________________Trade Name: _____________________ Date: ______________________ No. of Trainees Present: ___________________

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1.

Will the course help you to be employed or self-employed? Yes No. Not sure Total
No. % No. % No. % No. %

2.

Do you think that the course you recently completed is useful in your present job? What do you think for future? Please mention. Employment Self Foreign Total Employment Employment No. % No. % No. % No. %

2.1

If, foreign employment, which country do you plan to go?

2.2

Why do you wish to go for foreign employment?

3.

What were the most useful subjects in the training?

4.

What were the least useful topics of the training?

5.

What subjects could have been included?

6.

Would you recommend this course to others? If not, why?

Yes Number % NO Number % Total Number %

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2.7 Training trends

Devotee Trade Center has done a good job in conducting the mobile brick molder trainings. It has tried its best to achieve the targeted goals of the organization. The trends of the trainings conducted are as follows: Year 2005 2006 2007 2008 No. of Trainings 14 24 30 40 No. of Trainees 280 520 660 850

Training Trends
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Number of Trainings

40 35 30 25 20 24 30

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2.8 Proposals for training

Number of Trainees: 25 15 14 Training Site: 10 Training Start Date: 5 Training Closing Date: 0 SN Particulars 4 1 2 3 1 Survey and promotion expenses Year 2 Trainees Selection and orientation 3 Coaching and Counseling 4 Training hall rent @ Rs 4000x2 months 5 Main Trainer salary Rs 400 X 60 days 6 Co-trainer salary Rs 250 X 60 days 7 Coordinator Salary Rs 4,000 X 2 months 8 Training material cost (perishable) 9 Training equipments (50% depreciation)

Training Cost Brick Molder Training Training duration: 45 days

Amount Rs 20,000.00 10,000.00 10,000.00 8,000.00 24,000.00 15,000.00 8,000.00 15,000.00 15,000.00

Remarks

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10 11 12 13 14 15 16

Training tools (25% depreciation) Machineries (contract or depreciation) Snacks cost (25 X 60 X 35 days) Stationery expenses Transportation cost Tools maintenance Photography cost Total Cost Per trainee cost

5,000.00 5,000.00 52,500.00 5,000.00 5,000.00 2,500.00 3,000.00 1,80,000.00 7,200.00

2.9 Payments under Franchising

Under the franchising model of working with F-SKILL, the franchisee Devotee Trade Center gets paid its amount in three installments. Initially the franchisee invests its own capital for conducting trainings. The franchisee gets paid incentives in second and third installments based on the outcome of trainees. The employment or self-employment outcome must be at least 80% to get the full payment of capital invested. If the result is found to be 80% or greater then the franchisee is provided incentive based on the category of trainee enrolled in the trainings. Systematic cash provide method i. 50% after training completion ii. 15% after job placement (after 3 months) iii. 35% after job continue (6 months) Franchisee Reimbursement Calculation Calculation of Outcome and Payment B C D B=input Incentive C=A+B Outcome payment 22,505 20,405 18,105 D=0.25* C Royalty

A Cate gory

E E=C-D Net Outcome Payment 16,879 15,304 13,579

A=input Training Cost NRs

F For dropouts F=0.75*B

A B C

10,500 10,500 10,500

12,000 9,900 7,600

5,626 5,101 4,526

G=0.25 H=E-(F-G) G=E-H *F 75% of Royalty Deduction Payment Total cost of to Dropouts Franchis ee 7,879 1,970 10,970 5,909 7,879 1,970 9,395 5,909 7,879 1,970 7,670 5,909

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Category of Trainees A B C Number of trainees 23 2 Total Outcomes 388,21 1 Outcome Pymt to be made for 100 % success rate (over six months after training) Franchisee's Investment for training Profit 0 30, 608 418,81 9 262,62 5 156,19 4

Profit margin (all groups) Deduction for dropout 50% 15% 146,5 Installment III Total 87 418,8 19

0.59

For 100% success rate

Installments Installment I Installment II

ACTUAL 209,4 09 62,8 23

With adjustments 209,409 62,823 depends on success rate 272,232

Month of Pymt After training completion After three months of training completion After six months of training completion

2.10 Financial Plan

Financial plan is an important plan for an organization. Every business firms needs finance for smooth operation of a business. Therefore business firms should make financial plans for the operation of the business in systematic manner to achieve the objectives.

i.

Opening Balance Sheet

Opening Balance Sheet As on 31st December 2005

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Capital & Liabilities Owners Equity 11% Long term loan Total

Amount in NRs 48,94,000 40,00,000 88,94,000

Assets Cash in Hand Furniture Machinery & Equipments Preliminary Expenses Total

Amount in NRs 1,00,000 2,96,000 84,68,000 30,000 88,94,000

ii.

Projected Income Statement

Projected Income Statement for the Year 2006, 2007 and 2008 Particulars 2006 5,65,20,000 1,05,07,500 18,61,000 50,000 10,000 4,40,000 10,000 1,00,000 20,000 30,000 3,60,000 12,000 20,000 1,34,20,500 4,30,99,500 1,29,29,850 3,01,69,650 Year 2007 6,21,72,000 1,15,58,250 18,61,000 45,000 11,000 2,86,000 10,000 1,10,000 22,000 33,000 3,96,000 13,200 22,000 1,43,67,450 4,78,04,550 1,43,41,365 3,34,63,185 2008 6,83,89,000 1,27,14,075 18,61,000 40,500 12,100 1,32,000 10,000 1,21,000 24,200 36,300 4,35,600 14,520 24,200 1,54,25,495 5,29,63,505 1,58,89,052 3,70,74,454

A. Revenue from trainings Less: Operating Expenses Salary Depreciation Advertisement Office stationery Interests Preliminary Expenses Written Off Electricity Expenses Communication Expenses Repair & Maintenance Expenses House Rent Fuel Expenses Miscellaneous Expenses B. Total Operating Expenses Net Income Before Tax [A-B] Less: 30% Tax Net Income After Tax

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Return on Investment Notes: 2. Depreciation is assumed as fixed.

30.169%

33.463%

37.074%

1. It is assumed that there will be 10% increase in training revenues each year. 3. Advertisement will be reduced in coming years by 10%. 4. Amount of loan will be paid in three installments amounting Rs 14 lakhs in 2006, Rs 14 lakhs in 2007 and Rs 12 lakhs in 2008. 5. There will be 10% increase in salary and other operating expenses. 6. Preliminary expenses will be written off by equal amounts in each year.

iii.

Projected Cash Budget Statement Projected Cash Budget Statement for the Year 2006, 2007 and 2008
Particulars Opening Cash Balance Add: Cash Receipts Revenues from training A) Total Cash Receipts Less: Cash Payments Salary Advertisement Office Stationeries Interests Electricity Expenses Communication Expenses Repair and Maintenance Fuel House Rent Tax paid Miscellaneous B) Total Cash Payments Cash Balance [A-B] Less: Paid bank loan Ending Cash Balance 2006 100,000 Year 2007 30,740,650 2008 64,674,835

56,520,000 62,172,000 68,389,000 56,620,000 92,912,650 133,063,835 10,507,500 50,000 10,000 440,000 100,000 20,000 30,000 12,000 360,000 12,929,850 20,000 24,479,350 32,140,650 1,400,000 30,740,650 11,558,250 45,000 11,000 286,000 110,000 22,000 33,000 13,200 396,000 14,341,365 22,000 26,837,815 66,074,835 1,400,000 64,674,835 12,714,075 49,500 12,100 132,000 121,000 24,200 36,300 14,520 435,600 15,889,052 24,200 29,452,547 103,611,288 1,200,000 102,411,288

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iv. Projected Cash Flow Statement Projected Cash Flow Statement For the Year 2006, 2007 and 2008
Particulars Cash available from operating activities Cash receipts from trainings A) Total cash receipts Cash payment to employees, suppliers and other expenses Salary House Rent Office Stationeries Advertisement Electricity Expenses Communication Expenses Fuel Repair and Maintenance Miscellaneous B) Total cash payment to employees, suppliers and other expenses Payment of Interests and Tax Interests Tax C) Total Cash paid for interest & tax I. Net Cash available from operating activities [A-B-C] Cash available from investing activities 2006 56,520,000 56,520,000 Year 2007 62,172,000 62,172,000 2008 68,389,000 68,389,000

10,507,500 360,000 10,000 50,000 100,000 20,000 12,000 30,000 20,000 11,109,500 440,000 12,929,850 13,369,850 32,040,650

11,558,250 396,000 11,000 45,000 110,000 22,000 13,200 33,000 22,000 12,210,450 286,000 14,341,365 14,627,365 35,334,185

12,714,075 435,600 12,100 49,500 121,000 24,200 14,520 36,300 24,200 13,431,495 132,000 15,889,052 16,021,052 38,936,453

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II. Net Cash available from investing activities Cash available from financing activities Payment of bank loan III. Net Cash available from financing activities Total cash available [I+II+III] Add: Opening Cash Balance Ending Cash Balance

0 (1,400,000 ) (1,400,000 ) 30,640,650 100,000 30,740,650

0 (1,400,000 ) (1,400,000 ) 33,934,185 30,740,650 64,674,835

(1,200,000) (1,200,000) 37,736,453 64,674,835 102,411,288

3. References
i. F-SKILL, Annual Report 2006 ii. F-SKILL, Annual Report 2007 iii. Krishna Bahadur Mahara Chhetri, Annual Report of Devotee Trade Center iv. Gyanumaya Bohara, A Feasibility Study Report of Nursing Home in Dhangadhi v. Ratnaman Dangol, Management Accounting v. Shiva Prasad Munakarmi, Management Accounting vi. S.S Khanna, Entrepreneurship Development vii. www.google.com viii. www.business.com ix. www.fskill.org x. Joshi Pushpa Raj, Fundamentals of Research xi. Adhikari Rajkumar, Research methodology xii. Elam Plus, Sub-sector Analysis Report in Brick Molder

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