By definition, Franchising is the practice of using another firm’s successful business model. It is an anglo-French derivation of the franc- meaning free. For the franchisor, the franchise is an alternative to building ‘chain stores’ to distribute goods and avoid investment and liability over a chain. The franchisor’s success is the success of the franchisees. The franchisee is said to have a greater incentive than a direct employee because he or she has a direct stake in the business.
In the Philippines, Franchising is fast becoming a popular, reasonable investment vehicle for Filipinos. For whatever reason you may have: an individual seeking financial independence, or a family looking for additional income, investing in a proven franchise is a tried and tested way of making money, more so than starting your own business from scratch, where the startup risks are often higher. Here are some important tips if you are at the brink if getting a franchise or thinking of franchising your business:
1. When do I franchise my business?
First ask yourself if your business is already in place? This means that all your operations, from production to distribution, is all in placed and it can easily be replicated. To successfully copy a business, have a set of standards and operating procedures (or SOPs). Putting them down on paper will ensure that all the important aspects are covered, and all potential problems have a ready solution. You should follow this up by building a program for your franchisees training for it plays a crucial role in helping them see how things are done in a franchise system. A uniform, comprehensive training program is a must. The financial system is the heart and soul of any enterprise, so pay extra attention to this aspect of the business. A solid finance system incorporating best practices will help you and your franchisees monitor the health and long-term viability of the business, and solve future problems in the future. Dependability and facility of service are two backbones any business should have, especially if you plan to spread your concept to a wider marketplace. Establish a cohesive and well-structured logistics and distribution scheme.
2. Choose the right franchise partner!
In the Philippines there exist a saying referring to married couple’s relation as “hindi yan parang kanin na isusubo na kapag napaso ay iluluwa”, which translates that entering into a relationship is not as easy as eating rice that if its hot you could just spit it. Well, choosing a franchise partner is basically same as choosing a life-time partner. In the Philippines , the average franchise agreement term is between five and 15 years. If choosing the right franchise is difficult enough, then choosing the right franchisee for franchisors is another aspect that needs a careful study. Remember that even if you have the right business model and formula if you do not have the good franchisee to spread and do the job. For the success of any franchise business also depends on the performance of the franchisee acquiring it. A thorough background of the education, work experience, personality and credit history of your possible applicant is a must! Ask them to make a letter of intent to see their motivations and passion. Do they have the drive and the stamina to do it? You need to undergo a series of interview and sessions to get to know them better.
3. Top Franchising Ideas
Despite the economic difficulty, Filipino franchise companies are among the more optimistic and the more robust sectors in the local landscape, the country credited with the most number of original franchise ideas—close to 700—in the world. The top franchising sectors are:
Homegrown Franchise Food Cart: Taho Boy
Food and Retail
Economist are optimist on the continued growth of the food franchising business in the Philippines. In the country where people eat more than three times a day, there is no doubt that this tops the industry. The country has seen —several new brands taking center stage, paving the way for upstarts to try and make their mark in the food scene. Filipino consumers are seen to increasingly favor health alternatives like tea and yogurt, and Filipino food (the huge success of Mang Inasal is a very good example). The retail sector, on the other hand, is expected to expand this year because of the increasing demand for convenience shopping within business centers and residential villages. More and more consumers now go to convenience stores to pay their bills, buy medicines and groceries, get quick meals and buy mobile phone credit.
Services
This sector will continue to offer a lot of opportunities this year, from educational centers, lying-in clinics to training for becoming a pop star. Middle class families will definitely demand for pre-school learning centers in their neighborhood. Review center and call centers to name a few.
Beauty, Health and Wellness
The recent financial crisis proved the strength of yet another segment of the country’s SMEs: the beauty, health and wellness sector. This sector has the potential to grow even more this year because more and more people would want to feel good about themselves in order to avoid costly medical treatment and care.
For more franchising ideas check the business ideas chapter.
Tags: franchising definition, franchising ideas, Franchising in the Philippines, franchising tips
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