More on the retail franchise concept:
The business plan is designed to set up a virtuous circle. As I understand it, which is deduced:
SIAF JVs wholesale businesses, in which they use profits or other capital to invest in increasing equity. Therefore, the % of revenues flowing to SIAF net income increases each year.
SIAF establishes a wholly owned distribution network selling to retail franchisees.
So,
The wholesale businesses have a guaranteed customer, the distribution network.
The distribution network resells the wholesale product to the parent company's retail franchisees, who have a guaranteed supplier.
What does this do?
First, it doubles the revenue for the wholesale product, tacking on distribution profits for SIAF.
Next, it makes new wholesale JV businesses much more attractive to JV partners, because they have a guaranteed customer.
Therefore, the pace of new wholesale JVs can be expected to accelerate. In turn, expanded wholesale business capacity increases the supply of wholesale food available to the franchise network. Therefore, that network can grow, creating a larger customer base for more wholesale farms or cattle ranches.
Curious about others thoughts on this.
