AADHAAR RETAIL

Franchise Proposal

INTRODUCTION Every day, Future Group brings multiple products, opportunities and services to millions of customers in India. Through over 15 million square feet of retail space, we serve customers in 85 cities and 60 rural locations across the country. Most of all, we help India shop, save and realize dreams and aspirations to live a better quality of life every day. Future Group understands the soul of Indian consumers. As one of Indias retail pioneers with multiple retail formats, we connect a diverse and passionate community of Indian buyers, sellers and businesses. The collective impact on business is staggering: Around 220 million customers walk into our stores each year and choose products and services supplied by over 30,000 small, medium and large entrepreneurs and manufacturers from across India. And this number is set to grow. Future Group employs 35,000 people directly from every section of our society. We source our supplies from enterprises across the country, creating fresh employment, impacting livelihoods, empowering local communities and fostering mutual growth.

RETAIL BUSINESS Future Group makes every effort to delight its customers, tailoring store formats to changing Indian lifestyles and adapting products and services to their desires. We operate some of Indias most popular retail formats. Across value and lifestyle segments, our multi-format retail strategy caters to the complete consumption needs of a wide cross-section of Indian consumers. As modern retail drives fresh demand and consumption in new categories, our strategy is based on a deep understanding of Indian consumers, the products they want, and making these products available in every city, in every store format. Future Group offers innovative offerings at affordable prices tailored to the needs of every Indian household.
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Pioneers in the Indias retail space, our formats are household names in more than 85 cities and 60 rural locations across the country

Our stores cover around 15 million square feet of retail space and attract around 220 million customers each year

Pantaloon Retail (India) Limited focuses on the lifestyle retail segment led by the Pantaloons and Central formats

Future Value Retail focuses on the value retail segment through the Big Bazaar, Food Bazaar and KBs Fair price formats.

AADHAAR RURAL RETAIL

Future Ventures, through its subsidiary, Aadhaar Retailing Limited today announced the launch of its rural wholesale and distribution business with the opening up of its first Aadhaar Wholesale store in Kalol, Gujarat. The company plans to open 65 such Wholesale stores and the next one is coming up in Punjab. The initiative is aimed at capturing growing consumption demand in rural India through wholesale and distribution centers coupled with a franchisee network. Each of these centers will cater to rural retailers in their vicinity and provide them with a wide range of merchandise and at costs that are lower than what they currently source at. The company expects to develop around Rs 4000 crore business through this format within the near future. The rural consumption market is estimated to reach Rs 16, 70,100 crores by 2015, according to estimates by consulting firm, McKinsey. This first store in Kalol, near Ahmedabad is expected to support over 500 rural retailers in its vicinity. This initiative is in line with the Future Groups commitment to create livelihood and jobs in rural India. In 2011, Future Group had signed a MoU with Gujarat Government for creating livelihood and jobs in rural areas through multiple initiatives. Apart from catering to the general trade, each Aadhaar Wholesale store will also be a single point sourcing hub for the Aadhaar Retail franchisees in the rural area. Over 400 to 500 Aadhaar Retail franchisees will be attached to a single Aadhaar Wholesale stores for fulfillment of its merchandise mix.

WHY AADHAAR RURAL RETAIL?? The Aadhaar retail format will focus on addressing the essential demand and expanding choice of the rural consumers by creating an effective supply chain mechanism. The concept of Aadhaar came into picture because of the following emerging situation in the rural market. y y y Rising aspiration of rural consumers; to have urban like experience while shopping. Integrated package of products and enablers are available under single roof. Provision of advisory services along with the products can build the association with these stores. y Increasing desire in rural areas to buy quality products and frustration with the counterfeits and fake. y Rural retailers charging more for the same products.

WHY A FRANCHISE REQUIRED?? To have a national retail chain and presence in the whole of the country at village level is very difficult for big organizations and impossible for the middle and smaller ones. It makes it imperative for the companies who intend to grow and have national presence to form associations as a strategy for expansion. This is the only business format which can enable a medium sized companies to go for a national expansion and reach customers in all parts of the country. From Aadhaar Perspective: 1. To create Value in the Rural Distribution and Retailing. 2. To strengthen Rural Distribution. 3. Rural market Penetration. 4. Encouraging New age Entrepreneurs. From Franchisee Perspective:

1. Creating a Source of Income. 2. Showing a way to invest money.

3. Associating with Indias Largest Retailer.

WHO CAN BE ELIGIBLE FOR A FRANCHISEE ASSOCIATION?? Each person who joins Aadhaar retail as a franchisee needs to share our vision to make Aadhaar retail as a large and successful rural retail chain and also make their contribution towards making this vision a reality. We have categorized the potential franchisees into four, but this is not the exhaustive list. y y A new age entrepreneur who believes in Business. Women self help group who wants to do some useful activity to get maximum money in return. y Retired or ex servicemen people who want to earn money because they dont want to be a burden to their children. y Most Importantly Village co-operatives who have more influence in a particular village and have interest in doing business for maximum turnover.

AADHAAR RETAIL SYSTEM - A Unique Business Opportunity The Aadhaar retail Franchise System is like no other in the country. It is a proven retail operation with a nation-famous trademark, and the average initial cash investment is reasonable. Best of all, Aadhaar Franchisees receive assistance and support along the way. Today, there are 60 Aadhaar retail outlets in rural locations in the country and Future Ventures operate the company in partnership with the Godrej Group. These outlets are operated by Franchisees who are dedicated to giving Aadhaar retail customers what they want when they want it, by providing:
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A reliable, fresh assortment of high-quality products

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Speedy transactions Every day fair prices A clean, safe and friendly environment in which to shop.

HOW THE SYSTEM WORKS

 Location selection
y It would be depending on the particular catchment where he/she wants to operate i.e., population and number of households and also the size on which it is operating in. y Site should be within the 100 meter of the main local market of the area. y Types of Franchise Model Based on Size: 1. 2. 3. AFO 1: 300 square feet-Population <=12,000 AFO 2: 500 square feet-Population<=20,000 AFO 3: 800 square feet-Population>=30,000

 Franchisee Agreement y The Aadhaar Retail Franchisee is responsible for ordering and buying inventory; hiring and training employees, as well as payroll, cash variation, supplies, certain repairs, maintenance and other controllable in-store expenses. y Aadhaar Retail maintains an "open account" for each Franchisee. This "revolving" account is credited with each day's receipts and debited with store purchases, operating expenses and other activities. y Brand Deposit: This amount is paid by the franchisee for using our Brand Image. Amount would be 1, 00,000. y Renewal Period: This will be paid by the franchisee to increase the Association of business with us. Time period would be one financial year and renewal amount would be 11,000.

Amount Refundable: Initial Deposit would be refundable after one year of operation. ( yearwise slab working to be designed)

 Ownership Statement
The franchisee owns the business outright and is responsible for financing its operations. Profits or losses resulting from the operations are for the franchisees account. The franchise will be run under the name and style of Aadhaar Retail (A Unit of Future Group Agrovet Pvt. Ltd). The franchisor retains full ownership of all intellectual property (brand, know-how, manuals and so forth).

 What the Franchisee Receives from Aadhaar Retail

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A comprehensive 6-week training program on the operation and management of a Aadhaar Retail store.

An assigned Field Consultant who visits with the Franchisee at least once a week for several hours to provide counsel on every aspect of business. However, all store decisions are made by the Franchisee.

Monthly financial and marketing records prepared by Aadhaar Retail for the Franchisee's individual store, including profit-and-loss statements, balance sheets, etc.

A President's Leadership Council made up of Franchisees and Aadhaar Retail management. This organization gives Franchisees a voice in issues of national interest. Many important changes have been made to the Aadhaar Retail system through advisory councils and other local Franchisee forums.

Aadhaar Retail may provide various forms of advertising for the Aadhaar Retail stores as well as its products and services, ranging from broadcast and print media to point-of-sale signage. In addition, Aadhaar Retail also may support some of the Franchisee's promotional and community relations endeavors.

 Aadhaar Retails Proprietary Store's Information System:

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Provides Franchisees with a proprietary retail computer software system that gives them valuable store information in an accurate, timely manner. It includes a state-of-the-art ordering system and electronic scanning cash registers.

It is a sophisticated system that automatically collects daily merchandise sales, plus money order and other transaction information, and uses it to prepare sales and inventory reports.

Tracks employee payroll information and helps prepare daily cash reports. It automates much of the store's daily record keeping and provides Franchisees with information on product sales so they can do a better job of ordering the products their customers want.

 Store Layout
y Designing the layout of the store will be done based on the area available in a particular Village. y y y The Layout would provide the Fixture and Electrical Layout. Fixtures: There are several components which come under fixtures, they are Racks: Size would be 7*3 Pallets: Size would be 2*2 Bins: Size would be 2*2 Electrical Fittings The electrical fittings would by Tube light and Fan. Fans: The number would be depending on the size of the outlet. For example a 500 square feet store would require 4 fans. Shopping Baskets: The above applies the same to this also. For a 500 square feet store 10 baskets will be needed for better shopping.

Baggage Counter: A small wooden box can used as a baggage counter outside the store.

 Assortment
The Assortment of the Franchisee outlet will be consisting of Staples, Food and Non-Food category. The contribution of Stock would be 1. Staples: 50% 2. Food:25% 3. Non Food:25%

 Pricing Strategy
y y y y y The pricing for the Aadhaar franchisee stores would be as per PTR. The commodity pricing would be best in the village. Need to create an impulse buying from the customers on a specific day in a week. Schemes / offers would be provided to franchisee. Monthly bachat bazaar.

 Visual Merchandising
This is the important aspect of the Franchisee outlet. This will help in enhancing the brand image of Aadhaar in and out of the store. y y 1. Starting from the Frontline board to shelf talker VM should be taken into consideration. As per the size of the outlet, Types of Signage and their nos in the store would be: Shelf Signage:

2. Drum Signage: 3. Hanging Signage's & Boards: 4. Posters: y In store Promotion: we will allocate some area in the outlet only to promote the Brand of the outlet.

 Licenses Required
There are some licenses which a franchisee needs to get before starting the outlet. These are y y y y Shop and Establishment Act, 1990 Value Added Tax Standards of Weights and Measures Act, 1976 Prevention of Food Adulteration Act (PFA)

 Marketing Support
y y Store Launch activities Brand building activities Leaflets Auto Miking Camel Route / ST Bus Banner Inviting opinion Leaders of the village and official inauguration. y Creating a festive ambience.

 Training
y y The training would be given to franchisee and his staff for 3 days. The training would be based upon Store operations, Visual merchandising, stacking the Products, generating and sending reports, selling the products etc. y y The cost for the training would be absorbed by ARL. The franchisee should attend any training programme conducted by the company.

 Replenishment Cycle
y y y y Basically this would depend on the amount of turnover a Franchisee does in a store. A 500 square feet grocery store will averagely do a business of 4.5 lac to 5 lac. Average per week would be 1.2 lac There fore this retailer would replenish stock at least two times in a week to maintain minimum stock levels. The same will be applicable for franchise also. y The franchisee will get his stock replenished on free of cost (no distribution cost).

 Franchise Obligations
y y y y Refurbish and equip the Premises as required by the Franchisor. Only use stationery, invoices, and products which are supplied by the Franchisor. Operate the Business in accordance with the Agreement. Use only signs and packaging in connection with the Business as have been approved by the Franchisor.

Maintain the Premises to the highest standards and not carry out any alterations without the Franchisors consent.

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Use his best endeavors to promote and extend the Business. Operate the Business during hours specified by the Franchisor. Ensure that staffs are well dressed, clean and polite. Not employ as a manager any person who has not completed the Franchisors training course and been approved by the Franchisor.

 Validity of the Agreement/ Disputes/ Termination

y The franchisee agreement will be valid for a period of three years from the date of its constitution. However, this period can be extended upon mutual agreement. y In the event of disputes, the same can be settled in Delhi jurisdiction only as per the prevailing arbitration act. y Both the parties will have the right to terminate the contact by giving one months notice for the same by settling all accounts. If the franchisor is notified in writing by patients availing the services of Aadhaar Retail on three separate occasions, that the conduct of the franchisee is unacceptable, or has been below an expected standard for whatever reason, the franchisor reserves the right to terminate this contract. Any written correspondence received will be made available to the franchisee. The decision of the franchisor will be final.

 Separation of Legal Entity

y The franchisee is a separate legal entity for all purposes. There is no actual or implied contract of partnership or any other legal relationship created by the franchisor allowing the franchisee to promote and use the Aadhaar Retail franchise concept.

The franchisor has no responsibility for any liabilities of the franchisee, whether arising out of illegality, accident, neglect or arising in any other way.

The franchisee has full responsibility for all legal requirements required in running a business. The franchisor has no responsibility in any way for tax or any other statutory matters.

WHAT WOULD BE EXPECTED FROM A FRANCHISEE APPLICANT IN THE BEGINNING y Market Mapping Prospective franchisees are supposed to do a market mapping of their local area including population, local retail stores available in the nearby. They are also supposed to find out the places from which people go for shopping of grocery items and FMCG items. y Catchment Area Prospective franchisees also have to find out the no. of villages nearby from where people come to the franchisees village to shop. y Demographic Information Demographic information of the area is also a prerequisite; it will include the identification of population engaged in service sector and agriculture sector or others. y Location Identification Location for the store should be identified beforehand based on the above mentioned criteria.