Franchising TNT

Franchising has been in the Philippines for 94 years. With the entry of Singer Sewing Machine in 1910 which introduced product distributorship. Numerous companies embraced this concept as their vehicle for business expansion over the years. From 1910 to 1965, businesses staked their flags in the Philippine economy through PRODUCT DISTRIBUTORSHIP. Some of these multinationals were tire and pharmaceutical companies.

The take off was slow in the early years as the succeeding companies like A&W Restaurant known for its root beer entered in 1965. The first outlet was established on Highway 54 (now popularly and historically known as Epifanio Delo Santos Avenue or EDSA) near the Big Dome-Araneta Coliseum. The concept was a drive-thru where women food attendants garbed in mini-skirts, black stockings and in roller skates would serve customers inside the comfort of their cars. Trays clamped by the side of the door and mugs with cold refreshing root beer partnered with foot long hotdogs were served. Its set-up was exactly the same as found in the US branches during those years. What this company brought was another form of franchising, which is known as Business Format. From then onwards most entrants into the market embraced this concept, in fact, so widely used not only in the Philippines, but all worldwide.

Product Distributorship

This is a form of franchising where owners of products allow other parties to sell or distribute their products or even use their trademark as a dealer. There is minimal or no control of operations. The relationship is centered on the quality of products sold.

Business Format

A form of franchising used by 90% of companies involved in franchising. This is the reason why franchising is considered the most successful way of expansion worldwide.

In business format, the franchisor, more than his registered trademark and products, has developed a business system that is made available for use to franchisees. Compliance to the business system is the core and essential element of their contractual relationship embodied in a franchise agreement.

The first survey of franchising in the Philippines done in 1995 revealed that there were a total of 50 operating foreign franchisors at that time. The success rate of foreign franchisees is 97%. In 2003, there were 315 foreign franchisors in the country with 87% success rate.

Philippine Based (Home-Grown) Franchises

Earliest recorded homegrown company that used business format franchising was PANCAKE HOUSE. It was franchising since 1978. PANCAKE HOUSE is still active in franchising and has transferred ownership a few years back.

In 1996, there were 94 companies using franchising as their route to expansion and the number has substantially increased to 481 in 2003. The success rate is a good 90%.

Philippine Franchise Scenario

Franchising in the country evolved from the US Franchise System. There are, however, no laws that regulate franchising. Companies and franchise developers use international franchise practices as reference and as a guide to pursuing this type of business. The increasing number of homegrown companies using franchising in their expansion can be attributed to the presence and increasing number of foreign franchisors. They served as motivators and inspiration for the local entrepreneurs.

Franchising for years has been the monopoly of food sector. It was only in mid-1990’s that service and retail entrepreneurs used franchising.

There was an absence of franchise education in the country for decades. Franchise Conference and Seminars started only in the mid-90’s. Franchise Associations were also formed with the vision of professionalizing and standardizing the franchising as well as police their own ranks.

Franchising is a formidable fixture today in most countries, usually catering to such lines of business as food chains, snack counters, coffee brewers and laundry services. The line of franchising businesses has been the ideal way for upstart entrepreneurs seeking profitable opportunities that they did not experience from employment and affiliations with various businesses.

Food is perhaps the logical choice for franchising business acquisitions today. Outside that of being a basic necessity for people, food service franchises provide an established set of food and beverage menus that allow potential customers an easier way of selection and adapt to their schedule. People who continue to endorse and prefer such food chains for food and snack requirements would use the quality and speed of service as their measuring point for reliable franchise businesses.

Franchises known all over the world have usually established their name in certain areas or countries, the brand name or trademark of which will be the carrying point for successful recognition by the consumer market. The proper identification and selection of a franchise to carry will largely depend on how in demand a certain carrying brand or commodity is in a specific location.

Location is one element that will be a key prior to the final selection of what franchise business to carry will be made. Places cater to different consumer classes and this is something that should be properly taken into consideration. Reason behind this is the fact that the level of affordability of most people will vary and no matter how popular a franchise would be, placing it in out of coverage target market areas will render the placement totally useless.

Like for example, Starbucks is a known establishment that sells coffee above the usual prices that a person would be able to pay for. But despite their seemingly high prices, Starbucks has successfully garnered the consumer’s nod as more than just a coffee consumption place but also a place where people can hangout and hold meetings. In this case, catering towards the working class and the A and upper B classes has become their gauge for success. Imagine Starbucks in the lower classes and the most probable result would be for the placed franchise location as a hangout or worse, a dilapidating place where products would most probably expire.

The number of franchises available in the world today does not portray the whole history of a successful franchise business. The business approach towards franchising should be broadened in such a way where studies with regards to the 4P’s of Marketing must be taken into consideration. Marketing and serving the proper consumers that will endorse the end product of the franchising business should still be the main purpose for establishing a business, the same outlook that entrepreneurs will look out for when laying out investments.

It’s a great client question: What in fact is the difference between a franchising loan and a regular business loan when it comes to arranging franchise finance in Canada?

The answer? There are some differences, but you just might be surprised at the similarities when it comes to comparing the two. Let’s explain.

When it comes to the ‘ players ‘ in your finance loan, it’s pretty simple. Contributions are required from you, and your lender / lenders! In Canada those lenders are specialized franchise financing firms, banks, and third party commercial finance companies. While it is extremely difficult in Canada to obtain full financing for your franchise via a Canadian chartered bank the good news is that thousands of franchises are financed via the Government Small Business Loan which can provide funding up to $ $350,000. That’s not chump change! . And when you hear what rates and terms and structures are required you’ll be even more pleasantly surprised.

Clearly franchising fits into the area of the SME sector of Canada, and for that reason a lot of the challenges that the franchisee faces revolve around the same issues faced by any other start up. Yes , we agree that you’re acquiring ( hopefully ) a proven business model but the early stage financing required to get you to a turnkey ‘ in business ‘ stage is still viewed as placing a heavy onus on the entrepreneur to come up with a decent portion of the capital yourself .

Franchising, as well as any other type of business requires two key components for initial capital… a ‘ plan ‘ and ‘management expertise “. And that plan by the way is known as the ‘ business plan ‘ – which is simply your well thought out road map to financial and operational success.

The type of financing that you obtain when you finance a franchise revolves specifically around ‘ use of funds ‘, another common term for any other business financing. In your case that might be real estate, construction, equipment and fixtures, leaseholds, and some opening inventory if you have a product as opposed to a service franchise.

We mentioned the Govt business loan previously as a great conduit to get you approved for your new business. But we point to out clients that that loan program only covers equipment and leaseholds, so items such as the franchisee fee and opening inventory are not financeable. We wish they were… but they’re not!

We have referenced the fact that while Canadian banks provide millions every year for entrepreneurs in the franchise sector via the specialized BIL loan, they in general are reluctant to finance the business outside the Govt program. So discussions around bank financing quickly gravitate to personal collateral, home equity collateralization, etc. It’s simply not the optimal way to go if you want to separate your business life from your personal life.

Another strong similarity in franchise finance when compared to other business financing is the fact that a strong emphasis is placed on your personal financial history. This is typically documented by your credit report and a solid amount of emphasis is placed on this report. In Canada this report is in effect a scoring system and a good score of ‘ 650’ is required.
Simply speaking, the bank or any other commercial lender wants to know you will run your own business in the same manner as you have arranged and run your personal finances, and that of course makes sense – especially if you’re the lender!

So as we have seen many of the concepts and lender views around any business finance loan or proposal pertain to franchise finance, with some nuances / differences. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor for franchise finance assistance.

A difficult economic period like the one we are going through right now leads inevitably to a general decrease in revenue within many industries and sectors, although it also leads to the growth of certain types of businesses that benefit from the newly-adopted behaviors of consumers and from the ever changing needs that appear during a moment of crisis.

Among these growing sectors is the used gold franchising. Peoples need of liquidity and also the increasing value of gold in the financial markets as a stable good against the uncertainty of the markets make it so that activities dedicated to buying and selling this valuable good be among the most profitable to launch.

In combination with the franchising formula, the opening of an establishment specialized in the acquisition of old gold is an alternative worth evaluating if you are thinking of setting up your own business. As it happens for every new company, the initial investment is always the hardest step, but for the nature of the sales point and thanks to the know how transferred from the franchisor, a buying and selling gold business has lower than average set up costs and faster return of the investment.

It is precisely in the knowledge the franchisor transfers to the franchisee that lies the true force of this model in the gold and valuable goods industry. The set of techniques, methodologies and processes is given to the affiliate who benefits from a training period that yields not only general business management skills but also specific abilities required in an industry like that of used gold in which precision and deep knowledge of the product are essential.

Moreover, the reputation and brand image of the franchisor act as a guarantee in front of consumers. Especially in an industry as complex as that of used gold in which trust plays a truly important role, starting off ones business backed up by a consolidated brand is a huge competitive advantage.

Franchising is therefore a solid basis on which you can build your gold business, one that cannot but evolve in the current market conditions. With many unreliable alternatives for buying and selling valuable goods now in the market, the physical business with name and surname offers the security the rest cannot provide. Far from the solutions that promise immediate cash in exchange of used gold after unilateral evaluation of its worth even through postal means, the used gold franchised point represents the most reliable option for those who wish to find a serious, honest interlocutor with whom the transaction reflects the true, real market value of this valuable metal.

There are many firms that have traditionally worked in this industry that now see an opportunity for growth in the ever increasing demand of gold through the franchising formula. Consider the biggest and most reliable brands in the market and ask for details about their affiliates plans to find out if used gold can be a source of profit for you too.

In the earlier a lot of ages, corporations crank out attain by supplying alternatives given that of standard firm and additionally promotional design and style. Plans are generally currently being produced as well as delivered to wholesale suppliers, next to retailers as well as remaining often advertised or perhaps marketed by despite the fact that not constrained to prints, a good number of types of Television established as well as Radio areas, alongside marketing communications such as mailers as well as leaflets. Goods and services then are generally ordered from your quit purchasers.

Concurrently, the world is definitely adjusting in any way doable. It absolutely was at some stage in 1840s whenever business people started supplying rights to scores of other individuals to publicize their own services and choices. This progressed straight into what we should communicate with now as franchising. This business networking approach engineered amount of level of popularity predominantly given that there exists a mutual benefit to the 2 activities. The first group operator gains inside the acquire known as royalty that this costs inside of the business as their very own web based business and programs will be becoming marketed, what this means is simply no or even substantially significantly less other expense tag and energy on their feature. The franchisee alternatively additional many advantages to the cause that typically the strategy or tactic is by now established up, they only replicate and also place into motion all the solution supplied through the franchisor. A while and power to create or even contemplate an organization has in reality been eradicated and there’s a considerable possible regarding revenue and decent good results. Franchising then provided the upper-middle training course a way to increase their particular prosperity as well as advance up the interpersonal steps.

Although during the latest ages, not only the actual lower-middle course turned intrigued in possessing an organization. Progressively a lot of users aspired to very own a franchise however upon all most of these would probably price hundreds and countless numbers to have. A 2nd business networking tactic has been engineered in order to appeal on the center and lower-middle programs. This method named multi-level advertising and marketing is actually at this time successful in the fast payment because of to tens of hundreds of thousands of summary customers purchasing and also using courses are generally granted the accurate plus motivation to share those to folk. It is rapidly prosperous just since discussing is solely quick and also will occur inside of a natural and organic way for them due to the terribly to start with situation, they like or will want the actual products.

The two of such business networking platform, franchising in addition to multilevel merchandising, are usually applying companies appropriate right into a realm of income at the beginning unimagined by people today that just aspired to possess their particular exclusive business. In exchange, the principal operator using the business enterprise business is prepared in order to seize untapped markets like a consequence of the complete neighborhood and so achieve considerably huge funds – the reason why ever more far more firms are usually settling on business networking for their profit generating business products.