San Francisco Coffee House: An American-Style Franchise in Croatia.

San Francisco Coffee House: An American-Style Franchise in Croatia.Group 4Entrepreneurship and Innovation

December 4th, 2013

1Group MembersJose Miguel Flores Diaz MA1N0227Mirek Kysely MA1N0228Dacia Tucker MA1N0209

Company overviewOn the return to their homeland of Croatia following a six-year visit to the United States, Denis Tensek and Jasmina Pacek decided to open an American-style coffee house reminiscent of San Franciscos atmosphere.

Company overview While Croatia had many coffee houses, few had the combination of service, quality, products, and atmosphere that they remembered from their time living in the United States.

Company overviewTensek and Pacek started with a single coffee house. From the beginning they felt that it had the potential to grow into a franchise.

Instead of purchasing a franchise from someone else, they considered creating one that had all the elements of the modern franchise chains that were available on the international market plus the adjustments needs to the local market.

Company overviewThey decided to use all of their US lifestyle and professional experiences as well as understanding of habits and behaviors of the local market to create this new local concept in Croatia.

The initial coffee house became a success. The business steadily grew and operating profits had reached a satisfactory level.

Company overviewMotivated with the success of the first coffee shop in one of Croatias poorest regions, the couple realized that the potential for this concept was national, if not regional.

Growing organically by opening self-owned stores was costly, slow, and hard to control. They had neither the means nor the staff.

Company overviewThey knew they did not want to put more capital at risk, and did not have the time to travel to various locations around the country.

Furthermore, their concept had started to garner local publicity and inquiries from would-be franchisees began to arise.

Company overviewCroatia had a small economy and changing legal system. Growing through franchising was appealing, but they only had one store, the business was young, and franchising was unfamiliar to the emerging market of Croatia.

Question 1Should Tensek and Pacek consider franchising in Croatia?

Yes they can consider an Area Franchising Agreement (allows a Franchisor to own and operate a specific number of Franchisees in a particular geographic area).

Franchising is most appropriate when a firm:Question 1Question 2How could Tensek and Pacek overcome the weaknesses they possessed and the environmental threats?Question 2HoweverQuestion 3How could Tensek and Pacek protect their intellectual property and business format know-how? How could they fight imitators?Question 4What should be the next steps? How could they become the biggest and most successful coffee house nationally or regionally?Thank you for your attention.