Doverie Brico

completed

The project involves the establishment and operation of a DM 29.3 million retail business, comprising five stores in Bulgaria and Macedonia. The project company, Doverie Brico, has bought a franchise from a French operator, Mr. Bricolage. The retail business will carry the name of the franchisor and will offer a wide variety of home improvement/repair products, as well as specialized services.The project will be implemented in three stages over a three-year period. The first store will be opened in Sofia in September, 2000. The second and third store will be opened in two other Bulgarian cities in April 2001, and the fourth and fifth stores (either two in Bulgaria, or one in Bulgaria and one in Macedonia) will be operational in April 2002. All the stores will have a standard outlook and internal design, an integral part of the Mr. Bricolage franchise. IFC''s role in the proposed project could be valuable on several grounds: (i) In view of the perceived macro-economic and political risks to investing in Bulgaria and Macedonia, particularly for greenfield projects, IFC’s presence in this transaction will help increase investors’ confidence in the business environment of the region, and in the governments'' privatization efforts. IFC’s participation in the project, and the partnership with Mr. Bricolage, a leader in the French home improvement products market, will provide a significant demonstration effect in support of foreign investment in the region; (ii) IFC''s proposed investment will supply a source of long-term funds on reasonable terms otherwise not available to the company; (iii) IFC will play an important role in determining the project scope, structuring the financial plan, evaluating the environmental issues, thus reducing the project''s risk profile.The project will have a significant developmental impact, as follows: (i) Providing consumers with a wide range of good quality home improvement products, presented in an attractive environment, and at affordable price. The collective strength of a franchise system provides opportunities for purchasing and marketing economies. (ii) Technology & know-how transfer: The company in co-operation with the franchisor, will bring in proven integrated distribution system expertise, especially with its fully automated inventory control system, safety standards, advanced marketing and sales techniques and quality control systems. (iii) Upgrading business practices: The project will have a catalytic effect in developing and improving the quality of local suppliers and producers. Since eventually more than half of the product range is expected to be sourced locally, the company will have to work closely with local suppliers and producers to improve their quality in order to meet the quality standards of the franchise. (iv) Promoting SME and private sector development: The project would have a positive effect on the development of the home repair/improvement and construction services industry, which was underdeveloped during the years of state planning. This industry has emerged in the last decade and comprises mostly of SMEs. The project would facilitate market entry and improve service quality through standardization, larger selection of products, and reliable supply. (v) Demonstration effect: The project would provide a significant demonstration effect, as its success would encourage other companies pursuing investment opportunities in Bulgaria and Macedonia, as the countries'' perceived risk begins to diminish (vi) Increased employment: The project will create new employment, both directly and indirectly. It will provide direct employment to about 200 employees, mostly women, with a significant multiple of that number expected to be added in the supply stream and in ancillary activities. In addition, temporary employment will be provided to local labor during the construction phase of the project. (vii) Improved skills base: Integrated part of the turn-key package provided by the franchisor, is a comprehensive training program, for the stores'' personnel including training in Mr. Bricolage stores in France.