Franchising deemed as most successful biz system in Phl

CEBU, Philippines - Other than independent business start-ups, a consultancy firm considers franchising as today’s most successful business systems in the Philippines and in the world. RK Franchise Consultancy Inc. Founder Rudolf Kotik said that franchising plays a huge role in the economic sustainability of the country particularly in provincial developments.

He added that it helps such brands to expand quickly and simultaneously in several locations, thus contributing to its progress and productivity.

Having 25 franchisors among 443 nationwide, he also referred Cebu as a second hub next to Manila since it has always been the trading point in the Visayas region.

“Franchising makes it possible for provincial brands to be known nationwide and across the country. Without it, they would just stay here in Cebu and have a hard time expanding,” he said in an interview.

He further noted that if properly executed, a franchising network is a win-win situation and a place of mutual enrichment and profitability which is based on an interdependent relationship between the franchisor and the franchisee to use their business system, trademarks and corporate identity for a certain period of time.

However, he cited that most of the franchisees commit mistakes since they believe that they need not to work and just collect money while expecting too much from their franchisors.

“The more hands-on you are, the better you will be. Don’t expect too much from them because they will only train you and teach you. At the end of the day, you will only be the one to operate after. They won’t be there for you 24/7 and treat you like a baby,” he said.

Kotik said that 95% of the total number of franchises in the country is composed of unit franchisees that have a single outlet per brand while 4% goes to area franchisers in which the franchisor grants the franchisee the right to act as a franchisor within a specific area and 1% are master franchisees acting like mini-franchisors in other countries.

He added that the food cart is considered the strongest kind of a franchising network, accounting to 60% of the whole industry.

“Well, it goes with the supply and demand. At the end of the day, everybody gets everything. The non-food franchises get their fair share since there is enough for everybody. Although there is a tough competition, the market is still growing so there is a place for every franchise company,” he said.

Meanwhile, he also advised the public to be cautious against the presence of scammers in the franchising world.

He said that they can be easily identified if they are not a member of the country’s professional franchise associations particularly the Philippine Franchise Association, the Association of Filipino Franchisers, Inc., and Filipino international Franchise Association.

Moreover, the Department of Trade and Industry came out with a Bureau Order (10-24 Series of 2010) to assist Franchise Buyers not being victimized by unscrupulous franchise sellers.

“There are existing scammers but they won’t last long. They won’t invest big enough if they intend to stay. We try to avoid them by being vigilant. They are mostly on cart and kiosks businesses who promise things that are untrue and ask for the money before the contract. Nobody wants them to be on board,” Kotik stated during the seminar held at St. Patrick Square, Don Ramon Aboitiz Street, Cebu City last Saturday.

With a 95% success rate among franchisees as reported by PFA and P200,000 as the least capital, he further encouraged the public to venture into franchising as it provides less risk than independent start-up and a venue to expand someone’s (franchisor) brand through other people’s (franchisee) money. 

“Franchising is not a fad. If you have the money, the best way to invest it is through franchise. Nothing else is good. You franchise to grow and make your brand known. And that’s your best way to earn,” he said. (FREEMAN)