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3Fs and 3Ts Show Strongest Potential for Franchising

The Philippine Franchise Association (PFA) recently conducted a free seminar dubbed “Buying the Right Franchise”, zeroing in on the top franchise concepts with the strongest potential these days — the 3 Fs (food, fashion, fun and entertainment), and the 3 Ts (transport, telecom, and tourism).

PFA president Robert Trota, acknowledging the country’s abundant natural resources as a bountiful source of franchisable concepts, said, “There are so many readily available natural products that can be explored for franchising, especially for food concepts, such as fruits (natural, dried, shakes, juices, jams, halo halo), marine products (meal toppings, roll, sandwich, on stick), and coffee (brewed, instant, cybercafe).”

Fashion concepts, on the other hand, does not only mean retail apparel, but also beauty, health, and wellness, in the form of salons, gyms, and spas offering innovative personal services for weight loss, grooming, beauty treatments, massage, and even medical procedures such as cosmetic surgery and laser vision correction.

“The desire to keep fit and look good has spurred the growth of these franchises,” states Trota. “Despite being relatively young, beauty and fitness franchises are already a multimillion dollar industry worldwide.”

Transport concepts include car service and accessories, warehousing and delivery, while telecom concepts span business centers and it-enabled services.

“The tourism sector is also a mother lode of concepts, from hotels and restaurants, resorts and tours, shopping, and recreation,” Trota adds.

Area and Master Franchising

Aside from concept, timing is also a big factor in the success of a franchise business – and the best time is now, states Samie Lim, chairman emeritus of PFA. “Franchising tells a never-ending story of success,” cites Lim. “In fact, franchising grows even more during times of crisis than in regular time, as proven during the Great Depression and the Asian Financial Crisis.”

Lim also points out that aside from the thousands of concepts available for franchisees, multiple franchises are also another way to reap the benefits of franchising as a business model.

“The industry today is more open to multiple franchises, because this establishes a belief in franchising as a business strategy and stands as proof of good management,” notes Lim.

Aside from franchising different concepts, Lim enumerates two other ways to go into multiple franchising: area franchising and local master franchising. “A franchisee can opt to own or all the franchises or sub-franchise within a specific geographical territory,” Lim explains.

Although initial franchise fees are higher, area franchising can lead to greater growth than a traditional franchise. “Area franchisors are granted the right to open a predetermined number of outlets within a specific territory, and usually pay reduced franchise fees and royalties,” clarifies Lim. “Area sub-franchisors also keep a portion of the royalties individual franchisees pay over time.”

Another option is to acquire master franchise of foreign concepts, such as American, Asian, and European franchises. “Many foreign franchises are looking towards global expansion, offering us more opportunities to introduce successful franchises into the local market,” Lim notes.

“Franchising has changed the way people do business all over the world, and right here in the Philippines, the franchise hub of Asia, where over 45% of retail sales in shopping centers are from franchised enterprises,” concludes PFA Chairman Bing Limjoco. “In a country that is conducive to franchise growth, the global financial crisis only widens the market for prospective franchises and the prospects for enterprising Filipinos to operate successful businesses.”

PFA continuously seeks to provide opportunities for Filipino entrepreneurs, through corporate social responsibility programs such as the “Buying the Right Franchise” seminar which also showcased franchise companies that presented investment opportunities – packages from as low as P150,000 – including Aqua Best, Mongolian Quick Stop, Sam’s Everything on Stick, and 7-Eleven. Planters Bank also laid out options for financial assistance in acquiring a franchise, while PLDT SME presented innovations towards making business operations more efficient.

Other PFA activities include the 1st PFA Job Fair Expo, scheduled on the second quarter of the year, and the much-awaited annual franchise show slated on July 1-5, 2009, Franchise 2009, the 17th Philippine International Franchise Conference and Expo (PIFCE).

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