Multimedia Reporter
Mariel Alison L. Aguinaldo
Franchising one’s business can mean different things to different people. For some, it’s a lucrative business model; for others, it’s validation of how big their business has become. Regardless of how you view it, one thing is for sure: it’s a huge undertaking that shouldn’t be taken lightly.
Since franchising carries a lot of responsibilities with it, what should every business keep in mind in preparing for and running it? Injap Sia, founder of Mang Inasal and chairman of DoubleDragon Properties, shared his thoughts in Endeavor’s Scale-Up F&B held last November 29 at DoubleDragon Plaza.
1. Dream big, but remain grounded and prepare adequately.
Even when he had just started Mang Inasal, Sia knew he was building the business to franchise. Eager applicants for franchising and the droves of customers in his restaurants could have been proof enough that he was ready to start scaling. But he knew better than to grow too quickly.
“[In] the first six months, if your store is full, there’s nothing there; they are all first-time customers,” he said. “After one year, they’ll be 50 to 60 percent first-time. Two years after, they’re all repeat; then you have a hit. Because it’s natural and organic.”
Before you open for franchising, it may be wise to invest early in enterprise resource planning (ERP) solutions to manage the back end of your business.
Sia worked on Mang Inasal’s ERP while they were already expanding and he found it to be “a nightmare”. It may be expensive, but it’s well worth it.
2. Don’t advertise that you’re open for franchising.
So you’ve done all the preparation and are now ready for franchising. The next sensible step should be to promote the fact, right? According to Sia, doing so might be a mistake.
This is because an interested franchisee should be a believer of your product prior to the business opportunity presented to them. Sia suggests waiting for entrepreneurs to take the initiative and come to you instead.
“That’s a good filter,” he said. “It should be natural that they want to get your brand. Because once you start to invite one, it totally changes the position.”
3. Stick to the franchise contract.
Now, let’s say you’ve already got a handful of potential franchisees ready to set a meeting with you. In drafting the contract, while it should definitely be fair to the franchisee, make sure that it’s ultimately still biased to you. “You have more at stake. You built the company and the brand,” said Sia.
Once you’ve sent that contract to applicants, take note of how they react to it because it may tell about your future relationship with them. “If they come back and ask for so many [things] and take out your bias, then just move away. It means they’re not really ready to follow,” he said. “So don’t negotiate in between, except the commercial terms.”
4. Everyone has to go through the “awkward middle stage”– it’s how soon you get out of it that matters.
One of the challenges that Mang Inasal faced while expanding was that awkward middle ground that took its toll on their supply chain. “Your size is not big enough for the suppliers to take you seriously, [but] you’re also small enough that you can just [purchase] from them any time. You will pass through that stage.”
At this point, you just have to accept that you need to pay more than you did when you were a smaller entity, and focus on getting bigger in the fastest possible time.
“You just know that it has to happen and just get away from that stage as soon as possible,” said Sia. Because if you focus on getting that lower price at that stage, it’s useless. You’ll never get it.”
So you’ve done all the preparation and are now ready for franchising. The next sensible step should be to promote the fact, right? According to Sia, doing so might be a mistake.
This is because an interested franchisee should be a believer of your product prior to the business opportunity presented to them. Sia suggests waiting for entrepreneurs to take the initiative and come to you instead.
“That’s a good filter,” he said. “It should be natural that they want to get your brand. Because once you start to invite one, it totally changes the position.”
3. Stick to the franchise contract.
Now, let’s say you’ve already got a handful of potential franchisees ready to set a meeting with you. In drafting the contract, while it should definitely be fair to the franchisee, make sure that it’s ultimately still biased to you. “You have more at stake. You built the company and the brand,” said Sia.
Once you’ve sent that contract to applicants, take note of how they react to it because it may tell about your future relationship with them. “If they come back and ask for so many [things] and take out your bias, then just move away. It means they’re not really ready to follow,” he said. “So don’t negotiate in between, except the commercial terms.”
4. Everyone has to go through the “awkward middle stage”– it’s how soon you get out of it that matters.
One of the challenges that Mang Inasal faced while expanding was that awkward middle ground that took its toll on their supply chain. “Your size is not big enough for the suppliers to take you seriously, [but] you’re also small enough that you can just [purchase] from them any time. You will pass through that stage.”
At this point, you just have to accept that you need to pay more than you did when you were a smaller entity, and focus on getting bigger in the fastest possible time.
“You just know that it has to happen and just get away from that stage as soon as possible,” said Sia. Because if you focus on getting that lower price at that stage, it’s useless. You’ll never get it.”
One of the challenges that Mang Inasal faced while expanding was that awkward middle ground that took its toll on their supply chain. “Your size is not big enough for the suppliers to take you seriously, [but] you’re also small enough that you can just [purchase] from them any time. You will pass through that stage.”
At this point, you just have to accept that you need to pay more than you did when you were a smaller entity, and focus on getting bigger in the fastest possible time.
“You just know that it has to happen and just get away from that stage as soon as possible,” said Sia. Because if you focus on getting that lower price at that stage, it’s useless. You’ll never get it.”
