When we used to ask entrepreneurs how many outlets they dream to have, they used to say 20, maybe even 50 if they were dreaming big.
But the next generation of entrepreneurs start to realize that 100 outlets, or even 1,000 is within their reach because of franchising. As the market continues to develop and mature over the past 20 years, franchising has become a favorite expansion model for entrepreneurs small and big alike.
The Philippines is one of the most developed Asian markets when it comes to franchising, allowing entrepreneurs who franchise their business to achieve an average of 100 outlets. This is in sharp contrast to Thailand, with only 32 outlets per franchise brand, and Indonesia at 80.
What is it about franchising that allows entrepreneurs to dream big and achieve hundreds of stores?
1. Using other people’s time, money, and people to grow your business
No matter how big your business is or deep your pockets are, every business still always lacks one of these crucial elements. Capital is always an initial issue, but even companies that have access to financing and loans are limited by their growth due to lack of time to focus on expansion or good people to drive the growth and manage outlets in faraway areas.
Great entrepreneurs know that getting the right people is crucial to your growth, and franchising gives you access to other entrepreneurs like you who would stay up all night to solve issues, and would not mind giving up a weekend to make sure issues are fixed. Unlike salaried employees, a franchisee’s success is based on business success, so they have every incentive to make sure the business runs well. It also frees up your time as you take less operational responsibilities and you can then focus on business development, innovation, and brand growth.
In addition, franchising allows you access to capital through franchise fees, royalties, and most importantly the investment that the franchisee makes to open your business. This gives you almost unlimited capital to continue opening new locations in new areas, whether in the Philippines or internationally.
2. Systems. Systems. Systems.
Franchising is all about replicating the success of a business. So when a company decides to franchise, it forces the company to shape up and prepare their systems to be franchised.
Whether done internally or through franchise consultants, it is crucial to have documented systems before you start selling the franchise. From evaluating and preparing the financial statements, to documenting every process in the business and preparing franchise legal agreements, franchising allows you to relook at the business and improve it as you prepare to franchise. We have seen many mom and pop operations dramatically upgrade their operations in a span of six months because of the company’s shared vision of franchising.
3. Franchise support infrastructure.
Filipino entrepreneurs are lucky in that there are strong support infrastructures in the Philippines to help continue building the franchise industry.
The Philippines, for example, has the highest number of Certified Franchise Executives (CFE) outside the US. The CFE is a mark of excellence in the franchise industry and is an accreditation given only to those who have passed through the rigorous CFE education system.
Banks, such as BPI Ka Negosyo, also extend franchise loans both to companies who want to franchise their business, but also to those franchisees wanting to own a franchise.
We also have the Philippine Franchise Association, a key members of the World Franchise Council, that continually brings in best practices internationally and helps grow, regulate, and develop the franchise industry.
Franchising continues to allow the next generation of entrepreneurs to grow exponentially. With over 1,600 brands franchising in the Philippines, the sector continues to expand from food, retail, service, education, and other industries. And with more entrepreneur expanding through franchising, the Philippines continues to be the franchising hub of Asia.
The search is on for the NxtGen in Franchising Award winner. The Philippine Franchise Association is searching entrepreneurs 18 to 35 years old with an ambition to grow their business through franchising and have the potential to be the NxtGen Franchise Leader. Deadline is on Friday, May 20. For more details, contact (+632) 687-03 65 to 67; (+63917) 832-0732; or visit http://francorp.com.ph/nxtgen.
Chris is the senior vice president for marketing and strategy of Francorp Philippines; president of U-Franchise Sales & Management; and chairperson and director for special projects, ASEAN integration-Philippine Franchise Association.