Franchising Option for Pinoy Entrepreneurs

Details

Category: Business Opportunities

The tips on how to start with a franchise business, given by the Philippine Franchise Association (PFA) and Association of Filipino Franchisers, Inc. (AFFI), appear to flesh out Sun Tzu's The Art of War, which includes this quote: “Know the enemy and know thyself; in a hundred battles you will never be in peril. When you are ignorant of the enemy but know yourself, your chances of winning or losing is equal. If ignorant both of your enemy and of yourself, you are certain in every battle to be in peril."

Know yourself. The PFA suggests asking yourself why you want to own a franchise. Even before asking this question, you have to check if you have the predisposition for business and whether franchising is the way to go. In the same way that not all Pinoys are predisposed to business or entrepreneurship, not all Pinoy Entrepreneurs are predisposed to franchising.

At its core, franchising is "an entrepreneurial alliance between two organizations, the franchisor and the franchisee." There may not be much leeway for the franchisee, as the franchise agreement and its accompanying documents usually have operating guidelines that the franchisee must follow and strictly comply with.

The AFFI exhorts the prospective franchisee to know his/he budget. Franchising goes beyond merely pursuing a hobby, as it entails serious financial investment and contractual commitments. The franchisee must not only cover overhead costs, but must also factor in franchise fees, royalties, advertisement fess, among others.

Know the franchisor. The owner of the franchise, also known as the franchisor, started and developed the business concept and the operating system. Supplies and consumables are usually centralized with the franchisor for uniformity and consistency of the product. Know and understand the business, the PFA says, and check the business experience and track record of the franchisor. The AFFI suggests that the research, which ideally includes site visits and interviews with existing franchisees, should cover the franchisee fee package, regulations to follow, and the expected time for the return on investment (ROI).

Know the market. AFFI exhorts the prospective franchisee to go with something he/she knows and likes. Still, the final choice should be influenced by the market research, on what business best suited to the target market. Some franchisors provide tips and information on the target market. Still, the prospective franchisee must conduct a separate market research, as suggested by the franchise associations themselves.

Incidentally, the AFFI is holding the The 10th Filipino Franchise Show, Franchising Expo & Business Opportunity 2011.