Are you an entrepreneur or an OFW looking for franchise opportunities in the current market? Do you have what it takes to become the next tycoon in your chosen industry?
If yes, you are surely a determined franchisee who is willing to step up the game and aim for more profitable ways of managing a business.
Franchising is an enticing industry. It is booming, and people are constantly looking for ways to engage in this field. They are eager to learn and understand the principles and basics of franchising since it is the first step to becoming successful in this field.
Also Read: Philippine Franchise Association (PFA)
Moreover, as a form of investment, franchising is an avenue for aspiring business owners to have consistent income while making sure it is a valuable undertaking despite its short- and long-term goals.
What is Franchising?
Franchising Defined
In simple terms, franchising means getting the right to operate a business from the franchisor for a fixed price, which includes the usage of the trademark and the business model.
The interested party is the franchisee, and the owner of the business is the franchisor.
Franchising is bound by various legal documents and considerations to secure smooth business operations.
The Franchise Agreement (FA) document specifies all the duties of the franchisor and the franchisee, duration, and the provisions.
It is essential to understand these terms before starting any business-related operations with the franchisor.
The Importance of the Business Model
A business model in franchising is the established system of the franchisor that has been tested in the market for years and is proven to yield results.
Franchisees prefer a corporate business model since it separates identity from its shareholders.
Businesses with corporate models often vary in nature, ranging from the food industry to oil conglomerates.
Types of Franchising
Product Franchising
Also known as the trade name franchise, this type grants the franchisor the power to give rights to every franchisee in terms of selling its products and the use of trademarks for a fee.
Common examples are car dealerships and service station businesses.
Manufacturing Franchising
Here, the franchisee not only has the right to sell the products but also has the right to manufacture the product following the manufacturing guidelines.
An example is Coca-Cola, where franchisees mix, bottle, and distribute the final product.
Business Format Franchising
In a business format franchise, the franchisor allows the distribution of the products and gives franchisees the right to the franchisor’s business concept or model.
An excellent example is the food cart franchise, which is popular in the Philippine market due to its low initial investment and high returns.
Pros and Cons of Franchising
Franchising Advantages
- Capital Investment: Franchising allows entrepreneurs to start a business without the risk of debt or the cost of equity.
- Motivation and Management: Motivated franchisees often attract the best talent in the industry.
- Lower Risk: Franchises are more secure investments than new businesses due to their established business models.
- Loyal Customers and Brand Recognition: Franchises come with a ready customer base and established brand recognition.
- Buying Power: Franchisees benefit from the franchisor’s established relationships with suppliers, resulting in lower costs.
- Extensive Franchisor Support: Franchisors provide significant support to make sure the success of the franchise, especially in the early years.
- Be Your Own Boss: Franchising offers the flexibility and autonomy of running your own business.
Franchising Disadvantages
- High Initial Investment: The initial investment can be substantial, depending on the type of franchise.
- Limited Creativity: Franchisees must adhere to the established business system and cannot make independent changes.
- Shared Corporate Financial Information: Franchisees must share financial information with the franchisor, which can be a privacy concern.
How to Select a Franchise
1. Understanding the Franchise
Understanding every aspect of the franchise is the first step.
Learn the concept and consider franchising as a gateway to your entrepreneurial dream.
2. Finding the Common Trait
Look for a franchisor who treats franchisees as partners and cares for their success.
3. Finding the Perfect Investment Opportunity
Thoroughly research before investing.
Consider franchising as an alternative to other investments like real estate or mutual funds.
Questions to Ask a Franchisor
- Litigations: Inquire about any legal issues the franchisor has faced.
- Competitors: Understand the competitive landscape and the franchisor’s strategies.
- Changes: Ask about potential changes in the business model and marketing strategies.
- Competitive Threats: Discuss how the franchisor plans to handle existing and potential competitors.
- Market Analysis: Make sure the franchisor has a comprehensive SWOT analysis.
- Customer Base: Get details about the end-user customers and the market.
- Product Details: Understand what the franchisor is selling.
- Market Trends: Learn about market changes over the past five years.
- Vendors: Inquire about major vendors and terms of inventory.
- Pricing: Understand how the franchisor secures the best prices for products.
Things to Consider Before Buying a Franchise in the Philippines
- Self-Assessment: Ascertain that you are committed to the business.
- Study the Concepts: Understand that franchising is not an instant success.
- Research the Market: Conduct market feasibility studies.
- Take Your Time: Don’t rush into a franchise agreement.
Business Legal Requirements and Fees
1. Register Your Business
Register with the Department of Trade and Industry (DTI) for sole proprietorship or the Securities and Exchange Commission (SEC) for partnerships and corporations.
2. Secure a Mayor’s Business Permit
The local government unit of your business location will process this permit.
3. Register with the Bureau of Internal Revenue (BIR)
Obtain a Taxpayer Identification Number (TIN) from the Revenue District Office (RDO).
4. Register with SSS, PhilHealth, and Pag-Ibig Fund
If you have employees, register them with these government agencies.
Best Franchise Business Opportunities in the Philippines Post-COVID
According to the Philippine Franchise Association (PFA), now is an excellent time to invest in a franchising business and take advantage of the industry’s recovery.
They predict a franchising golden age by 2025, but only for businesses that can adapt to the new normal. Consider the following franchise businesses:
1. Financial Services
Digital payments in the Philippines grew significantly during the pandemic, with financial service franchises facilitating bill payments and money transfers. As digital transactions have become more accepted, financial service franchises remain profitable opportunities.
Franchise Brands
Bayad Center, ML Express, ExpressPay
Cost Estimate
- Franchise Fee: from PHP 100,000
- Total Investment: from PHP 150,000 to PHP 400,000 depending on the store setup
Pros
- Consistent demand due to everyday transactions.
- Simple business model with minimal equipment needs.
Cons
- High competition with many financial service providers.
- Requires strict daily accounting.
2. Mini-Groceries, Convenience Stores, & Meat Shops
Demand for food and essential goods remained high during the pandemic, making mini-groceries, convenience stores, and meat shops lucrative. Franchises that offer delivery options and safer shopping experiences thrive in the new normal.
Franchise Brands
Alfamart, 7-11, Monterey
Cost Estimate
- Franchise Fee: from PHP 200,000 to 1M
- Total Investment: from PHP 3M to PHP 5M depending on the brand, store size, and inventory
Pros
- High demand for essential goods.
- Wide range of products caters to a large market.
Cons
- High initial investment costs.
- Requires strict inventory management to prevent theft and spoilage.
3. Pharmacies
Pharmacies were essential during the pandemic as access to healthcare became limited. With an increased focus on health, pharmacies remain essential, offering both medicines and health supplements.
Franchise Brands
Generika, TGP The Generics Pharmacy, Farmacia Ni Dok
Cost Estimate
- Franchise Fee: from PHP 210,000
- Total Investment: from PHP 600,000 depending on the store size and inventory
Pros
- Essential goods with constant demand.
- Access to more affordable generic medicine.
Cons
- High initial investment due to diverse inventory needs.
- Highly regulated industry requiring specific protocols.
4. Courier Services
Courier services surged during the pandemic as e-commerce boomed. With continued demand for online shopping deliveries, courier service franchises remain profitable.
Franchise Brands
Ninjavan, 2Go Express
Cost Estimate
- Franchise Fee: from PHP 50,000
- Total Investment: PHP 200,000 to 1M depending on the delivery vehicle needed
Pros
- Strong e-commerce presence ensures ongoing demand.
- Commissions from deliveries in your area.
Cons
- Potentially high investment due to vehicle costs.
- High competition and variable income due to traffic and fuel prices.
5. Automotive Services & Car Washes
Despite a drop in vehicle sales, automotive services and car washes are still needed as people return to work and prefer private transportation.
Franchise Brands
Rapide Auto Services, Motech, CycleHouse, NiceDay Car Wash
Cost Estimate
- Franchise Fee: from PHP 170,000 (for car washes) and from PHP 1.5M (for auto services)
- Total Investment: from PHP 350,000 (for car washes) and from PHP 4M (for auto services)
Pros
- Simple business model for car washes.
- Ongoing need for vehicle maintenance.
Cons
- High investment for auto repair services.
- Competition with manufacturer service centers.
6. Water Services
Demand for clean water increased during the pandemic. Water service franchises with strict health protocols and diverse bottle options remain in high demand.
Franchise Brands
LivingWater, Aquabest, Crystal Clear
Cost Estimate
- Franchise Fee: from PHP 100,000
- Total Investment: from PHP 600,000 to PHP 700,000 depending on the water source
Pros
- Constant demand for water as a basic necessity.
- Simple business focusing on water quality and customer relationships.
Cons
- High competition in certain areas.
- Expensive initial investment.
7. Home Services
Home service businesses like laundromats and cleaning services rebounded as people returned to work. Convenience and delivery options make these franchises appealing.
Franchise Brands
Quicklean, Suds Laundry, Clean Zone PH, Mr. Butler
Cost Estimate
- Franchise Fee: from PHP 250,000
- Total Investment: from PHP 750,000 to PHP 2M depending on the store size and equipment
Pros
- Ongoing need for home services.
- Resilient industry despite economic fluctuations.
Cons
- High investment for equipment-heavy businesses like laundromats.
- Some people may prefer DIY solutions.
8. Food & Beverage
The food and beverage industry was hit hard by the pandemic, but franchises with strong e-commerce and delivery capabilities are thriving.
Franchise Brands
Baliwag Lechon Manok, Mr. Liempo, Serenitea, Angels’ Pizza
Cost Estimate
- Franchise Fee: from PHP 350,000
- Total Investment: from PHP 500,000 depending on store type and brand
Pros
- Food is always in demand.
- Simple business model focusing on quality and delivery.
Cons
- Low-cost franchises relying on foot traffic are not recommended.
- Must be e-commerce and delivery ready.
9. Education
Education franchises such as supplemental education and review centers became important during the shift to online learning. Parents seek these services to help their children excel.
Franchise Brands
Kumon, Dr. Carl E. Balita Review Center, Seriously Addicted Math (SAM)
Cost Estimate
- Franchise Fee: from PHP 50,000
- Total Investment: from PHP 350,000 to PHP 2M depending on existing infrastructure
Pros
- Ongoing demand for educational support.
- Fulfilling work helping children achieve their potential.
Cons
- High construction costs.
- Regular retraining of instructors required.
Video: Yumaman sa Franchising Business
Achieving success in franchising demands dedication, hard work, and informed decisions. While the franchise model offers easier entry into business, the ultimate success still lies in the hands of the franchisee.
Conclusion
Franchising in the Philippines offers numerous opportunities for aspiring entrepreneurs.
With the right knowledge and preparation, you can achieve success in the franchising industry.
The Philippine government and various associations provide support and resources to help you on this journey.
Take advantage of these programs and embark on your path to becoming a successful franchisee.