Similar to most Filipinos working a 9-to-5 job in the Makati Central Business District in the early 1990s, I had dreams of becoming an entrepreneur. I started my career in the private sector working as a trader. Traders had to constantly update their market positions, and sometimes, I would stay in the office until 4:00 am; and the result of those long, torturous hours? Php 6,500 every month. I survived on fast-food restaurants that were always packed. I thought back then that I had to start a franchise business in the Philippines to become an entrepreneur.
In the 1990s, many franchises from the United States arrived in Philippine shores. Most of them were fast food, and Subway, El Polo Loco, Auntie Anne’s Pretzels, and Kenny Rogers Roasters were the popular ones. There were also nonfood franchises, such as Roto-Rooter and Mail Boxes Etc.
However, the success of the franchising industry was best represented by fast food. Every fast-food concept enjoyed brisk business. Location didn’t seem to matter in this business. People simply naturally gravitated and patronized foreign franchises. I remember being in a queue for El Polo Loco at SM Mega Mall while thinking to myself, “I should get a franchise business in the Philippines!”
Eventually, I did get to own and operate a US chain of hamburger restaurants in the Philippines. In 1998, I opened the first “Flamers Burgers and Chicken” franchise on the third floor of Festival Supermall in Alabang.
The journey from a dreamer to a franchise owner took almost seven years. It took that long because I didn’t know how to go about it. I am sharing my experiences with you in the hope that I can help you reach your dream fast.
Here are my 10 steps on how to start a franchise business in the Philippines:
1. Attend Franchising Seminars
This step should always be your starting point. Seminars about franchising are a great way to get valuable information on the business. They present historical data in the franchising industry, including the latest statistics and figures.
The guest speakers are successful franchisees who have no reservations in sharing their experiences with their audience. At the end of the presentation, there will be an open forum where you can direct questions to any of the guest speakers. The seminars also provide an avenue to network. You can connect with prospective franchise holders, potential partners, and suppliers.
There are many franchising seminars held throughout the year. However, the best ones are conducted by the Philippine Franchise Association or PFA. PFA is a voluntary self-regulating organization that oversees the franchising industry. The majority, if not all, of the successful franchises in the Philippines are members of PFA.
2. Conduct Comprehensive Research
Armed with information from PFA seminars, you should now have an idea on how to approach your research on the specific industry from which you plan to get a franchise.
Comprehensive research should cover the following areas:
- Industry analysis. Research the level of competition, the market share of the top players, the average net profit margins, prospects for growth, and the latest trends and developments.
- Demand analysis. Collect data on demand patterns, changes in tastes, and preferences and consumer demographics.
- Financial analysis. Assess the viability of a franchise business by presenting projections on income, cash flow, and ROI.
Your research forms the basis of your business plan. If you are not well versed in research methodology, do not hesitate to hire the services of a person who can.
3. Incorporate Your Business
If your research yields results that support the feasibility of a franchised business, begin the process of incorporating your business.
At this point, even if you have not decided on any franchise, you should still establish the legal personality of your business. Franchisers are more receptive to corporations than to sole proprietorships.
Some franchisers may ask you to first submit corporate documents as proof of authenticity before opening their lines of communication.
4. Identify the Franchises to which You Are Interested
You should have solid bases in identifying the franchises you can invest in with the data from your research.
In my case, our research indicated that hamburgers and chicken are the consensus top favorites of Filipino fast-food consumers. We did exhaustive surveys in Makati, Quezon City, Muntinlupa, and Mandaluyong on fast-food preferences. The numbers revealed that Filipinos prefer grilled hamburgers and fried chicken over pan-fried burgers and roasted chicken.
The only grilled hamburger franchise at the time was Carl’s Jr., which also serves fried chicken.
I remember going through an issue of Entrepreneur that featured the “Top 50 Fast-Food Franchises” in the United States. In the top 20 was Flamers Burgers and Chicken, which a friend of mine from New York raved about a few months earlier.
I bought the issue, which had the contact details of Flamers Burgers.
Today, organizations such as the PFA have many franchises in their directory. Even banks that offer small business loans, such as Bank of the Philippine Islands, have franchises in their programs. They can connect you with the franchises to which you are interested.