Primagama on the Block
    Category: Entrepreneurs By : Gloria Haraito Read : 2182 Date : Sunday, February 16, 2014 - 23:57:55

    Ahmad Zamroni / Forbes Indonesia

    This year will be a memorable one for Purdi E Chandra. In the first quarter, the Primagama company that he created 32 years ago, and still wholly owns, is slated to be sold in auction after the Jakarta District Court declared Purdi bankrupt in June 2013. Most likely Purdi will lose control of PT Primagama Bimbingan Belajar, a cautionary tale for any entrepreneur.

    A law firm is now auditing the company in preparation for the auction, and an appraiser is valuing the assets—and among the most valuable will be the Primagama brand itself. “The Primagama brand is strong and known well,” says Purdi, who, for now, remains president commissioner.
As Forbes Indonesia was going to press, the Kompas Gramedia Group had announced its interest in acquiring Primagama. It would be a good fit for Gramedia, as it already operates English language courses in 15 outlets in Java, Bali and Makassar.

    It's been a long journey for Purdi. He founded Primagama in Yogyakarta while in college, in 1982. At the time, Purdi was an education whiz kid, taking four majors simultaneously at two  universities: electrical engineering and psychology at Gajah Mada University, and English literature and mathematics in Yogyakarta State University. Ironically, instead of finishing his studies, Purdi quit and with his partner Herman Legowo opened a prep school to help applicants pass entrance exams for state universities, using a Rp 300,000 loan as his startup capital. To attract customers, Purdi guaranteed all students would pass the test, and in the first class 92% of them did.

    Having a success with the first outlet, Purdi then opened the second branch in Yogyakarta. Within a few years, he had 180 outlets across Java. He expanded not only in number but also in types of classes and students, with prep courses for elementary and high school students.

    In 2000, Purdi decided to speed up growth by moving to a franchise model. To become a franchisee, it costs Rp 350 million to Rp 500 million as an upfront fee, plus a franchise royalty of Rp 75 to Rp 100 million for five years plus an annual management fee of 10% of gross income. Franchisees were also required to buy their books from Purdi's company.

    Purdi's chain grew even faster after that, hitting 661 outlets nationwide. Recognizing the importance of having a standardized network, in 2004 Purdi decided to convert all his original branches to franchisees until he was left with only 18 outlets that were company owned. At the time, he thought converting to an almost-all franchise system was best. “As an entrepreneur I wanted to create employment. Then I realized creating more entrepreneurs was more important, and franchising was a way to create more entrepreneurs,” says Purdi.