Franchising is a proven and effective strategy to grow one’s business from one to many. Today’s successful brands serve as proof that franchising is the most flexible method for growth and has been tried and tested over time with a 90-percent success rate.
Francorp Philippines managing director Noel Siggaoat is a passionate advocate of franchising. Early on, he saw how significant an impact franchising can make on the economy because it multiplies businesses and creates thousands of jobs.
After receiving his MBA from the Carnegie Mellon University in Pennsylvania USA, Siggaoat worked in New York City as a financial system consultant. His job entailed helping the treasury departments of client banks understand their exposure to different types of risks—interest rate, currency exchange, counterparty, etc.—and manage their portfolios accordingly. He was enjoying life in the most exciting city in the world and was doing well financially.
“In spite of the financial rewards,” Siggaoat said, “I didn’t feel a strong sense of fulfillment helping out US and European banks who were already rich, successful financial institutions become even richer. There was an inner voice telling me that I should be using my skills to help out in my own country,” he said.
This prompted him to move back to the Philippines to find opportunities that would be beneficial to the country and be personally fulfilling at the same time. “When the opportunity at Francorp came along, I immediately saw its connection to my personal mission. Helping small and medium businesses grow through franchising, making entrepreneurs out of franchisees and employing lots of workers through franchising was an opportunity to contribute in my own small way to the Philippine economy,” he said.
Francorp Philippines is the Philippine master licensee of Francorp International, the global leader in franchise development and consulting.
Franchise businesses
Francorp has helped develop more than 3,000 franchise businesses and assisted more than 10,000 companies worldwide in their franchise expansion. To date, Francorp Philippines has helped over 600 different companies which created about 20,000 entrepreneur-franchisees and generated employment for about 400,000 individuals.
As part of the technology transfer, Siggaoat and other members of the Francorp Philippines office had to undergo months of training at Francorp headquarters in Chicago under founder Don Boroian, a well-respected pioneer in the field of franchising in the US.
Boroian is acknowledged as the head of the Francorp USA team that helped Jollibee Philippines when it was still a startup company in the 80s. Noel and the Francorp Philippines team were involved in the project teams of Francorp USA working on live client projects to learn firsthand about the company’s development philosophy and methodology.
Once the team returned to the Philippines, it took some time before the company’s services were accepted by the market. “Companies that ventured into franchising in the early days believed that developing a franchise was a simple endeavor that could be learned by reading an article or copying the franchise offering of another company,” Siggaoat said. “Part of the challenge when Francorp Philippines began was educating the market that yes, franchising is a simple concept but preparing a company for franchising requires a lot of planning, analysis, and transformation. There are many layers involved in a franchise program that require expertise in different fields—strategy, finance, legal, operations, marketing and sales.”
When the market understood the value of Francorp’s services and saw the success of its early clients, Philippine companies in food and retailing started to get on board.
The Generics Pharmacy was one of the business that benefited greatly from franchising. In the beginning, the look of the store and its operating system needed work. However, generics-only pharmacies were only starting to enter the market.
“Francorp took on TGP because it had a strong selling proposition: its selling prices were a quarter to half of their branded medicine counterparts, yet still maintained very good product margins,” Siggaoat said. When TGP eventually launched their franchise program a few months after working with Francorp, the once small pharmacy grew from one to 2,000 branches in a span of eight years.
Another early client was Bo’s Coffee. When it started working with Francorp, Bo’s Coffee was a startup Cebu player looking to expand outside of its base. At the time, there were other more established coffee brands in Metro Manila and foreign brands were beginning to stamp their dominance in the market. Bo’s successfully entered Manila and also expanded nationwide.
“Today, Bo’s Coffee is not only the premier homegrown coffee brand, it is holding its own against the international coffee brands that have entered the Philippines,” Siggaoat said. “Bo’s Coffee has also started its expansion abroad by opening in the Middle East”.
Global expansion
Francorp has also helped international brands adapt their franchise offering for the Philippines. Over the years, it has helped foreign brands like Chatime and Bonchon customize their franchise programs for the local market.
Other local businesses that started out small and have now grown after partnering with Francorp include Potato Corner, Citrus Zone, Farron Café, and Turks Shawarma. Even big businesses like Penshoppe, Bench, Max’s, Tokyo Tokyo and Goldilocks grew even bigger through franchising. Some have ventured abroad after gaining franchise experience locally.
Siggaoat is optimistic when it comes to the franchising industry in the Philippines. Outside of the USA, the Philippines has the highest number of certified franchise executives thanks to the pioneering efforts of the Philippine Franchise Association. Because of the high level of franchise expertise in our country, more Philippine franchise professionals will be in demand abroad.
While there are other methods of growing businesses, franchising has become the preferred method adopted by many local businesses. Siggaoat said that franchising, when done correctly, outperforms other methods because of its low cost and built-in incentive system for the franchisee – the one who owns and manages the business. He sees that more companies will adopt franchising as its go-to method of expansion because of its win-win outcome for both franchisor and franchisees.
Some successful franchised businesses will attract larger companies who will want to buy them out and include them in their portfolios. This is an ideal exit strategy for some entrepreneurs who look to bigger conglomerates to take their brands to an even higher plane.
“Because their business is growing on autopilot, thanks to franchising, many franchisors will also look into offering new products and services that may or may not be related to the original one. There’s also a growing demand in other countries for Philippine products and services – the demand comes from both OFWs living in those countries and from local residents,” he said.
Meanwhile, Siggaoat sees more innovative products and services going into franchising in the coming years, signifying a brighter future in the local franchise industry. “In the last few years, education franchises and medical services have started to expand through franchising. We will see more franchises in these fields as well as in business services, tourism, and technology-based products and services,” he said.
Advocacy
Through the years, franchising has manifested itself as a great equalizer since it can provide the same growth opportunities for start-ups and established players alike. “Franchising gives everyone a chance to reach hundreds, if not thousands, of units. You don’t need to have lots of capital to grow; as long as you have a product or service that customers will want to buy and consequently a business that people would want to be a part of, franchising can help grow your business,” Siggaoat said.
“At Francorp, we have played a direct role in helping hundreds of businesses grow from one to many. We have seen thousands of people achieve their dreams of being entrepreneurs by becoming franchisees. And these franchisees have employed hundreds of thousands of workers. We have gone far but we are not done. Doing good for the greatest number of people through franchising is an advocacy we will never tire of pursuing,” he said.