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Franchising a hit among Pinoys

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Jollibee Photos from Agence France-Presse. (I have not been able to access this blog for the last four days, so I’m posting my entry for last Friday.) For the last, oh, 5 to 6 years, franchising has continued to fizzle and sizzle in the Philippines, cornering an ever growing share of retail sales especially in Metro Manila. A recent article by Tina Arceo-Dumlao of the Philippine Daily Inquirer that there are now “close to 900 franchises operating in the country from just 50 in 1995 and 64 percent of these are homegrown. These are largely in food, service and retail.” Interestingly enough, many new franchise owners are 30-something and below, says the Philippine Franchise Association. They know the pulse of the market because they ARE a big segment of the “upwardly mobile professional” market. They are aggressive, looking not just at the Philippine market but ASEAN and beyond. They have nimble business sense and they readily morph and adapt their business strategies to suit the market -- something that older, more traditional businessmen might have difficulty doing. “Franchising is definitely a growing market,” Bartolome says. “Every month, there are entrepreneurs starting to expand via franchising. More and more Philippine companies that are franchising here are now inspired to expand beyond the shores like within the ASEAN region, Middle East and North America. I could see that within the next decade, almost all businesses will be into franchising,” says Amando Bartolome, a franchise consultant. You don’t need to be a rocket scientist to see why franchising is growing exponentially. Success rates through franchising are higher because it’s easier to make more money in a business that has already been tried and tested. If you are considering starting a business the franchising way, there are many online resources that can help you weigh the pros and cons. Follow these links: The Philippine Franchise Association’s Frequently Asked Questions is a good resource for potential franchisees. Pay close attention to the things that you need to know before you get any franchise. It’s hard to get out of it once you start and it can be a very costly mistake. MagNegosyo blog’s Franchising 101 gives an overview on what you need to do to choose the right franchise for you. One of its articles says the recovery period can range from six months to three years. Philippine Franchise Business Investment has some articles both for those looking for a franchise and those who wish to franchise their existing businesses. One of its articles says that not all well-known brands are expensive to franchise and some are priced just right for the start-up entrepreneur. This insight is particularly useful:
“There are some cheap franchises being advertised that can be had for as little as 5,000 php. Even if it’s relatively cheap to begin with, many sound suspiciously like fly by night companies. Carefully research them first and try to get feedback from previous clients before committing any money. Most of these franchises lack name recognition to warrant paying a franchise fee. There are some food kiosk who are not really well know brands are offering their franchise for an amount not in proportion to their value. In these cases, starting from scratch would be a better idea than paying for a franchise that will go nowhere.
You also need to be well-versed in legal issues surrounding franchising. Philippines Franchise Information blog’s guest post from a lawyer says a good due diligence involves investigating the day-to-day operations of the franchise. Through the years I have been writing about entrepreneurs, the best tip I have heard is to visit an existing franchisee and asking him about the business. That interview will tell you many things that the franchise contract won’t. Now, if the franchisor refuses to give you a list of all his existing franchisees, that’s a sure sign something is fishy. Like most decisions, almost every successful franchise owner says getting into franchising requires that you know yourself first. It doesn’t work for everybody, most especially for people who cannot handle being their own boss. Once you know it’s for you, you need to know which franchise fits well with your passion and interest. From there, it’s pure hard work and, hopefully, financial and psychological satisfaction. Good luck!

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This page contains a single entry by published on December 31, 2007 8:35 PM.

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