Tag: Philippines

Putting one’s hard-earned money into a profitable investment is something that most people want to do. However, with the various investment vehicles today, a lot of us are at a loss of which is the right one to invest in. Having a business is a popular option when it comes to investments; however, starting one from scratch takes a lot of effort, time, and money. This is the reason why people who are keen to having their own businesses prefer to go for franchising opportunities instead of starting their own personal line of trade.

In a country like the Philippines where you cannot really tell how a start-up business will prosper after a few years, it is logical to go for something that has a recall with the public. This is the advantage that franchising has over new businesses. The fact that branding is what attracts a customer’s loyalty makes it easier for a franchise owner to maximize his returns.

However, it is important to note that while franchising is a popular way to have a business, it is something that cannot be done by just about anyone because it has its limits. When you franchise a brand name, you are limited to selling it the way the original owners of the franchise do, so if you crave control and dynamism to do whatever you want with your business then franchising may not be the best type of business for you.

On the other hand, if you only have a limited experience with business yet are amenable to follow the established system of the franchisor, then choosing to have a franchise will work to your advantage. One can indeed say that franchising is a path with low risk and a high potential return.

So, how does one start a franchise business in the Philippines? Firstly, you have to identify a brand name that sells. Remember it is very tough to maintain a position in the market but having a brand name that people trust gives you a competitive edge. The name of the franchisor itself is the biggest kind of advertisement you can give for your business so choose wisely. You also need to have interest in the particular business you want to franchise because once you start operating it, it will be on your mind 24/7. Bear in mind that it takes a great amount of passion to get the business running.

Once you know the kind of franchise business you want to invest in, the next step you have to take is to find a franchisor you want to strike a deal with. You can consult online franchising directories or local franchising magazines for information regarding the franchise opportunities in your area.

Lastly, before signing any agreement with the franchisor, make sure that you negotiate and understand all the terms regarding the franchise. You can even present your own business plan on how you plan to help the franchisor by improving your franchise outlet.

These are the general steps on how to start a franchise business in the Philippines. The success of a franchise outlet starts with a simple choice of getting the right kind of branding recall. Therefore, when you think of franchising, make sure that you put a lot of thought into this step more than anything else.

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What made the franchise industry of the Philippines successful? According to the PFA or the Philippine Franchise Association, the franchise industry of the Philippines had significantly grown in the last few years, from 50 franchises to more than a thousand franchises today. And according to them, the reason for its rapid growth is because of small franchise business in the Philippines such as food-cart and food-stall businesses.

Popular Small Franchise Businesses
Unlike in the past in which most franchise businesses are large businesses, such as convenient stores and fast-food restaurants, most franchise businesses today are small ones, such as food-cart and food-stall businesses.

Because of its relatively smaller size and far lesser expensive franchising costs, many Filipinos were able to franchise a business for their own, giving them the same opportunity that wealthier Filipinos have had with franchise businesses.

In addition to its lesser expensive franchise cost, small Franchising business Philippines such as food-cart and food-stall businesses became popular in the Philippines because it doesn”t usually require its franchisees to have acquired years of experience in a managerial position or have finished an MBA course, which are usually the case for larger franchise businesses.

According to the PFA, it was because of the simplicity of these small types of franchise businesses that made the franchise industry successful in the Philippine market, particularly in today”s modern trends in which franchise businesses had become a popular trend for many Filipino businessmen and women. This had also led to the significant growth of the franchise industry in the Philippines.

The Franchise Industry of the Philippines
The Philippines had received a number of recognitions due to the rapid growth of the franchise industry in the country.

The rapid growth of the franchise industry, according to the PFA, had led to the creation of thousands of enterprises and generation of hundreds of thousands of jobs, making franchising an important tool in the country”s economic growth, which gave had also given the industry entry to the international market, which led to the recognition of Filipino business concepts world-wide.

According to the PFA, the Philippines was also recognized as the “franchise hub of Asia” when it comes to the development of franchise concepts.

According to many business experts, it was because of these recognitions that made franchising the preferred business method for more and more entrepreneurs, both for old and new entrepreneur.

Franchising is a popular trend in the Philippines today, and one of the many reasons as to why it gained a lot of popularity among Filipinos is because of its many opportunities. Here are some of those:

Quick ROI (Return of Investment)
One of the many popular benefits of franchise business Philippines is because of its faster ROI or Return of Investment compared to start-up businesses. Part of the reason why is because franchised businesses have already established a name in the market which makes them reliable in their market, unlike that of starting a business from the ground-up which would take a lot of time and effort.

Successful Business
In addition to its faster ROI, another reason why franchising became popular in the Philippines is because of its successful business model. According to business experts, the main advantage of franchising is that it allows its owners to start up quickly based on an already proven trademark, which is unlike that of starting their own business from scratch.

Lesser Maintenance Efforts
One of the reason why franchise business in the Philippines had gained a lot of popularity in the Philippines is because of its lesser maintenance efforts, particularly for food-cart or food-stall businesses. The reason why is that all of its marketing efforts as well as branding had been arranged by its franchisor. Some franchisors in the Philippines would even offer their services to register their franchisees business and arrange all its legal papers. This makes it easier for Filipinos to start their business quickly.

Availability
Another popular reason why franchise businesses had gained a lot of popularity in the country, particularly with food-cart or food-stall businesses in the Philippines. Because of hundreds of franchising companies in the Philippines that offer different brands of franchise businesses, particularly food-cart businesses, Filipinos have the freedom to choose which business suits their passion. Such as if with foods, Filipinos can choose from a wide variety of food-stuffs.

Business Loans
In addition to other benefits, business loans are also the reason why franchise businesses had gained a lot of popularity. A popular example is Ka-Negosyo by BPI.

Ka-Negosyo can offer flexible business loans which offers its clients choices of which plans can accommodate their franchise business Philippines needs, allowing it to cover the franchise cost itself, as well as its overhead expenses, such as its legal papers and registration, rent for its location, as well as its construction (if needed).

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.

Today, the people who have the money to invest are at a loss on the correct type of investment to get into. This is because they do not want to throw their hard-earned money into something which will not be profitable in the long run. One popular investment option that these people are leaning to is having a business. But as much as they would like to start from scratch, everything about starting a business is a painstakingly effortful process consuming both money and time. This is the main reason why an investor would rather go for a franchise rather than establish one of his own.

This goes true even in a country like the Philippines. With the economic fluctuations, it is indeed better to be associated with something that is already popular with the public instead of breaking through with a new and unknown product. This is what franchising can give an investor a known brand with a good recall. With these characteristics, he is sure that he will get the most out of his investment in a short span of time.

Yet even with this, the concept of franchising is not for everybody. True, it is an easy way to earn, but the fact that you have to abide to certain regulations on how you should run the business can limit your own dynamism and creativity. Once you franchise a brand name, you have to run it the way the franchisor does with his business. If you want to have the freedom to operate a business the way you want to without having to follow any kind of rule, then franchising is not for you.

However, if you are looking for something that will give you the path of least resistance in business, you can give franchising a try. As a fact, it is a method of business which is perfect for those who have little experience in trade. With an established system in place, all you have to do is abide by the system and you will start earning.

Going into a franchise business in the Philippines is easy. You just have to remember some general steps to direct you to the right path. The first thing you should do is to select a product that is popular in the market. Simply stated, it should be something that the sells. Since the industry is very competitive, you have to get a brand name that people trust. This way you will easily edge over your competitors. In franchising, the name you carry is the biggest advertisement for your business. Therefore, it is a must that you choose the franchise that you want carefully. Another consideration you have to make is that you have to have an interest in the business you want to franchise. Running a business is hard work and if you aren’t interested in it, you will get nowhere.

Granting that you already know the type of franchise business you want to have, the next step in the process is the selection of a franchisor. To do this, you can check out information found in your local magazines or in online directories for franchising opportunities specific to your area.

Before signing any kind of agreement, it is imperative that you understand the terms set out by the franchisor. You can also negotiate and present your own business plan to the franchisor so that you reach a win-win situation regarding the franchise terms.

Basically, these are the general steps of going into a franchise business in the Philippines. Remember, the successful returns your franchise outlet will give you are because of customer loyalty so take the selection process in stride. Make sure that you do have a brand that people trust.