San Francisco Coffee House: An

American-Style Franchise in Croatia.

Group 4
Entrepreneurship and Innovation

December 4
th
, 2013
Group Members
Jose Miguel Flores Diaz
MA1N0227
Mirek Kysely
MA1N0228
Dacia Tucker
MA1N0209
Company overview
On 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 overview
Tensek 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 overview
They 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 overview
Motivated 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 overview
They 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 overview
Croatia 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 1
Should 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 1
SFCH got excellent reviews and unusually
large media attention.
Ranked it among six best decorated service
industry interiors.
Has a strong or
potentially strong
trademark.
SFCH good Human Resource Management
Made wise and responsible financial
management.
A well-designed
business method.
The initial coffee house was a success.
Motivated owners to consider growth
opportunities.
A desire to grow.
SFCH offered customers a wide variety of
choices in coffee and muffins.
Strong focus on ambience and entertainment
(Wi-Fi, newspapers, music)
The brand adds
value for
customers.
Question 2
How could Tensek and Pacek overcome the weaknesses
they possessed and the environmental threats?
Lack of Legal support.
Lack of Financial support.
Not enough Information about franchising.
Company was young and unproven in other locations.
No well-established support organization for the
development of Franchise networks.
Question 2
However
They can get professional advice; plan advertising strategy and
franchise training programs; and put together a team.
Despite the situation in Croatia, the emerging market and the new
openness to European integration had created opportunities to start
bringing in new businesses from the outside.
There were two Centers for Franchising which worked with the
Croatian Franchising Association to stimulate franchising
development.
The establishment of McDonalds was stimulating the growth of
franchise operations in Croatia.
Question 3
How could Tensek and Pacek protect their intellectual
property and business format know-how? How could they
fight imitators?
Conduct an
Intellectual
Property Audit.
Source a Special
Utility Patent-
Business Method
Patent.
The can register
their trademark/
service mark.
Question 4
What should be the next steps? How could they become
the biggest and most successful coffee house nationally or
regionally?
1
Develop franchise documents.
2
Prepare operating manuals.
3
Plan a strategy for soliciting prospective
franchisees.
4
Help franchisees with site selection and the grand
opening of their franchise outlets.
Thank you for your attention.