Today, business franchising is emerging as the fastest growing sector in the Philippines. This was the recent revelation of World Franchise Council (WFC) Chair Samie Lim.
Predicting that the local franchising sector is bound to grow by as much as 20 to 30 percent in the next two years, Lim said that the influx of homegrown business concepts is slowly proving to be the most aggressive driver of the sector.
“Franchising in the Philippines began more than two decades ago and has grown at a rapid pace since then,“ Lim says. “From just around 20 local and foreign business franchises in the 1980s, we now have more than a thousand entities that accounted for the explosive growth in the sector today.“
Over time, the business of franchising has evolved as a business model primarily identified with very minimal risks and over 90% success rate. This makes franchising a most preferred strategy that guarantees countless opportunities for all entrepreneurs.
But what really is business franchising? How can more Filipinos learn about it and make huge profits out of it? What are the risks and the challenges involved in this kind of business system?
Franchising is a business method of practicing and using another individual or group’s perfected business concept. This duplication of a successful business model involves two legally independent parties–the franchisor and the franchisee.
In this kind of business relationship, the franchisee is granted the right to market a product or a service under a crafted marketing plan or a system that uses the trademark, name, logo and advertising owned by the franchisor.
As a contractual agreement for the franchisee to use the franchisor’s business, operating and marketing strategies, franchising establishes a relationship with a successful business allowing entrepreneurs to use and capitalize on its proven system and name.
Not all businesses can be franchised, but most business concepts that adhere to the concepts of uniqueness, marketability and profitability, and a sound return of investment are those that are considered as ideal models for duplication.
A good business franchise must, first of all, carry a fresh or unique concept that has the potential to expand nationally, and even internationally. Aside from this, the business must be consistently marketable and profitable in order to assure both the franchisor and the franchisee of a consistently growing and attractive return of investment.
A systematic business plan must also be in place. The business operating systems should be polished and efficient, and should be relatively easy for others prospective franchisees to understand.
One crucial determinant of a successful business franchise is actually one of the basic fundamentals of any entrepreneurial task: RESEARCH.
Have a good grasp of the kind of business you want to get involved with by doing an extensive market research. What do people need nowadays? How will you answer these needs by being unique? As with any other major decisions in life, going into business requires due diligence in assessing several variables before coming up with a resolution.
Assess your need to franchise by asking why you want to buy one. What are the things that interest you the most. Once you’ve already found the business concept that you feel suits your preferences, check on the business experience and track record of the franchisor.
Get enough information on the franchise by visiting stores; and interviewing the franchisors and existing franchisees. You should also determine the type of experience required in the business; the hours and personal commitment necessary to run the franchise; how much money is to be invested; and, the terms and conditions of the franchise agreement.
And above all, check if the franchise you’re eyeing is accredited by the Philippine Franchise Association (PFA). The pioneer and the premier franchise association in the country, PFA promulgated the Fair Franchising Standards, which all PFA member franchisors adhere to. The Fair Franchising Standards or FFS is PFA’s code of ethics and provides guidelines on fair and ethical business practices.
Get to know more about the basics of business franchising by coming to the Franchise Asia 2011, Asia’s biggest four-in-one event ¬ from September 19-25 at the SMX Convention Center. A much-awaited international event, Franchise Asia 2011 will feature the two top-level meetings of the World Franchise Council and the Asia Pacific Franchise Confederation; the International Franchise Conference with concurrent breakout sessions, featuring the latest trends and developments in franchising; the International Franchise Expo, a one-stop-shop of the best investment opportunities from micro to large ¬ covering the food, retail and service sectors ¬ both here and abroad; and, the Educational Sessions and Franchise Seminars, an excellent learning venue for would-be franchisors, franchisees and international master franchisees.