More SMEs want to try franchising

MANILA, Philippines - Independent small and medium enterprises (SMEs) are challenged by the fast-growing franchising sector as more Filipinos opt to adopt the business model, according to the head of a company that organizes trade expositions.

“Franchising is now flourishing. If people have money, they go into franchising and once they are in, they usually go into food (business) said Mildred Caballero, president of Tradecon in a press briefing late Friday for the promotion of the 4th Philippine Small Medium Enterprises Expo that will be held from May 11-13 at the Philippine International Convention Center in Pasay City.

Caballero said, however, that despite the aggressive growth of franchising in the Philippines, there are still bright spots in the independent SME sector such as in direct-selling, food processing, and agri-business.

“And this is a challenge right now, all the more why we want to promote small businesses. Everybody’s going into franchising. Because when you go into business, you have to identify where your passion is. We want to teach people that because at the end of the day, if you are not passionate about your business, you will leave it,” she said.

Data from the franchising industry shows that franchising activities in the Philippines are now are valued at $11 billion as of last year. This figure is expected to expand 20 percent this year as more Filipinos adopt the business model and bring in foreign concept brands.

More franchise companies are also planning to list in the stock exchange.

SMEs as a whole comprise more than 90 percent of the enterprises in the Philippines and employs around 60 percent of the country’s workforce. Small enterprises are businesses that have an asset base of P3 million to P5 million and a workforce of 10 to 9. Medium enterprises have an asset base of P15 million to P100 million and a workforce of 100 to 199 employees. 

Most workers in the rural areas are employed by SMEs.

Some 200 exhibitors are expected to participate in the three-day trade expo which aims to increase the exposure of SME products and expand the distribution channels of their products. Participating businesses are those in the direct selling, agriculture, as well as hotel and restaurant management.