How franchising works in the Philippines? Franchising is one of the biggest business ideas to hit the Philippines over the last few years. It’s no surprise, as franchising has some significant benefits. As the business world becomes, more accessible, big and small corporations are giving the entrepreneur inside of you the chance to be part of a larger team by opening your own franchising business.
When we look at how franchising works in the Philippines, most Filipinos ask practical questions such as; How does franchising work? Can you make good money with this investment? What are the pros and cons of franchising? Well, fear not. All these questions will be answered today in small readable chunks. So, let us dive straight in!
How does Franchising work In The Philippines?
In the Philippines, a franchising company will allow a person (also known as a franchisee) to sell products or services under their brand name. This business works especially well in the Philippines as, on average, the public trusts certain brands. As an added benefit, franchising in the Philippines allows business owners to scale their businesses quicker and more effectively.
What Is Franchising In The Philippines?
Part of how franchising works in the Philippines is understanding what franchising is. In a brief description. A franchise business is a business in which the owners, or “franchisors,” sell the rights to their business. This also includes their logo, name, and model. All this goes to a third-party retail outlet, owned by the independent, third-party operator, called “franchisee.”
What Are The Pros Of Franchising?
PROVED BUSINESS MODEL / PLAN
A proven business model is an excellent asset to any entrepreneur that is looking to franchise a company in the Philippines. Why? Because the franchising business that you choose will have a valuable understanding of the customer’s needs, desires, and expectations. In other words, this business plan will help you massively on your path to success.
In addition, their business model will also help you understand a little more about their specific business and how franchising works in the Philippines together with the brand.
IN-HOUSE TRAINING SPECIFICALLY SET
Often many companies, both big and small, offer in-house training. This is another valuable pro to franchising in the Philippines. This in-house training can be anywhere from manual tasks that are performed daily or could be on the topic of customer service. This will be crucial and very valuable for you as an entrepreneur.
All franchising companies are different. Many have fantastic business support and are available 24/7, while others have limited their support. However, from research, we can see most franchising companies do offer ongoing business support to the franchisee. This support can also be used at the start when you question how franchising works in the Philippines concerning their brand.
WELL KNOWN BRAND
If you are opening a new Jollibee or a new 7/11, then a lot of the work has already been done when it comes to building the brand. This allows new franchisees a more straightforward method of attracting customers. Remember, as you are a well-known brand, you will have requirements and must uphold these as this will also help build the brand.
Many companies spend millions (if not billions) of pesos every year on advertisement and marketing. This can be anywhere from social media to television as a franchisee marketing will be something to focus on, especially in the beginning days. First, however, the franchisee’s head office will spend a considerable amount of money advertising this business brand which brings us back onto brand recognition.
What Are The Cons Of Franchising?
FRANCHISE FEE AND ROYALTIES
One of the main cons to always consider is the fees involved. Most well-known brands that are franchising corporations in the Philippines are very transparent regarding their fees and royalties. The fees and royalties you will need to pay will depend on the franchising company you have chosen.
Like any franchising business, there are certain rules and regulations you will need to follow as a franchisee. There is an element of independence as this is your business. However, it is almost like having a big brother or big sister. In other words, you will need to follow the rules and regulations that the franchising company sets.
Some franchising companies hold protected zones. AKA protected territories. There are many reasons for this, but this is to avoid too many stores, shops, carts, or stations opening up in the same area. When we looked into franchising, we found that many franchising companies in the Philippines have this protection zone implemented into their contract, but this only covered a few of the larger franchising corporations.
INABILITY TO INDEPENDENTLY SELL
As a franchisee, you may be limited to the stocks, products,s or services you are selling. This means you may not be able to sell your independent products or services. Getting this on the contract before engaging in any startup franchising is recommended if you plan to do this.
This is probably the most significant negative factor of franchising in the Philippines. This is because it is the requirement of startup capital. For this article, we researched many franchising companies across the Philippines, and we found that there was a specific cost on all franchising opportunities, which were 100% non-negotiable
Due to the rules and regulations set by the franchising Corporation, you may not be able to have the flexibility you are desiring. For instance, If you are looking to introduce a new shipping method or a new selling method, you may not have the go-ahead from the franchising corporation.
The last factor to consider on our list is titled misleading expectations, but it would be more appropriate to say false expectations. Many people start investing in a franchising idea without thoroughly investigating the pros and cons and what you can and cannot do before you embark on any franchising business. It’s important that you have the option to fully explore the whole business from the perspective of a franchisee.
Another false expectation is that a business model will work just because it’s a brand name. Sadly this is not always the case. Many franchising businesses have opened the door and have not been successful or have been much less successful than expected.
What Companies Can I Franchise In The Philippines?
There are quite literally hundreds of different franchising opportunities across the Philippines. These range from food carts to laundry stores to big chain restaurants. However, here is a small list of the most common franchising companies you will find in the Philippines.
How Can I Start Franchising In The Philippines?
Now we know how franchising works in the Philippines, we can begin to look at how to start. But before you start, it’s important that you have all the requirements needed to start this business. The most important, of course, will be the financial factor as often this is something most franchising brands are very strict with.
Requirements aside, it’s time to apply. Most franchising businesses will have a process that is set out clearly on their website. After going through the top 15 franchising businesses in the Philippines, we can clearly see most often. The first process is to speak to a representative of the company.
This is an excellent eye-opener for you as an investor/business owner. Why? Because you can find out a little more information that you may not find out online. For instance, when we spoke about “How To Franchise 7/11 In The Philippines,“ they informed us about information such as the expected location size and average profits. All of which at the time were not declared on their website.
Once you have spoken to a business representative, they will start the process of franchising. This may involve an interview and providing proof of the capital required for this investment.
How Franchising Works In The Philippines: Summary
Franchising Opportunities in the Philippines are growing. As a result, big and small companies are turning to franchises to open up a different element to their corporation.
Many franchising opportunities across the Philippines have become very successful. It’s also important to understand not all franchising businesses are successful. But if you have an entrepreneurial vision, this will allow you to increase your chances of your franchise business being successful.
Someone asked me recently if franchising is a great passive income. The answer is no. On the basis that franchising is not passive, especially during the early stages. Admittedly when your business grows, you can have the opportunity to take a back seat while you’re empire grows. But at the beginning, it will very much be all hands on deck.
We have recently spoken about franchising tips and how these tips can help you become more successful in your franchising business. If you are looking for these exclusive tips, then head over to our franchising page. Another great source of information is the website Philippine Franchise Association.
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