FRANCHISE OPPORTUNITY INFORMATION GUIDE

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1 FRANCHISE OPPORTUNITY INFORMATION GUIDE

2 Dear Prospective Franchisee, Thank you for your interest in becoming a member of the Stirling Sports team. The Stirling Sports brand has a clearly defined space within the marketplace based around providing a great retail experience in high foot traffic locations, providing excellent service and ranging better lines. We are continually seeking the newest, hottest products and brands that make for a compelling offer that is differentiated from our competitors. Our experienced team and brand partners are focussed on ensuring our 48 stores nationwide offer a superior retail experience and have the latest and greatest ranges. The product differentiation, backed by the exceptional enthusiasm and quality customer service of our owner operators and their teams, gives us a point of difference. We welcome anyone who displays a genuine interest in sports goods retail, has the financial and management capabilities and the drive and enthusiasm to succeed in business, to join our team. We look forward to having an opportunity to meet and further discuss the Stirling Sports Franchise Systems with a view to a developing a successful long term business partnership. Yours Sincerely, Mark Anderson Managing Director Wayne Turner General Manager

3 STIRLING SPORTS A UNIQUE OPPORTUNITY Stirling Sports opened their first Store on Dominion Rd in Auckland in They have always been about stocking the best brands and hottest product lines and delivering a great retail experience and service. The group grew to twelve stores across the North Island and in 1983 the first Stirling Sports franchises were awarded, after investing almost 20 years in developing and testing the business format. The original Stirling Sports Since 1963 The Stirling Sports group, under the direction of the group founder and Managing Director, Colin Taylor, pioneered franchising in New Zealand and is a founding member of the Franchise Association of New Zealand. Within a few years of issuing its first franchise, Stirling Sports became, and still remains, the largest independently owned sports retail group in New Zealand. Today the name Stirling Sports has powerful brand awareness and nationwide customer loyalty with high profile stores servicing the community in almost all major cities and towns. Stirling Sports continues to enjoy a strong compound retail sales growth, sound return on investment and offers Franchisees an opportunity for real financial independence.

4 STIRLING SPORTS FRANCHISE SYSTEM The Franchisor s Association of Australia and New Zealand (FAANZ) define a franchised system as The granting of a licence by one person (the Franchisor) to another (the Franchisee). A Franchise is fundamentally a set of proven business practices, operated by a group of capable and responsible Franchisees backed up by professional services and support from the Franchisor. The Franchisee is granted the right to use the trademarks and Stirling Sports name, and in return, is required to conduct the business in accordance with the Franchise Agreement and Business Manual which specify the marketing, business and operational systems and standards to be met. The Franchise agreement is designed to protect the system developed over 5 decades for the benefit of all Franchisees participating in that system. Stirling Sports works diligently to uphold the quality and standards of the Franchise System which in turn delivers not only satisfied customers and brand partners but profitable business for our Franchisees.

5 In a study that covers more than a decade of data, the U.S. Department of Commerce reported a rate of over 95% of Franchises succeeded in any given year compared to a failure rate of between 30% and 65% for all non-franchised businesses.

6 Being awarded a Stirling Sports Franchise entitles the Franchisee to many tangible benefits and significant on-going support Franchisee Benefits and Support The Franchisee owns the right to use and trade under the Stirling Sports brand within a designated territory Stirling Sports assists with site selection and lease negotiations Stirling Sports assists with store design and layout and initial stock planning In-depth management systems and in-store training, covering store operations, budgeting, buying, use of reporting systems and group data and policies, covering all vital information and business knowledge required to successfully operate in sporting goods retail Systems for Staff recruitment, induction, sales training and product knowledge and tracking of results Buying groups, which provide assistance and guidance with buying across a wide number of categories and access to the best ranges and information on sell through performance & holding orders for at once replenishment business through the year Buying power of a nationwide chain that gives you more margin and competitive pricing Multi-million dollar advertising campaigns across various media channels and in store support in terms of point of sale material, windows and instore visits by merchandisers Comprehensive set of weekly and monthly benchmarking of results covering all KPIs On-going in-store support from Stirling Sports Operations Managers covering Stock / Operations / Merchandising and Marketing / Staff Training / IT Support Via regular Regional Meetings, Buying Meetings and at National Conference the Franchisee can network with a team of experienced, motivated and successful Franchisees

7 Put simply, we provide opportunities and expertise to help our Franchisees to achieve better sales and profitability than could otherwise be attained by standalone sports stores. We believe communication with our Franchisees is a top priority. Our business philosophy is to allow data, information and ideas to flow via regular intranet site newsletters, regular meetings and in store visits. Upholding the Stirling Sports system, which at its core is about marketing, presentation of the store, product availability, product differentiation, customer service standards and product knowledge, is very important to us. There is no aspect of the business, which does not, or could not involve the Stirling Sports Ltd management team. We are available at any reasonable time to discuss any matter relative to the Franchisee s business.

8 This means we get access to key lines and exclusive stock at great prices, and marketing support from the brands.

9 We are proud to associate ourselves with the likes of...

10 FAQ Q: What is the investment required to set up a new Stirling Sports? A: The following is the estimated capital required to completely establish a new Stirling Sports franchise. These estimates are based on a site of 200m2. Franchise Territory Fee Joining Fee / Training / Set Up Stock Signage, Fixtures and Equipment Trading Cash Requirements Total $40,000 $10,000 $180,000 $120,000 $10,000 $360,000 The $360,000 estimated cost is based on a new site fitted out to a Mall standard. No allowance has been made for creditor s funding nor allowance for landlord contributions. The above estimated capital requirements are approximate only and will vary depending on each and every franchise s individual location. We recommend that you verify all financial assumptions with your own professional advisors.

11 FAQ Q: What is the Franchise Fee? A: 3.275% of turnover, there are certain elements of the turnover that are exempt from fees Q: What is the National Advertising Contribution? A: 2.5% of turnover, there are certain elements of the turnover that are exempt from fees Q: May I see actual accounts which support and help me make my own financial projections? A: We do not make any predictions, warranties or projections for your particular store, but we will make available historical data as to the performance of existing stores and will give you general guidance as to the sorts of factors you and your accountant or business advisor may wish to take into account when preparing your own business plan, cash flow forecasts and profit projections. Q: What services will you provide after the business has commenced? A: Stirling Sports will provide ongoing support and assistance in the following areas: buying coordination of ranges and purchasing terms; marketing, advertising, in store pos, windows and merchandising; IT training and support; operational field support; weekly and monthly performance monitoring; regular meetings on and off site designed to support and develop your business; and general advice concerning the use of the Stirling Sports franchise system in your business. Q: What financing arrangements are available? A: Stirling Sports does not provide financing or financial assistance. However, Stirling Sports can introduce Franchisees to bankers who are familiar with the Stirling Sports System Franchise and who will consider applications from Franchisees, subject to the banks normal lending criteria.

12 FAQ Q: What systems do you have for keeping Franchisees in touch with you and each other? A: There are weekly bench marking results and weekly s regarding day to day operational requirements; fortnightly there is a newsletter covering all aspects of the business; there are regular store visits from Stirling Sports field support staff, both merchandisers and operational managers. Buying meetings are held quarterly and Regional Franchisee meetings are held at regular intervals 3 times a year. A National Conference is also held once a year. Stirling Sports operates a Franchise Advisory Council (FAC) made up by elected Franchisees that represent all Franchisees interests, this body meets at regular intervals with the Franchise company. Q: Do I need retail experience to be successful? A: Relevant business experience is ideal, although not necessary. What we are seeking are people with the required financial capacity, drive, ambition and the ability to be a team player and operate within a franchise business system. Q: Can I speak to current Stirling Sports Franchisees? A: Yes. We actively encourage all potential franchisees to talk to any of our franchisees. A contact list of all Franchisees will be made available on application. Q: Does the Franchise Agreement permit me to sell the business? A: Yes provided the purchaser is approved by Stirling Sports. Q: Can I order directly from suppliers? A: Yes. Individual Franchisees order directly from suppliers under advantageous terms negotiated by the Franchisee Company. Indicative Indent orders are written by the Franchise Company for the stores and reviewed by the Franchise Company when placed by the Franchisee with the Suppliers. Holding orders of key lines will also be exclusively available to Stirling Sports Franchisees.

13 STEPS TO BECOMING A STIRLING SPORTS FRANCHISEE Franchisee Selection Stirling Sports places the utmost importance on selecting the right person before granting a franchise. The financial resources available to should subject themselves to an examination of their attitudes, capabilities and long term goals. The provision by the Franchise of managing the Franchise business. Stirling Sports Ltd requires that all new Franchisees complete an on-line Psychometric Test through the candidate, while important, are know how, systems and business Selector NZ Ltd. This process allows only one element in the selection format does not guarantee success. Stirling Sports Ltd to see if the process. The success of any operation depends potential Franchisee is a good fit for on the Franchisee s ability and skill the business and the group. Everyone who decides that they in maximising the opportunity that would like to have their own business the Franchise represents and in

14 STEPS TO BECOMING A STIRLING SPORTS FRANCHISEE How to Apply for a Stirling Sports Franchise 1. You will have had to have read the information kit and know something about how Stirling Sports operates and believe that you have the enthusiasm and drive to become a successful Franchisee. You must want to buy / set up and operate a store, this decision you must make for yourself without any external pressure. We want the Franchisees to be keen and enthusiastic buyers. It is a very important decision for you, probably a change of your lifestyle and not without some risk therefore the decision to apply should not be taken lightly. Some key questions to ask yourself before you proceed are: a. Do I have the drive and passion to succeed? b. Do I like dealing with people? c. Am I a good communicator? d. Am I keen to work as part of a team of Franchisees, while leading my own team? e. Am I capable of exercising a disciplined approach to managing my business? f. Do I have the appropriate financial resources to meet the investment? 2. If you have answered yes to the questions in step one, then we invite you to fill in the attached application form, so we can understand your background a little better. Most potential Franchisees will be familiar with our Brand and product offer, and after reading the enclosed information will have more understanding of the Stirling Sports business and so should be in a position to disclose their own circumstances by completing and signing the enclosed Statement of Personal Details and Deed of Confidentiality.

15 STEPS TO BECOMING A STIRLING SPORTS FRANCHISEE 3. After the point where you have registered your interest, and we are in receipt of your personal data, then you may feel free to call on, or talk, to any Stirling Sports Franchisee. 4. Once we have your application we will check out the references and request a psychometric test be completed. Assuming there is a positive outcome we will then approve your application and begin to work closely with you against our new store / new franchisee check list and planner-gram to ensure all elements of a new store or purchase of an existing store happen within the agreed timeframe. We will issue you a copy of our franchise agreement for you and your legal council to review. 5. We do not ask for any payment nor deposit, nor do we ask for a For Sale and Purchase contract with you until we are both well past the point where we have approved you as a potential Franchisee and you have had a chance to talk to our existing Franchisees, view our new store / franchisee check list, are comfortable with the franchise agreement and have finalised the sale and purchase of an existing business or secure the lease and finance for a new Stirling Sports business. As previously mentioned, the process through to you owning your own Stirling Sports needs to be carefully thought through, investigated thoroughly and independent advice sought. At every stage we need you to question whether you are making the right decision, for the right reasons. We look forward to receiving your signed Statement of Personal Details and Deed of Confidentially documents should you decide to take the next step towards investigating owning a Stirling Sports franchise.

16 Believe you can and you're halfway there Theodore Roosevelt

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