Basic Guide: How to Start a Business Franchise in the Philippines?

Franchising business is way popular in the Philippines nowadays because of its high success rate and proven practicality.

In a report from Business Mirror, franchising industry in the Philippines is expected to rise to 25% given the expected increase of consumers’ spending as factored by economic growth, and the continuous creation of local brands.

Know what is a franchise business

The International Franchise Association (IFA) defines this type of venture as “expanding a business and distributing goods and services through a licensing agreement.”

In this case, the original business owner sells the rights to their business name, logo, and business model to third parties known as “franchisees”.

Starting a business through a brand franchise may not be as complicated as creating your own business from scratch, but there are still critical things and processes that you have to take note of to not waste your effort and capital.

Select the type of business to franchise

Firstly, you have to decide what type of business you want to start. Some successful entrepreneurs suggested that for you to likely succeed in your startup ventures, it is recommended to consider these factors in selecting what business to operate:

  • What is the type of industry that interests you?
  • Is the capital investment needed within your means?
  • Does your community or the people in the expected location likely need or want your products or services?
  • Are the competitors for your selected kind of business manageable?
  • Is the business something you can afford to manage or is someone trusted available to manage in your behalf?

After figuring out the type of business you want to invest on, consider your resources.

Things like what brand to franchise and where to find a franchisor are things that you should be mindful of. Choosing the brand to franchise may make or break your startup. Thus, it is important to make a research first before making a head start.

Best franchise businesses in the Philippines

The following are some of the major franchise businesses in the Philippines based on popularity and recommendations from Grit.ph.

Do not worry if the below list seems expensive for you because I will dedicate a whole article for the list of low cost franchise business in the country.

Jollibee
Industry: Fastfood
Initial Capital: Php 35-55 million
Contact info: https://www.jollibee.com.ph/Philippines/

McDonald’s
Industry: Fastfood
Initial Capital: Php32-45 million
Contact info: https://www.mcdonalds.com/us/en-us/contact-us.html

Max’s
Industry: Food
Initial Capital: 15-22 million
Contact info: franchise@maxsgroupinc.com

Shell
Industry: Gasoline Station
Initial Capital: 3-5 million
Contact Info: michelle.ledesma@shell.com

7/11
Industry: Convenience Store
Initial Capital: 3.5 million ( including franchise fee of Php 600,000.00)
Contact Info: Franchising@7-eleven.com.ph

Know the general requirements in operating a franchise

After trimming down your possible franchisors into one or two, depending on how many you intend to put up, acquaint yourself with the general franchising system in the Philippines.

Every franchising process is different depending on your franchising agreement or the type of business.

The following, however, are the general requirements in taking a step towards your dream investment:

1. Secure the documents your franchisor requires. Below are some of the common requirements from franchisors.

-Letter of Intent
-Application Form (completely filled-out)
-Valid Government-Issued IDs
-Target Site Location Details
-Client Info

2. Meeting and Evaluation of Location – This is the part where you can clarify important matters relating to the business with your franchisors. Make sure to understand the major model of the business before you seal an agreement to prevent the burden and cost of rescinding a contract or penalties for non-compliance.

Especially for high-end industries, likely those businesses which invest a lot on their brand’s reputation, the franchisor may ask you strategic questions to ensure that the franchisee has the capability to mitigate the possibility of reputational risk.

3. Contract Signing
Once both parties have set the proper expectations, it is time to sign the deal. Make sure to read all the terms and conditions and clarify vague provisions.

Final Thoughts

Franchising is among the safest ways for people to do business without going through the whole business model planning because all of these are provided by the franchisor.

All you have to do is pay for the transferred business rights, start operation and manage your business well.

Becoming successful in the franchise industry may not be as easy as counting numbers because franchisees still need to know the ins and outs of business organization and management.

The day-to-day business handling is still imperative to this kind of venture it’s just that you have the support of the brand owner.

Surely, there are entailed risks in every stage of franchising. However, if you learn your industry and seek valuable network to help you out in your business initiatives, it is not impossible to enjoy prosperity – a catch for a successful entrepreneurship!

image sources: Pexels

featured image from: Meo Fernando @ Pexels

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