On Franchising * Franchising is a BOOMING business industry in the Philippines. * More than ten years ago, major food chains in the Philippines became the pioneers and the major players in the franchising industry. Eventually, this industry experienced rapid growth. * Micro-retail business (booth operation) is now the current trend. Tapping the food and service industries is a very good concept in franchising, especially since Filipinos just love to eat. * Master franchise system package is an opportunity to tap and penetrate regional markets, especially the Visayas and Mindanao region. * Franchising through networking is a very good tool to educate the Filipino people in growing a small business with unlimited income. The Difference Between Franchising and Licensing * In franchising, franchisees get the right to use the franchiser’s trademark; licensers may not allow the same thing. * Licensing firms usually provide only the product; franchisers provide full support to franchisees in terms of staff training, research and development, advertising and promotion. * However, franchisees follow strict standards and run their outlets by the book. * Licensees may sell both the licenser’s product and other competing brands. Should I buy a franchise or put up my own business? Many of those who started their own business and who are reaping their rewards through franchising have had to go through tough times before they became successful. Buying a franchise may be the best business decision you’ll ever make. When you invest in a franchise, you invest in a successful system. You minimize risk and gain a powerful ally who will help you succeed – the franchiser. Choosing the Right Franchise Match your personality with the business you desire. * What type of personality do you have? * What type of people are you comfortable dealing with? * What are your natural aptitudes, skills and talents? * How much time can you spend on the business you want? * Is there any particular business you want? * What are you looking for? Job satisfaction? Capital gain? Financial freedom? An investment (absentee owner)? Find out how much money you can invest without sacrificing your personal needs or touching your savings meant for emergencies. * Do you possess enough financial resources to enable you to start a business and survive while it is struggling to become established? * Are you able to raise sufficient finance? If you don’t have enough resources, try borrowing from relatives, friends, or cooperatives. Attend franchise shows when choosing the franchise you want. Factors to Consider Before Deciding to Buy a Franchise The Franchise Package * What does it include? * How much investment does it require? * What other expenses will you have to budget for? The Location Study * Are you convinced that the site you are eyeing will be good for the franchise business you want? * Will the franchiser help you in the site study? * How far is the site from your house? * Will traveling take too much of your time? The Projected Sales * After the site study, do you think the franchise will give you a return on your investment in one or two years out of a franchise term of five years? Remember that a franchiser will never guarantee that the projected sales will happen. The Results of Your Talks with Franchisees * Were you satisfied after meeting some of them? * Can you now decide if you want to buy the franchise? The Franchise Agreement * Have you read it thoroughly? * Have you discussed the various points with family members or partners? * Have you hired a lawyer to clarify and interpret the sections that are not clear to you? * Have you gone over the agreement with the franchiser? * Did you know that you should not sign on the dotted line without knowing what you’re getting into? Have you met the owners of the company? * Franchising entails a relationship, so it’s important to meet the owners before you sign the contract. * This will allow you to establish your partnership and voice your concerns if you have any. Do you have your family’s support? * Getting your family behind you will give you more confidence in running the business. They will then be around to help when you need them. When is a franchise market saturated? Each franchiser would have identified his niche before preparing his offering to the public. He/She also would have made a decision on the number of franchise and company branches to put up and the areas to serve to avoid saturation. What aspects of the Franchise Agreement are usually negotiable? Few if ever. The Franchise Agreement is a comprehensive form of contract. It details the business relationship between the franchiser and franchisee, and the terms and conditions of the contract. It’s up to you to accept or turn it down.