By Vincent Mariel P. Galang
Reporter
EVER thought of franchising a business? Here is how you can determine how you can invest your hard-earned capital in a franchising business without wasting time and effort.
Velle Cacha-Manuel, group marketing manager of Francorp Philippines, said a good franchise is unique, profitable, and systemized.
Franchising, which she defines as a method of practicing and using another’s perfected business concept, should also offer a continuous transfer of knowledge. She said one of the main advantages of franchising is “there is a strong branding and brand recall. You don’t have to do it from scratch.”
Given that the brands open for franchising are already established, a franchisee can be assured of making profit. Of course, there are disadvantages, like having to follow a system consistently in terms of pricing, location, and territorial restrictions. There is also the chance to still fail.
Before signing the franchising contract, a franchisee should consider several factors, while answering questions such as why the need to own a franchise. Most of the time, the answer is wanting another source of income. The next step is to start researching about the brand and to look for features that are of interest to the franchisee.
“Is it a unique brand and concept that you love? Is this a product or service I love and I would want to pay for. You have to be the first and last customer of your brand, of your franchise,” Ms. Manuel said in a seminar during the Franchise Asia Expo 2019 held in Pasay City from March 29 to 31.
The would-be franchisee should also look into his or her understanding of the business, including how it matches existing resources (time, experience, and capital to be invested). A check on the track record of the franchisor is also valuable. A visit to one of the franchise stores of the target business is a must to get more information about it through current franchisees. The franchisee should also assess what makes the brand different from its peers.
Extra attention should be given to the terms and conditions involved in the agreement, which should include the renewal process, the required capital investment and fees (franchise fees, royalties, marketing contribution, and training and support), the purchase of products, territory, and termination.
A knowledge of who made this important document is key to avoiding “scam-ish” deals. Brands that present too-good-to-be-true claims tend to pressure franchisees. They usually have no list of franchisees and outlets, and have a vague company profile.
“Ask who developed the franchise program. The last thing that you really don’t like to happen is Google your franchise agreement since they don’t have an operations manual. If they really can’t tell you if they have an operations manual and no other parties are involved in doing their franchise program then that maybe is a red signal to take a step back,” she said.
When asked about her advice to those who want to venture in this kind of business, she told BusinessWorld after the seminar, “You have to be ready in the submission process when you go into franchising business because that’s really how it will work. It’s really duplicating the success of the brand. You have to be in love with the brand, believe in its purpose, believe in its mission kasi ‘yun ‘yung mga [because those are the] valuable stuff that will really ignite them to continue the business.”
Francorp Philippines is part of the worldwide franchise consulting firm Francorp, which is based in Chicago. It also has consultants in South America, other parts of Asia, Middle East, and South Africa. Francorp Philippines’ clients account for 25% of the total franchises in the country. The firm works with more than 5,000 entrepreneurs per year through seminars, events, and other activities. Some of its clients are Jollibee, Potato Corner, Max’s Restaurant, Chatime, Goldilocks, and Pancake House.
The event organizer, Philippine Franchise Association, is a voluntary self-regulating body for franchising in the country. Its members range from micro to large businesses both from the Philippines and abroad in the fields of food, retail, services, and other types of businesses.
