Philippine Franchising 101 the name of the game
By Carina Roncesvalles
Franchising has been a buzzword in the business community. Budding Filipino entrepreneurs who already have the capital to start an enterprise include franchising in the roster of its business options because of the tried and tested formula that runs the franchise business.
The Department of Trade and Industry (DTI) defines franchising as a method of doing business where the buyer (the franchisee) runs a business by using the system and trademark of the seller (the franchisor).
The DTI noted that the franchise investment generally includes: franchise fee which ranges from P200,000 to P4 million, depending on the product or service of the business and the store or outlet set-up; marketing study; store design and layout assistance; training programs; leasehold improvements (outlet construction); equipment and signage; pre-opening marketing expense; and pre-opening supplies. It added that the recovery period of investment ranges from six months to three years.
The DTI also enumerated the benefits of franchising as follows:
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Minimizes the risk of business failure because through the years of running the business, the franchisor has ironed out potential problem areas;
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You save on the cost of advertising because not only do you have a well-known and recognized trademark, you also pool advertising resources with other franchisees;
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The franchisor provides the franchisee and staff with detailed training and help. If you were an independent operator, where would you and your staff train?
The Association of Filipino Franchisers Inc. (AFFI) earlier reported that franchising, particularly among homegrown ventures is growing. AFFI president Ricardo Cuna told a recent news conference that 2006 proved to be a good year for the franchising industry as its membership more than doubled to 85, accounting for P8 billion to P12 billion in retail sales.
2006 was a very good year for us and the numbers are good signals that 2007 will also be a good year, Cuna said.
But if the would-be entrepreneur thinks that franchising is an easy way to get into the business and return on investments would come in a snap, think again is the advice from the successful men in the franchise industry.
In interviews with Magnegosyo.com, the names in the franchising industry noted that while a ready business concept is already in place when one enters into a franchise agreement, diligence and hands-on entrepreneurial management are still necessary to make the venture succeed.
Armando Bartolome, GMB Franchise Developers Inc. president and Director for Education of the AFFI, said the business model of the franchise deserves the critical eye of the budding entrepreneurs.
The most important of all to remember is to have a successful prototype or model of the business. The model should have projected the type of business concept. The products and services must answer the needs of the target consumers. Such model should have undergone the test of time which refers to having an experience of the lean and best months, the profitability of the model, the adaptability to different locality or areas, and the niche identification making it different from direct and indirect competition, Bartolome said.
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About Carina Roncesvalles: Carina Roncesvalles is a Journalism graduate from the University of the Philippines in Diliman. Carina has worked as a Reporter for BusinessWorld. She is nowworking as a full-time writer for a Makati-based public relations company.
3 Responses to “Philippine Franchising 101 the name of the game”
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give more idea regarding franchise thanks
I spend most of my free time online for pleasure. I know all websites, and this is the one about real events that really took place in the world.
i’m a retired ofw. pls. help me iwant to have a business of my own.