KBank partners with Minor Food Group to offer franchise credits to food businesses Offering three months of no principal and interest payments

Stocks and Financial Services Press Releases Wednesday June 13, 2018 11:33
Bangkok--13 Jun--KASIKORNBANK

KASIKORNBANK (KBank) has entered into partnership with Minor Food Group – owner of Thailand's most popular restaurant franchises – to offer loans under the K-SME Franchise Credit scheme to those interested in setting up food and ice cream businesses under the brands of The Pizza Company, Swensen's and Dairy Queen, in line with buoyant food and ice cream businesses. For applications submitted today until December 31, 2018, a three-month waiver will be granted for both principal and interest payments. This year, KBank aims to extend total loans of 350 million Baht to the group.

Mr. Surat Leelataviwat, KBank Executive Vice President, said the franchise business in Thailand has exhibited consistent growth to reach a total value of 200 billion Baht in 2017 and is expected to expand to 230 billion Baht in 2018, or growth of 15 percent. It is therefore a business segment that has continually flourished amid intense competition. The top three businesses with highest growth are: 1) food; 2) beverage and ice cream; and 3) bakery. The supporting factors include supported by business expansion of the shopping complexes and gas stations using famous brands to attract customers, a behavior of families with high purchasing power that enjoy dining out; and growth of delivery business, mostly used by teenagers and single persons who are familiar with online food ordering.

Minor Food Group is a very strong and widely recognized brand, which has experienced high growth. The group is an important partner of KBank to provide "Total Business Solutions" to customers, namely:

1. Support of K-SME Franchise Credit – The financing is earmarked for those interested in running a franchised store under The Pizza Company, Swensen's or Dairy Queen brands. KBank will provide credit limit of 80 percent of investment value for opening of a new branch, outlet expansion or renovation as well as for purchase of new equipment. The loan which requires no collateral is offered at a special interest rate of MRR-2 percent during the first two years and MRR-1.5 percent from the third until the end of contract term. Special privileges of a three-month grace period of no principal and interest payment are granted to investors seeking to be a franchisee of these three brands under Minor Food Group.

2. Business matching: KBank acts as intermediary to match customers with funding resources who lack business experience or knowhow with Minor Food Group.
3. Suitable location: KBank works with its business partners who are landlords to provide rental spaces for outlets of Minor Food Group investors.

Mr. Surat added that outstanding loans under K-SME Franchise Credit now total 2.44 billion Baht and set the target of 5 percent growth in this type of loan. The top three businesses using this financing include retail business, food and beverages. Minor Food Group holds the largest share of loan granted to food business, with outstanding loan totaling 438 million Baht as of March 2018. KBank targets to extend 350 million Baht in loan to Minor Food Group within this year.

Mrs. Kanya Ruengprateepsang CFO , Minor food group, said that the group owns and operates restaurants and fast food outlets under franchise agreements with well-known restaurant chains, including Pizza Company, Swensen's and Dairy Queen, which have been in Thailand for a long time. Since their food products are popular throughout the country, such franchise businesses offer relatively high returns, with a breakeven point within five years. Our business management systems ensure that operators will achieve success in terms of sales, ability to maintain consistent product and service standards.

Entrepreneurs interested in Pizza Company, Swensen's and Dairy Queen franchises must have the following qualifications, including: 1) Have sufficient outstanding balances in their accounts; 2) Reside within the same area as one of those franchise businesses; 3) Must operate the franchise business by themselves; 4) Do not operate other restaurants with the exception of existing operators of the Minor Food Group; 5) Have thorough understanding about the market and customer segments in the area; and, 6) Have good relations with important agencies in the area.

Ms. Kanya said that The Pizza Company's key strategy in the second half of this year will focus on the freshness of its pizza and pasta, and value for money. The company aims to open 100 branches nationwide this year; half of them will be franchise. Swensen's ice cream brand will enhance its store decor by adding a modern twist to its ice cream parlors with fun and colorful atmosphere to stir ice cream appetite, while developing equipment and tools to maintain the quality of Swensen's products. The company also plans to increase the number of customers while adding the frequency of the regular customers' visits and commanding the lion's share of Bingsu through a variety of menus. The strategy is designed to create a trend and reach out to every group of customers. Swensen's will continue building good relationships with customers, their families and children, instilling awareness that Swensen's is a delightful ice cream parlor that is full of fun in every festival. Swensen's creates brand loyalty by using technology to upgrade the system and carry out marketing communications via cutting-edge channels to cater to the needs of every target group.

In the meantime, the main strategies of Dairy Queen, soft serve ice cream chain, include to strengthen existing customer base by launching products that resonate with the taste of Thai consumers, to expand business via new channels where customers can access more easily and to boost the network of franchisees by enhancing their knowledge and business capacity to enable them to continuously respond to the needs of the customers.

The cooperation forged today provides business opportunities for business owners or SME entrepreneurs wishing to expand their business presence with low risks. By providing easier access to funding and financial services, KBank believes that the cooperation will help ease the entrepreneurs' financial burden in terms of investment and interest payment.

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