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Franchising – the Fastest Way to Your Own Business

Franchising as a business strategy is a relatively easier way than any other means to expand one’s business locally or abroad. The startup cost may be as minimal as PhP50,000 to as high as millions of pesos.

Samie Lim, president of consulting firm Francorp Philippines, Inc. at the Franchise Asia 2003 held in China.

“A franchise is for people who are not entrepreneurs — those don’t know how to start their own business,” said Samie Lim, president of consulting firm Francorp Philippines, Inc. “A franchise is for people who will follow rules because that is the formula. If you fool around with that formula, you will not succeed. A creative person will not be successful as a franchisee because he will fool around with the formula.”

Mr. Lim is also founder and chairman of the Philippine Franchise Association (PFA), one of the associations in the country composed of enterprises taking the lead in franchising.

Mr. Lim noted that franchising has caught the attention of Filipino entrepreneurs because this type of business poses less risk than most other businesses.

According to the US Department of Commerce’s National Trade Data Bank, the franchising industry in the Philippines grew 44% in 1997 and 25% in 1998 despite an unstable economic situation.

PFA data show that the Philippine franchise industry grew from only 50 franchises in the early 90s to over 500 in the year 2000. Franchise industry sales grew from PhP30 billion in 1997 to PhP63 billion in 1999.

“Since 1997-98, people say businesses went down. I think most of other businesses were affected…they stagnated after the Asian crisis. But franchising continued to grow and it is still growing,” Mr. Lim noted.

Ironically, he attributed the boom in franchising in recent years to the Asian financial crisis and the global economic slowdown that followed thereafter. He noted that “franchising is even better when the economy is bad” because when factories closed and people were laid off, they turn to entrepreneurship.

Recent fresh graduates who had difficultly finding jobs also opted to open up their own business and franchising was an easy way to get into a business. “A big proportion of our franchisees in the last three years are the graduates who opted to start their own biz rather than take a job,” Mr. Lim said.

Retirees also became interested in franchising.