How to Start a Franchise Business in the Philippines

Owning a franchise business in the Philippines is fast becoming one of the most popular and most effective ways to gain financial freedom and stability. A lot of young Filipino entrepreneurs are getting into this type of business more and more each day. With the 90% success rate in such businesses, who wouldn’t be interested in starting one?

True enough, the franchising business is booming. It is developing at such an astonishing rate. The industry has only been in the Philippines for about 11 years but according to the Association of Filipino Franchisers, Inc. (AFFI), there are now about 900 franchises all over the country! In fact, the Philippines is now known as the “franchise hub of Asia”.

But do you know what franchising really is? And do you have any idea on how it works? Let’s take a closer look to see if this business model is right for you.

Franchising 101

Franchising is defined as a business model wherein the owner of the business (franchisor) gives the independent operator (franchisee) the right to distribute his products, implement his business techniques and use his brand and/or trademark in exchange for a fixed franchise fee and a portion of the gross income (royalty fee, advertising fee, etc.).

What makes this business model so attractive is that it takes all the guesswork out of the equation and provides the franchisee with the proven formula and the exact system for a successful business endeavor. So, if you’re going to be a franchisee, you just need to follow the franchise’s exact system and you’re on your way to guaranteed success. Now, that means cutting your risks significantly and protecting your hard-earned money!

If, and when, you decide to go into franchising, there are several things that you need to do to further increase your chances of success. With the wide variety of franchise opportunities available, you need to decide which one is right for you, learn how to choose a viable franchise, and then know the basic steps in getting one.

Choosing a Franchise

Contrary to what most people think, your budget should not be the main gauge in choosing a franchise business. Of course, it should be a part of your selection criteria but it shouldn’t be the primary deciding factor.

Instead, what you need to do is take a closer look at yourself. Know where your passion lies. Just follow your heart and it’s almost guaranteed that your franchise business will be a huge success!

Now that you have a concrete idea on what franchise business suits you best, it’s time for some serious research. Get to know the existing franchise opportunities in your chosen niche. Make a list and take a closer look at each one of them. Consider the brand, the business model and the support package being offered.

Choosing the brand. When you go into a franchise agreement, you are buying the name of your chosen product or service. You are banking on it to get an early lead over your competitors. So choose wisely.

Consider the business model. See if your chosen franchise business has a well established business system. Does it conduct its business effectively? If you see that the number of its franchise outlets is significantly increasing, then it means that business is good and it’s probably worth it!

Are there any available support? One good thing about franchise agreements is that the franchisor offers support and guidance to each of its individual franchises before and during operation. It’s really a part of the package – and a vital one, too! Quality control, continuous research and development, and trainings should also be included in the overall package.

You also need to check the legitimacy of the franchise. Head off to the DTI office nearest you and see if your chosen franchise is registered and not some “fly-by-night” operation. You also ask if the franchise is affiliated with any existing legitimate franchise groups such as the Association of Filipino Franchisers, Inc. (AFFI), Filipino International Franchise Association or the Philippine Franchise Association. Remember, it’s always better to be safe than sorry!

Steps in Getting a Franchise

Now that the research part is over, you are now a step closer to your dream of running your own franchise business. You will need to prepare the required documents (usually a Letter of Intent to Franchise, an Application Form, and a Site Location Proposal), have an interview with the franchisor, sign the franchise agreement, and pay the franchise fee.

Now you’re ready to start earning!

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