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Franchising Stirs Rise of SMEs Opportunities

Franchising is fast evolving into a means for the country’s small and medium enterprises, or SMEs, to get into high level of operating efficiencies and become globally competitive.

This was noted by the Philippine Franchise Association in pointing out the expansion of many of the country’s homegrown franchises into other parts of the world.

PFA chairman emeritus Samie Lim said franchising had enabled, not only SMEs, but also entrepreneurs to adopt modern management and operating systems through tested business formats with established brand names, goodwill, and customer acceptance.

“The unfamiliarity of many SMEs or their inability to cope with the high-productivity requirements of modern business is somehow being addressed by franchising, whose enterprises are well-equipped with technology and best practices,” Lim said.

“In effect, the franchising industry is fast spreading a culture of competence in the commercial sector through its prominent visibility at the consumer front,” Lim explained.

Pointing to the success of Jollibee locally and abroad, Lim cited other franchises doing great overseas like Chowking in the United Arab Emirates, Hotshots Flamegrilled Burgers in Indonesia, and Bench in Daly City, California, among others.

Another example is Goldilocks, which is reportedly eyeing expansion into Singapore, Hong Kong and Thailand in the next two years. Last year, Goldilocks had sales of $30 million in the US and Canada. Goldilocks’ expansion began in 1991 with its aggressive franchise program.

Nevertheless, the franchise business now comes in a very wide band of concepts and formats – from big to small operations with varying levels of capitalization and types of products and services – all are almost guaranteed of success because of proven track record of stability and profitability.

Manila Standard – July 2, 2006