Setting up a Coastal Hire Franchise

Coastal Hire looks for an enthusiastic, self-motivated individual committed to owning and operating his/her own business. Coastal Hire is not an investment to be considered as a side- line. Properly managed, the business will provide an excellent living and a good return on investment.

Depending on the size of the premises and Landlord’s allowances, the total set-up cost will be in the region of R2,250,000.00 of which the franchisee should have approximately R787,500 available in cash. The balance can be financed through leasing, term loans, overdraft or a combination of all three. This will depend on each franchisee’s particular circumstances.

Franchisees must be prepared to offer customers first-rate service at all times even when under extreme pressure. Customer contact is all-important and therefore the personality of the operator plays a significant part. The ability to motivate and manage staff is also of prime importance.

Total Set Up Costs: R2 250 000 excluding VAT

The total set up cost provided you with a complete turnkey operation which is broken down into the following costs.

Franchise Fee: R100 000 excluding VAT

The Franchise Fee is a once-off payment for each store that is opened. It secures the rights to trade from the premises concerned using the Coastal Hire trademarks and business systems. Franchisees are awarded clearly defined territories for the operation of the franchise business. This fee includes the payment for R20,000.00 for the computer program.

The Franchise Fee, which is payable on signature of the Franchise Agreement, covers the following:

  • Site Evaluation
  • Lease negotiation
  • Landlord Allowance negotiation
  • Viability and profitability Studies
  • Estimation of set-up costs
  • Store Planning and specification
  • Plans Submissions and authority approval
  • Access to CTH’s Intellectual
  • Property Rights
  • Tenders and Tender Evaluation
  • Store building supervision
  • Training – for Franchisee and Staff
  • Purchasing and lines of supply
  • Store Opening support and training
  • Training Manuals
  • Operators Manuals
  • Computer Package for day-to-day operation of the business

Royalty: 6% on gross hire income excluding VAT

(Depending on size of turnover)

6%R30 000R200 000
5%R200 000R400 000
4%R400 000 and over 

3% on sales of equipment and plant hire.

Advertising: 2% of gross turnover, excluding VAT

This amount must be paid monthly to the franchisor. This advertising levy forms part of Coastal Hire national marketing fund which is used for the national marketing of the Coastal Hire brand to the benefit of all stores. The marketing fund is administered by the Dealer Council comprising elected representatives of the franchise together with representatives of the Coastal Hire. The fund pays for Yellow Pages and national radio, television and newspaper advertising and national in store campaigns as well as a reasonable supply of DIY Booklets and Price Guides. Franchisees are expected to implement their own local advertising and marketing in their defined area.

Shop-fitting and Signage: R110 000

This is a once off payment for initial set up costs and includes all shopfitting and signage as per our standard new store specification list. There is also provision in this funding for office furniture, start up stationery and uniforms.

Working Capital: R250 000

This amount can either be provided in the form of an overdraft or your own funding can be used for this. These funds will be used to support your cash flow in the initial start up phase.

Equipment: R1 100 000

On opening a standard mix of equipment to the value of approximately R800 000 will be purchased for each new store.

Within a period of six months with research into equipment mix a further approximately R500 000 worth of equipment will be added to your fleet. This allows you to determine the needs of your market and what specific equipment would be required to increase growth for your store.

Due to the fact that there are slight variations with equipments from area to area, we allow for a time span to determine the correct hire fleet mix.

Summary of Set Up Costs - South Africa

Building, Plumbing, Flooring, Painting
(as per Coastal Hire’s standard specifications)
By Landlord
DescriptionAmount
Equipment800000
Franchise Fee100000
Shop-Fitting110000
Stationary5000
General230000
Uniforms5000
Vehicles250000
Additional Equipment500000
Total:2000000
Working Capital:250000
Total:2250000
  
Financed Portion 60%:1462500
Owner Contribution 40%:787500

 

Summary of Set Up Costs - International

Building, Plumbing, Flooring, Painting
(as per Coastal Hire’s standard specifications)
By Landlord
DescriptionAmount
Equipment800000
Duties to be advised0
Transport and Shipping to be advised0
Spares to be advised0
Franchise Fee170000
Shop-Fitting110000
Stationary5000
General230000
Uniforms5000
Vehicles250000
Additional Equipment500000
Total:2070000
Working Capital:400000
Total:2470000
  
Financed Portion 60%:1605500
Owner Contribution 40%:864500