As more Filipino brands go global, local franchisers started leveling-up homegrown concepts for established brands, emerging concepts, franchise brands from the regions and Philippine franchise brands which are already operating in international markets or are ready to go international.
Philippine Franchise Association chairman Emeritus Sammy Lim said Filipino global franchise brands are proof that the Philippines has the potentil to cultivate more world-class brands.
For example, among the Filipino brands that are now global is Max’s Group Inc. Max’s in 2016 had openings in Qatar, Yellow Cab in United Arab Emirates and soon in China. Plans are also underway to open five Pancake House restaurants in Qatar.
The same can be said for its other franchises like Goldilocks, which has more than a dozen stores in US and Canada; Bibingkinitan, which recently opened in Dubai; Potato Corner, which is present not only in Asian markets like Indonesia but is also doing exceptionally well in the US, the birthplace of French fries. Also gaining international foothold are Oryspa, which started franchising in 2011 but already has stores in Singapore; and Figaro, whose growing global footprint include the Middle East and Oceania; and many more.
The group is urging Philippine franchises to explore overseas expansion opportunities because of the benefits it will bring to the country’s export earnings.
Franchisers as SMEs
Most of the local franchises have started as micro, small and medium enterprises (MSMEs). MSMEs’ comprise about 99 percent of businesses in the Philippines.
“We have always been committed to do our part in empowering MSMEs,” said PFA president Alan Escalona.
“In fact, the reason why Philippine franchising continues to grow robustly is because of PFA’s programs to grow MSMEs via franchising.”
When PFA was founded in 1995, there were only about 50 franchises in the Philippines and most of these were foreign brands. But wanting to promote franchising as a tool for economic development and nation-building, PFA introduced franchising as a strategy for growth for MSMEs. Furthermore, it also positioned franchising as a more secure alternative to becoming an entrepreneur.
“That is why, there is now an estimated 1,500 franchises in the Philippines creating about 140,000 franchise outlets and employing more than a million Filipinos,” Escalona said.
Because of PFA’s thrust to promote franchising to MSMEs franchising became a powerful tool in creating thousands of businesses and millions of jobs, which is the mission of PFA.
A key partner is PFA’s efforts to promote franchising as an enabling agent for MSMEs and for region-based businesses is teh Trade Department.
In fact, PFA has long partnered with the Trade Department in holding capacity-building and opportunity-creating franchise seminars in the regions through various Negosyo Centers and the SME Roving Academy.
The Department is also a keypartner in the Association’s regional franchise shows, which are organized to bring the benefits of franchising – as a tool to create businesses and jobs – in the regional areas.
On a related note, PFA is firming up a partnership agreement with the Trade Department’s Bureau of Domestic Trade Promotion (BDTP) to help promote inclusive value chain by tapping on the beneficiaries of the said agency as potential suppliers for Philippine franchises.
“This is all part of PFA’s commitment to promote franchising as an agent for inclusive growth,” said Escalona.
Global franchises swarm into Philippine retail market
On the local front, as much as 150 new international brands are seeking entry into the very versatile Philippine consumer market..
Some of the international brands that are interested to come in are Lawry’s Steakhouse, an American food chain, several pet and pet grooming companies.
Lim said about Korean companies have also expressed interest to join the local competition with the intention to introduce a new take on Korean food.
“A few of them have expressed interest to set up a new dining experience known as Korean Plaza. We notice that they’ve been introducing new concepts starting with the telenovelas, to music and fashion. And now they’re seriously marketing Korean food,” he said.
Locally, the group noticed that very recently, there has been an increasing popularity of service franchising such as that of funeral homes, drug rehabilitation centers and drug testing.
At least two funeral homes have approached FPA for inquiries on franchising and several drug testing and drug rehabilitation centers.
With the prospect of new brands coming in, the group is positive revenues of the entire franchising sector will increase 15 percent in 2016 and continue the trend for a 20 percent revenue hike in 2017.
The group has had good years of combined inflows particularly in 2014 with $12 billion industry-wide revenues, as reported by about 1,500 to 2,000 brands.
“We intend to strengthen the role of franchising as a tool for economic development and nation-building by building the capacities of the Philippine franchising sector to face the challenges of hyper-competition. With Mindanao now in the loop, it will be easier for us to target 30 percent growth in the next two years. We’ve visited Davao and our next stop is Cagayan de Oro,” Lim said.
Tax reforms benefit retailers and franchisers
Micro and small entreprises are bound to benefit from two measures that seek to make tax processes easier to understand and complied with micro and small entrepreners.
FPA official Richard Sanz said the proposed measures will help small entreprenuers focus on their business more by eliminating repetitive and cumbersome processes.
“Each franchise is a micro or small entreprise. The tax reform act will greatly enhance the competitiveness of these micro and small industries if they can spend more time developing their own businesses,” he said.
The start-up act and the small business tax reform act filed by Senator Bam Aquino will ensure that micro and small businesses will get the boost and support tney need from the government.
In aid of trade and entreprenuership, Aquino had authored and delivered several bills that are now shaping the country’s trade and investment regime.
These include the Youth Entreprenuership and Financial Literacy Act, Microfinance NGOs Act, Credit Surety Fund Cooperative Act, Amendments to the Cabotage Policy, the Philippine Competition Act and the Go Negosyo Act.
Sanz stressed the importance of supporting micro and small enterprises since these sector make up the backbone of Philipline economy, comprising about 98 percent of domestic business.
PFA the biggest group of franchisers in the Phililpines, expects about 15 percent growth within the sector.
The group sees growth projections doubling in 2017 to as much as 30 percent, owing to a robust economy and a stable retail sector.
“Many Filipinos are getting educated with international brands. As the level of expectation grows, so does aspiration. Local brands are now forced to level up with international brands. It is nice to see competition doing its share to grow the economy,” he said.
The franchise sector contributes an average of $12 billion yearly to Philippine economy or about 5 percent of the country’s GDP.