Thursday, August 2, 2012


1.     Was the training and support provided by the franchisor to prepare the first year of the franchise's operation?
Oldtown Group will provide support and training to new outlet before start operation. Next, The Franchisor will assist Franchisee to establish local supplies channel.

2.     When procedures change, does the franchisor offer further training?
Yes, franchisor will offer further training to each outlet. If new item or food launch, franchisor will also offer a course for staff training.

3.       What are the risks and secure new outlets?
To facilitate Oldtown, management faces the need to secure new outlets at strategies location. Tenants who intend to secure new premises for outlet expansion are usually required to prepay their rents 3-12 month in advance. Hence, the group’s aggressive expansion plan, especially with regard to fully owned outlets, may strain its cash flow.

4.     What was the total cost of the franchisee's initial purchase?
Total cost of the franchise is :-
Franchise Term (years) : 5
Royalty : 5%

Marketing / A & P Fund: 3%

Estimated Initial Capital : RM600,000 – RM800,000

5.     What are the risks inherent in Franchising?
The risks inherent in franchising are Oldtown has aggressively opened outlets over the last six years; there is a downside to this as this gives rise to the risk of deterioration in the quality of its services and products. For instance, the negative perception of a few below-par outlets may have impact on the group as a whole. As such, it must ensure that its franchisees are properly trained and abide by the same system. The potential risks are the ability to retain staff at reasonable wages while continuing to expand.

6.      Is the service and food safe?
Yes, the service is safe we note that labor shortage and the inability to get locals to work in the retail sector is a common problem in the F&B subsector, hampering efforts to maintain consistent quality of food and service standards throughout all outlets among local F&B operators. Hence, Oldtown will need to ensure that their salary package is competitive and continuously invest in internal training and development programmes to ensure that all outlet staff is skilled in preparing food and providing top-notch customer services. Failure to do so may lead to customer dissatisfaction and adversely impact the patronage at Oldtown outlets.

7.     Is the franchise international or local?
Oldtown White Coffee Company expanded vertically into the food service industry by opening a chain of cafes. Today, the company exports its coffee mix to more than 12 countries and operated 207 café outlets as of end July 2012.

8.     How many franchise outlets now?
Number of outlets is 207.


Oldtown White Coffee environment area.

Oldtown #2

Oldtown #3

I taken picture with Oldtown Supervisor.

During interview with Oldtown Supervisor.

Interview # 2

Interview #3

Interview #4

Thanks to Oldtown Supervisor spends some time to me 

Thanks to Oldtown White Coffee give me a chance to interview.


1.    What is the company’s current financial status?

Oldtown company current financial status is stable. Oldtown's financial year ending Dec 31, 2012 (FY12) and FY13 net profit of RM43.9mil and RM51.7mil respectively. This will see earnings growing at 9.3% and 17.7% respectively. We believe our estimate is achievable at this point in time, as key drivers are going strong. The main drivers are the strong double-digit growth rate in the fast-moving consumer goods (FMCG) segment coupled with a moderate growth in the company's caf chains.
The FMCG growth expects to be boosted by the continuation of likely rising market shares in Malaysia, Hong Kong and Singapore this year.
It will also be boosted by penetration into new markets such as South Korea and Vietnam. Meanwhile, the management's vision of opening more caf outlets domestically and regionally should be more than adequate to sustain the moderate growth rate in the segment that we are conservatively forecasting for now.
Our target price of RM1.58 is based on 12 times the price earnings ratio over its FY12 earnings per share of 13.2 sen. Investors should continue to buy the stock at market as it still offers potentially strong total returns of 27.5% at the current price.
If the economic condition normalises with China continuing its growth trajectory, we believe there could be more upsides to our FY13 estimates.
We have observed that foreign and local funds have started to increase their stakes in the stock recently at 18.6% as at Feb 23, 2012. We understand that the promoters (management and major shareholders) will no longer sell their shares in the open market. This could be a positive indication of the company's future earnings growth.
2.    Who are the competitors?
Oldtown competitors are Starbuck, Paparich, and Coffee Bean.

3.    What is my total estimated cost to open?
            The minimum financial requirements and application procedures are as follow: -
1.              Minimum net worth of assets of RM1 million.
2.              Minimum liquidity of RM600, 000 (in cash or cash equivalents)
3.              Accept individual applications from qualified prospective Franchisees.
4.              Individual applications must be submitted for each person who will have an                 ownership interest in the franchise.
5.              Individual applications are also required of corporate applications for each                  owner with an interest of 10% or more. Additional supporting for                          creditworthiness, annual reports, etc. is required.
6.              Franchisees may be invited to attend a Franchise Seminar for a more detailed              understanding of the OldTown White Coffee Business Model.

4.    What is the Franchisor mission?

We Believe That Our People Are Our Assets
We acknowledge and appreciate our people as those who grow with us and for their full dedication. We value them for their effort and what they are able to bring to the company, hence we constantly provide a platform and opportunities for career growth and enrichment of knowledge. We cultivate the passion of delighting our consumers into all our staffs to bring forth the best experience possible.

We Nurture The Community
We are aware and committed to our community hence we operate our business in a manner that does not compromise the wellness of our future generations. We are passionate about our corporate responsibilities and do our best to provide for the community in different ways, from doing our part for the earth we live in to providing underprivileged children with better homes. We will not look lightly upon our social responsibilities, as we believe in giving back to the community as part of the effort towards a better future.

We Delight Our Consumers With Our Products
We are consumer centric and are always focused on consumer needs. Hence we are dedicated to delighting our consumers with all our product offerings, by committing ourselves in sourcing the finest ingredients through ethical ways to provide them with the best quality products. We hold strongly to our origins in order to bring to consumers the authentic experience that they expect to enjoy.

We Do Our Part in Saving Mother Earth
We are attuned with the growing needs to nurture our mother earth and to do our part in caring for the environment. With this, we share and grow the passion and knowledge of caring for the environment with our partners and consumers for them to live this together with us as part of our corporate values.

We Focus on Prospering Our Investors
We are dedicated to growing and maximising the financial rewards of our investors as we see it as a platform for our company to continue to provide to our consumers and the community.

5.    How many franchised units (stores or outlets) now?
Number of outlets is 207 (Latest Update on July 2012)

6.    What are the strategies marketing of Franchisor?
We utilize the following marketing strategies to sustain and expand our business:-
·          Continue to place emphasis on branding by strengthening and promoting the “OLDTOWN” brand name which is key in building brand equity and customer loyalty;
·          Position ourselves as an operator of a major café chain specializing in coffee supported by in-house bean roasting and manufacturing facilities;
·          Maximize on our established “OLDTOWN” brand name by expanding our product portfolio of coffee and other beverages in the retail sector.
·          Continue to provide high standards of quality of food and beverages at our “OLDTOWN WHITE COFEE” café outlets as well as our in-house manufactured coffee and tea beverages; and
·          Continue to expand on our network of “OLTOWN WHITE COFEE” café outlets through our franchise program locally as well as overseas.

7.    Does Oldtown Group is non halal or halal?
          Nowadays, Oldtown already enjoys a huge following among the Chinese population in Malaysia, which makes up more than 80% of its customers. Currently, the group’s beverages and food outlets are not, Since being certified Halal is key to winning over the majority Muslim community, most F&B is targeting Muslim customers need to unsure that their products are HALAL-compliant. Oldtown Company are receive HALAL certification from the more prominent HALAL certifier, Department of Islamic Development Malaysia (JAKIM) by 3QFY12 fro its F&B outlets.

8.    Will the Franchisor supply a list of franchisees so that can contact them?

History of Oldtown White Coffee

Established in 1999, the co-founders and Executive Director, Mr Goh Ching Mun and Mr Tan Say Yap are the incorporation of White Café and provide quality white coffee to Malaysian households and the food services industry. Its founders formulated their own blend of 3-in-1 instant white coffee and commenced manufacturing in 1999.
With more than 10 years of experience in the coffee beverage industry, both of co-founders were instrumental in the growth of the Oldtown Group of companies. Next, Mr Lee Siew Heng, is the one of support them to incorporation Oldtown Group. He is the Group of Managing Director who played a significant role in implementing the overall vision, strategy and development of the Oldtown Group.
In 1999, they successfully to commercialize the instant 3-in-1 coffee mix under the “OLDTOWN” brand name for the retail sector. By end of 2009 October, the “OLDTOWN” 3-in-1 instant coffee mix was sold in approximately 1,348 retail outlets nationwide in Malaysia, approximately 550 retail outlets in Singapore and approximately 2,100 retail outlet in Hong Kong.
In 2000, the “OLDTOWN” brand of 3-in-1 instant coffee mix is the first export to Singapore.
In 2001, White Café marketing commenced operations as the marketing arm for the Group’s beverage products. During the same year, the product line is expanded and includes different variations of the instant coffee mix. In addition, instant coffee mix has also expanded export to Hong Kong markets.
In year 2002, White Café obtained a HALAL certification from the Islamic Religious Department of Perak for the Group’s beverages. This is the part of OLDTOWN Group’s intentions, which is to produce the beverages in accordance with the Islamic law. In the same year, OLDTOWN Group’s have successfully expanded to nationwide retail distribution of 3-in-1 instant coffee mix to cover East and West Malaysia through major hypermarkets and supermarkets.
In 2003, OLDTOWN Group’s have also successfully commercialized the new blend of 3-in-1 instant milk tea for the retail market under the “OLDTOWN” brand name.
In view of expanding OLDTOWN manufacturing activities, OLDTOWN Group’s incorporated Gongga Food in 2003 and commenced operations in 2004 manufacturing roasted coffee powder for the road services sector using the Group’s proprietary bean roasting process. OLDTOWN Group’s also distributed the roasted coffee powder to traditional coffee shops in Ipoh and other states in Malaysia. In addition to the food services sector, roasted coffee powder is also marketed to the retail sector under the “NANYANG” brand. In 2004, it also further penetrated the export markets for 3-in-1 instant coffee to cover the United States, Canada and United Kingdom and subsequently in 2005, Taiwan and Indonesia.
In 2005, OLDTOWN Group’s expanded vertically into the food services sector by opening a chain of café outlets based on the traditional Ipoh coffee shop setting and ambience under the “OLTOWN WHITE COFFEE” brand name. This is part of the Group’s strategy of capitalizing and reinforcing on the “OLDTOWN WHITE COFFEE” brand in the food services industry. In the same year, Kopitiam Asian Pacific commenced operations in the licensing, supply of food, beverages and other item, and provision of management services to “OLDTOWN WHITE COFFEE” café outlet.
Since the opening of the first “OLDTOWN WHITE COFFEE” café outlet in Ipoh in 2005, the chain of café outlets have expanded to reach 137 café outlets in Malaysia and Singapore as at 31 October 2009. This included fully and partially owned, and franchised café outlets. In 2005 and 2006, OLDTOWN Group’s has established the subsidiaries namely as Old Town Kopitiam, Old Town Kopitam Butterworth, Old Town Kopitiam Kuala Lumpur, Old Town Kopitiam Cheras, Conneczone to focus on operating café outlets in different areas and states within Malaysia.
To support the café outlet business operations, their established the following subsidiaries as central food processing centres between year 2005 and 2007:
·       Emperor’s Kitchen commenced operations in 2005;
·       Esquire Chef commenced operations in 2007;
·       Dynasty Confectionery commenced operations in 2007.
In 2005, Gongga Food’s business activities also expanded to cater to the procurement of food items for “OLDTOWN WHITE COFFEE” café outlets. In the same year, Gongga Food also obtained a HALAL certification from the Islamic Religious Department of Perak for the production of its roasted coffee powder. Furthermore, OLDTOWN Group’s has obtained a HACCP certification from BM TRADE Certification Ltd for the processing and manufacturing of beverage products.
In 2006, the company also expanded the product export to Japan and China markets. In the same year, the company incorporated Dynasty Kitchen as a distribution centre, which commenced operations in 2007. During this year, group’s company also incorporated Oldtown Berhad, which will focus on investment holding and provision of management services pursuant to its listing on the Main Market of Bursa Securities. Subsequently the OLDTOWN Group’s also started exporting to Thailand and Philippines.
In view of group’s company plans to expand more café outlet business operation to Singapore, OLDTOWN company also incorporated Oldtown Singapore in 2007 to provide management services, supply of food and beverage items to café outlets in Singapore. OTK Singapore commenced operations in 2008 with the launch of the first “OLDTOWN WHITE COFFEE” café outlet in Singapore.
In 2008, the company of Dynasty Confectionery and Esquire Chef obtained HALAL certifications from the Islamic Religious Department of Perak for the processing of various foods. On other food-processing subsidiary, Emperor’s Kitchen obtained HALAL certification from the IFRC ASIA. To further affirm, OLDTOWN Group’s adherence to international food safety standard and White Café achieved ISO 22000:2005 certification and ISO 9001;2000 from BM TRADA Certification in 2008 in addition to GMP certification by the Department of Public Health, Ministry of Health Malaysia in the same year. Within 2008, OLDTOWN Group’s has expanded the product lines to include 3-in-1 instant coffee mix with cane sugar.
In 2009, Gongga Food obtained a HACCP certification from BM TRADA Certification Ltd for the production of roasted coffee powder.