RESEARCH

METHODOLOGY
PROPOSAL

Tran Thi Thuy

B0412DHDH1112

TABLE OF CONTENTS
RESEARCH BACKGROUND.......................................................................................................2
1) Topic Focus.............................................................................................................................2
1.1. Research Topic..................................................................................................................2
1.2. Data Sources.....................................................................................................................2
1.3. Questions of Research......................................................................................................2
2) Rationale..................................................................................................................................2
LITERATURE REVIEW.................................................................................................................4
1)

About the Coffee Brand....................................................................................................4

Vision.......................................................................................................................................5
Mission....................................................................................................................................5

2) About Franchising...................................................................................................................5
The Definition of Franchising.................................................................................................5
Why Startup Needs Franchising?............................................................................................6
Benefits of Franchising................................................................................................................7
Challenges of Franchising...........................................................................................................8
RESEARCH METHODOLOGY..................................................................................................10
Primary Data..............................................................................................................................10
Survey Sample.......................................................................................................................10
Collecting Data for Survey and Sampling.............................................................................11
Interview................................................................................................................................11
The Technique and Validity of Interview...............................................................................12
Other Primary Data Sources..................................................................................................12
Secondary Data..........................................................................................................................12
Analysis of Data........................................................................................................................13

Research Methodology: A Proposal

Time Scale.................................................................................................................................14
Limitation..................................................................................................................................15
REFERENCES..............................................................................................................................16

Research Methodology: A Proposal

RESEARCH BACKGROUND
1) Topic Focus
1.1. Research Topic
The research of franchising opportunity for StartUp Coffee in Vietnam.

1.2. Data Sources

The Primary Data sources for this business plan research include online and leaflet
questionnaires to people who are currently living in two major cities of Vietnam: Ho Chi Minh
City and Hanoi. The research also takes a deep analysis of various Secondary Data Sources.

1.3. Questions of Research

This research aims to solve these questions below:
a) What are the opportunities for StartUp Coffee to franchise it brands in Vietnam?
b) Is franchising the most efficient way for start-up business like StartUp Coffee to
expand its business?

2) Rationale
Enjoying coffee has become Vietnamese peoples interesting habit. On the other hand,
Vietnam has gradually become second largest producer of coffee in the world, which takes into
account of 16% of global production (European Coffee Federation, 2015). Furthermore, coffee in
Vietnam has been planted in 36/64 provinces throughout the country and this number continues
growing the production of coffee grew up to 1.29 million tonnes in 2012.
Total sales revenue of Vietnam coffee has gradually grown from USD 912 millions in
2012 to USD 1.4 billion in 2013. Moreover, according to a report of Business Monitor, coffee
hot drink consumption of Vietnamese people increased the 64.83% in the years of 2008 to 2011.
As a result, there is still room for development of drinking coffee in Vietnamese people. The
growth in sales revenue of coffee has been continuing there is a potential growth forecast in
sales of coffee from USD 1.8 billion in 2015 to USD 2.24 billion in 2017.
In addition, the constant growth of both modern and classical coffee bar in Vietnam has
shaped the trend regarding to the enjoying of coffee. A report by Agriculture and Agri-Food
Canada (2013) stated that the coffe and tea shop in Vietnam can reach the total value of USD 3.1

Research Methodology: A Proposal

billion while this figure regarding to the takeaway coffee would be USD 35 million in 2015.
There are few reasons that can be mentioned in order to explain why coffee and tea shops have
the significant development. Firstly, according to Business Monitor (2014), young Vietnamese
people both adults and teenagers have open-minded with the new worlds trend and new idea.
Moreover, according to Truong (2012), the young Vietnamese people nowadays dare to spend
higher money for food as well as beverage for better quality.
Vietnam now has a lot of coffee shops which provide various choices for all types of
customers. On the other hand, due to the globalisation and the rapid development of international
trade, more and more global
Secondly, Vietnam has a high diversified range of coffee and tea houses that can adapt to
all types and demographics of customers (Agriculture and Agri-Food Canada, 2013). The
diversified coffee and tea products and services have created the trend and drinking habits among
Vietnamese people. The coffee and tea houses also play an important role to provide appropriate
venues that people can have for various jobs. They can take advantage of the shops for
discussion business, studying or gossiping.

Research Methodology: A Proposal

LITERATURE REVIEW
1)

About the Coffee Brand

Being back to Vietnam in 2013, Mr. Mai Truong Giang the founder and CEO of Startup
Coffee Vietnam brought with him the dream to build up a Vietnam coffee brand that can
provide and inspire new business ideas for young people who come to the coffee shop in daily
routine. As a result, the owner has started his own coffee shop brand Startup with various
ranges of price for the products in order to attract young customers. On the coffee shops website
(2015), it states that Startup Coffee has offered half of the price for all the products which are
similar to other competitors in the same positions. Furthermore, Startup Coffee shows the vision
of creating the nice place with competitive price for young Vietnamese customers to enjoy not
only the nice coffee but also to discuss about the innovative business idea and startup. Startup
Coffee is managed by Khuong Viet Jsc. Ltd. and has been looking for franchising partners to
expand its business.

Research Methodology: A Proposal

Vision
The founder of Startup Coffee wants the brand to be a leading brand name in the
segmentation of modern and urbanised coffee chain stores like Starbucks or Coffee Bean but
with cheaper prices (Startup Coffee Vietnam, 2014). In order to reach that vision, Startup Coffee
will need to accomplish these below categories:
a) Food and beverage are served in the coffee shop must be controlled carefully
regarding to the quality, hygiene but still have it own taste.
b) Startup Coffee pursues the competitive price strategy in which the coffee and tea are
served with high standard but only charged with reasonable price. Therefore, more
customers can be reached.
c) The employees must be trained with higher standard in comparison with other
competitors so as to deliver to customers the best service.

Mission
Startup Coffee is established by a young Vietnamese guy who has an ambition to bring a
new and innovative business concept in order to compete fairly with other international brandnames such as Coffee Bean and Starbucks. From that thought, Startup Coffee really wants to
share its own business concept, idea, knowledge and experience for young people who want to
step into startup business world.

2) About Franchising
The Definition of Franchising
Franchising is a definition about a business approach in which one company or
entrepreneur is willing to share the rights of brand name usage, capable technology and other
specification of products and services for other organisations in the trade of a sum payment or a
fee which is on the basis of sale (Cateora et al., 2011). According to Johnson et al. (2007), the
holders of franchise will be responsible for the special activities of producing, storing in
warehouse, distributing and doing sales. On the other hand, the franchiser will take into account
of the brand name marketing, human resources training in order to help the new franchised store
to operate smoothly so that the franchisee can deliver the same culture and other intangible
values to the customers. Usually, according to Daft (2010) the franchise consists of three types:

Research Methodology: A Proposal

Business Format Franchising: the franchisors will allow the franchisee to use the market
products and services as well as the brand-name and other trademarks such as logo, slogan, and
brand colour. In return, the franchisees will have to pay for the fees and royalties for the
franchisor. This can be considered as the most popular way of franchising.
Franchising by Distribution of Product: this type of franchising has been applied by a lot
of large companies such as PepsiCo, Coca-Cola, Shell or BP. This type of franchise means a
limited franchise will be granted to an organisation in which that organisation will have the
license to sell products that are produced by organisations factory.
Franchising by Conversion: TIGI can be considered as a successful sample for this type
of franchising. The conversion franchising means a small independent business can be brought
with the chance to affiliate a franchise company. TIGI has helped a lot of small hairdressers to
join the organisation through franchise.

Why Startup Needs Franchising?

Franchising, in another hand, is a significant growth strategy for any business that wants
to have an impressive expansion to gain financial benefit (Bygrave & Zacharakis, 2011). As a
result, a very small startup business idea can become a big business entrepreneur someday by
replicating the business model. For this reason, a business model must be developed carefully so
as to help operating business smoothly. One of the approach can be applied in order to develop
an excellent business model is Ostawalders Business Model Canvas. A Business Model Canvas
is used to generating the suitable model through customers segmentation, relationship with
customers, distribution channels, key partners, value proposition, key resources, cost structure,
key activities and stream of revenue.
Additionally, according to David (2012), franchising is significantly effective in an
industry which has the trend of fast growth at the moment and in the future. Regarding to
Bloomberg (2013), the hot drink consumption especially coffee in Vietnam showed the trend
of increasing more than 55% from 2008 to 2012. Furthermore, the development of coffee and tea
shops is forecasted to reach US$ 3 billion in 2015. For the customers segmentation of the coffee
shop, according to Business Monitor (2014), the young and high-end adults in Vietnam has
increased and this population is large in comparison with the world. These young people are very
perceptive with new business ideas and concepts and they are willing to spend money for strange

Research Methodology: A Proposal

and unique products especially in food and beverage industry. For all those reasons, the coffee
industry is still quite attractive and has significant growth trend in the future for Startup Coffee to
develop its business.

Benefits of Franchising
One of the most essential and significant benefits of franchising is the tremendous
expansion of the business in comparison with the original idea because franchising has the ability
to deliver the mutual benefits to both sides the franchisors and franchisees (Gale, 2009).
Particularly, Startup Coffee can reach to the number of hundreds of coffee shop without spending
so much financial capital in building rental, infrastructure constructing and other equipment such
as the machine or furniture. The franchisees will be in charge of those investment. Thus, Startup
Coffee has a very great chance to spend those opportunity cost into other activities such as the
marketing or promotional programs.
Another benefit of franchising is that with the number of stores increases, Startup Coffee
can have the economies of scale which means long-run average total costs will decline since the
output of the production increases. For this reason, Startup Coffee can widen their products range
after a time of operation. The franchising business model can help Startup Coffee to expand the
revenue stream from the operation. Two of those streams include the franchising fee and loyalty
from the franchisees and the extra revenue stream from the products and materials that
franchisees buy from franchisors.
Additionally, the franchising also supports the franchisors in establishing its appearance
in countries or territories whereby the population there cannot have enough capital for a
significant expansion (Wheelen & Hunger, 2012). Therefore, Startup Coffee with competitive
price getting along with the quality products can penetrate into poor provinces and places in
Vietnam to gain more benefits.
A benefit for franchisees is the franchisees do not need to spend financial resources in
order to promote and advertise for the business. The franchisees also can receive the business
advices with experiences, together with solutions and technology from the franchisors.

Research Methodology: A Proposal

Challenges of Franchising
Although Franchising can help the business owner to develop and expand the business
quickly through replicating; however, franchising still encounters some of limitations during the
business operation of an organisation.
The very first limitation of franchise is that the one who is granted with franchising right
surely cannot have the utmost independence toward the brand (Gale, 2009). The franchisee
surely is restricted into the business process which is established by the franchisor through the
tight contract. Therefore, such restricted franchising contract will avoid a lot of franchisees to
adjust the products and services regarding to the specific requirements and demanding of each
geographic region. As a result, the threat appears that non of the franchisees can have appropriate
and immediate adjustment whenever there is a change regarding to the demographic and lifestyle
at that region.
For the franchisor, since the franchisee cannot make prompt implementation toward the
particular challenge in particular region, the customers may abandon the whole brand just only
because of one distribution store.
Another risk that franchisees have to face is the financial problem. Since the franchisees
still have to pay for the fees and loyalty cost; therefore, it is very challenging for them in the first
year of operation, when there is no revenue but the franchisees still have to cover those fees.
Last but not least, a tremendous threat toward franchised entrepreneur is that whenever
there is a crisis regarding to the brand, the franchised brand would be affected as well because
franchise can be applied everywhere on the world.

Research Methodology: A Proposal

RESEARCH METHODOLOGY
Startup Coffee has created a trendy and reasonable place for young customers to come
and not only enjoy the drink but also discuss about new innovative ideas or business concepts.
Therefore, Startup Coffee must build up for it own an unique cultural atmosphere for attracting
the customers. In order to identify the attractiveness of such business concept together with a
thorough understanding about the business culture, a research will be conducted.

Primary Data
So as to collect a broad range of comprehensive information, the primary data will be
collected and analysed through two main methods: interview and survey. For the interview, an
in-depth interview with the top management board will be carried out since the in-depth
interveiw can help the researcher to explore the current issues and seek new insights (Saunders et
al., 2009).
In addition, a survey will be conducted in order to identify the customers demanding,
requirements as well as awareness regarding to the Startup Coffee. Moreover, through the survey,
the researchers also wants to acknowledge about the customers behaviours, habits, interests and
favourites in order to support for the idea of franchising Startup Coffee. Furthermore, the market
research through survey also helps the researcher to find ways in planning and creating the
strategic capability which include two aspects: unique resources and core competences (Johnson
et al., 2007). The strategic capability will be used for market analysis and help to build up the
competitive advantages.

Survey Sample
The survey will be conducted by both online and paper questionnaire. The participants
for the survey will range from 16 to 55 the main customers age range of Startup Coffee. These
people are more proactive concerning to the lifestyle. Moreover, some of young Vietnamese
people from 18 years-old have the part-time job so that they can use their money for enjoying the
drink.

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Research Methodology: A Proposal

Collecting Data for Survey and Sampling

The simple random sampling will be applied in this survey. According to Saunders et al.
(2009), the simple random sampling is probability sampling procedure which can ensure each
case within the sampling population will have its equal chance to be involved into the survey.
The respondents will be invited through Internet or randomly on streets with questionnaires.
According to Benson et al. (2011), for the personal information, all of personal data will be
remained unknown in order to ensure there is no any biased factor within the survey. All of
information about the research objectives and aims will be notified to the participants and the
participation will be on the basis of voluntary.

Interview
The researchers will conduct the interview with open question regarding to some of
categories below:
a) Overview about Startup Coffee culture: the business culture is important for any
entrepreneur. This question will focus about the culture that the managers have built
up so as the researchers can base on that to identify whether this culture is suitable for
the customers and employees. Moreover, understanding the culture would be very
important for the researchers in doing franchise the brand of Startup Coffee.
b) Tangible and Intangible Resources: this question will focus into the essential
resources that Startup Coffee has in order to build up the competitive advantages.
Moreover, this question also helps the research to shape in the mind about what needs
to be done and collected before opening another franchised store.
c) Leadership and management: the managers will be interviewed clearly about their
styles of leadership in order to identify the best approach for the employees so as they
are comfortable to serve customers. This section also helps the researchers in
understanding the necessary management process for a new franchised store in order
to ensure the synergistic concept of franchising.
d) Performance of the employees & other stores: the researcher wants to identify the
performance of each staff as well as other stores so as to be easy in making decision
of franchising.

The Technique and Validity of Interview

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Research Methodology: A Proposal

In order to ensure a smooth interview concerning about the key operation of Startup
Coffee, all of the managers will be communicated through phone or mobile to the headquarter of
Startup Coffee so as to clarify the objective of the franchising purpose and the interviewer will
persuade the interviewee about this. Then, a cover letter which has the interview question will be
sent first through email. In the case they do not have the email, the letter will be sent by post
according to the managers requirement. This action will be carried out from one to two months
before the interview. The confirmation process will be carried out later by telephone and then,
confirm once again by email. In order to obtain more information, with Vietnamese people, the
interview will be carried out with the low degree concerning to the degree of formality. The
interview will be conducted right in Startup Coffee shop since it will helps the conductor to have
an open environment and atmosphere in order to help gaining more information. According to
Saunders et al. (2009), the validity of this project about franchising Startup Coffee is the usage of
methodological triangulation with more than one method is applied for collecting necessary data.

Other Primary Data Sources

Other sources of primary data include the internal report of Startup Coffee regarding to
the financial report, and performance review of the employees.

Secondary Data
Once the interview and survey are through for the data analysis, the secondary data will
be applied for the deep analysis about the external environmental factors which concern to micro
and macro-economic environment. These factors will have the significant effect toward the
franchising process.
Some of sources would be:

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Business Monitor Report about the food and beverage in Vietnam.

Vietnam General Statistic Office for the exact value of material.
Other report from academic journals about the habit of young Vietnamese people.

Research Methodology: A Proposal

Analysis of Data
After collecting the data, the researcher must conduct the data analysis in order to get the
necessary information from the number and code. The research project will encounter some of
difficulties since the researcher has to analyze both quantitative data (from the survey) and
qualitative data (from the interview). For the qualitative data, Saunders et al. (2009) stated that
with the complex range of information, the researcher will need to code and categorize the
information carefully in order to extract the essential data. Furthermore, the qualitative data will
need to be considered upon the participants tone and mindset in order to have the most accurate
meanings.
According to Saunders et al. (2009), so as to organize and support the data analysis, a
deductive approach will be carried out. The data will be intertwined with the main reason of this
research project: to identify the chances as well as clear understanding about Startup Coffee for
the franchising business model. The culture of the business and which aspect can be used to
adapt with the business context in Vietnam.
In order to support with the qualitative data, the quantitative data will be analyzed as
well. The quantitative data will be put in Microsoft Excel software in order to make the coding
process and then put into SPSS software for statistical analysis. There will be some test to be
conducted including of Chi-square, Simple linear regression, ANOVA and so on. The data will be
interpreted with both inferential and descriptive statistic.

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Research Methodology: A Proposal

Time Frame for the Research

A Gantt Chart will be used in order to manage the time of the research. The research
project will be managed with the specific tasks and details. The Gantt Chart is proposed as
below:

Figure 1. Research Project Gantt Chart

Limitation of the Research Project

The limitation of the Project can be considered that there is not enough secondary data
for the analysis of Startup Coffee in Vietnam. There would be a lot of secondary data regarding
to the coffee and tea export or shops growth but for specific Startup Coffee, there is not so many
sources.

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Research Methodology: A Proposal

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Research Methodology: A Proposal