Trying out Bibingkinitan for a Starting Franchisee

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Category: Business Opportunities

The benefits of getting a franchise, especially for those who have no business experience like OFWs, include a fully-developed, turn-key business system. It's like a plug-and-play device for computers and electronic gadgets; just plug it and it will run by itself.

[See also Franchising and Entrepreneurship and Franchising Option for Pinoy Entrepreneurs]

In other words, the franchisee (the one getting the franchise) pays for the franchise fee and related fees, while the supply, invoicing and accounting procedure, sales and marketing materials, production and development, advertising, are handled by the franchisor (the one holding the rights to the business). Training is also usually involved.

This is a win-win situation, so we thought of assessing what franchise we would select under this assumption: an OFW who has accumulated some capital and would want to invest in the Philippines, while at the same time working abroad and allocating a huge chunk of the remittance to cover family expenses. Is it a good business or investment idea for an OFW? Using the guidelines for prospective franchisees, we went through the following:

The franchise/product. Food is always a good option, even in difficult times. Plus, we like bibingka, so the outlet would break-even even if I'm the only customer. There's a particular market segment that likes bibingka, and the challenge is to find out what segment it is and which place that segment could be found. The drawback, on the other hand, is that Bibingkinitan has a limited offering, principally bibingka, which would further narrow down the potential market.

The franchisor. The company behind the Bibingkinitan franchise is a recipient of a number of awards, and Bibingkinitan itself received a number of awards, including the Best in Franchise Support by Entrepreneur Magazine Philippines for the years 2007, 2008 and 2010, and the Fastest-Growing Franchise for 2008, 2009 and 2010.

[For other options discussed in Pinoy-Entrepreneurs.com, see also Steps in Franchising (Binalot Fiesta Foods) and Franchising Opportunity: Reyes Barbecue]

The market and sales. As they say, there are three important factors to consider in business: location, location, location. We've inquired from a number of franchisees. An outlet at a mall, the attendant said, sells an average of 150 to 200 units, while the outlet at the expressway sells around 2,000. Starting with a conservative estimate of 200 pieces, at P20 per piece, that's a gross sales of P4,000 a day, or P120,000 a month. On the other hand, if we take the higher sales figure of 2,000 per day, that would be P1.2Million a month.

Franchise fees and related costs. The costs/expenses for securing a Bibingkinitan franchise includes the following: Franchise fee of P200,000; Cost of equipment which is P200,000; Renovation estimated at P300,000 to P500,000, depending on size; and Security deposit in the amount of P100,000. In other words, the minimum starting cash out is P800,000.

For a starting entrepreneur, P800,000 is too steep, considering that there are other incidental costs. It looks like a good investment, but not too affordable for new business-minded people who don't have extensive capital. Or maybe we'll change our minds.

[See also Franchising and Entrepreneurship and Franchising Option for Pinoy Entrepreneurs]