The apparent bold move to face keen competition without overseas backing was forced upon the franchises because of the high cost of raw materials being passed to them by a multinational company compared to the 30-40 percent lower rate of the same material sold to other Asian countries. The Photo Trade Association of the Philippines told The STAR. Reportedly over 200 photo developing franchises were feeling the pinch of the unstable economy and aggressive competition because of the 40 percent higher cost of raw materials and were finding it hard to turn up more profits in order to recover their investments.
PTAP cited the following factors that threaten the permanence of their member’s photo labs: High cost of materials – the same raw materials being sold in Thailand, Canada, US and other countries is 30 to 40 percent cheaper than those being supplied in the Philippines; Infringement on proximity agreement – granting of franchise to operate on a particular location without regard of existing franchisees nearby. As such the franchise cannot achieve maximum output possible from its location as prescribed in the frachise agreement given the existing conditions when the particular local market is not only served by regular competition but by unexpected allies as well; and compromising the provision in the agreement enjoining franchisees to keep confidential the information and training of one’s respective systems to protect its distinctiveness and value.