Philippine Franchising Industry - Fourth In The World - by lovephileo
Franchising has been in the Philippines for 94 years and it has made good progress helping to improve the productivity of a small and medium enterprises through the use of standards, modern technology and better management systems. 2008 is a banner year for RP franchising and it has become a national power in the economy of the country same as in many nations.
The first survey of franchising in the Philippines done in 1995 revealed that there were a 50 operating foreign franchisor at that time. The success rate of foreign franchisees is 97%. In 1996, there were 94 companies using franchising as their route to expansion and the number has substantially increased to 481 in 2003. The success rate is a good 90%. On the part of franchisees, a 65% success rate among small and medium enterprises.
Franchising in the country evolved from the US Franchise System. The increasing number of homegrown companies using franchising in their expansion can be attributed to the presence and increasing number of foreign franchisor. Philippine Franchise Association and the University of Asia and the Pacific (UA&P) showed that the industry contributed P107 billion to the economy between 2005 and 2007 or about 5% of total gross domestic product and employed close to 1 million workers. According to the PFA, the Philippine is now the fourth in the world and the leader in Asian in terms of the number pf franchise concepts and franchise outlets. The sector has grown from only 50 franchises in the early '90s to almost 1,000 today.
RP has a large young consumer population and a high-end global tourism market seen driving further growth in the franchising industry despite skyrocketing prices of food and fuel plus a booming property sector that provides the franchising industry the commercial spaces and new urban growth centers for expansion.
RP franchises giving earnings and jobs to both entrepreneurs and hundreds of thousands of people in the workforce - a job generator as well as promoter of economic dispersal. The study also revealed that some 200,000 franchise stores all over the country employs, on the average, four to five employees per outlet.
The homegrown brand jollibee leads the food franchising industry, being consistently among the top ten corporation in the country. Its closest competitor is the foreign brand, McDonald's, who was forced to modify itrs menu to adapt to local palate. Other succesful foreign market players are: KFC, Starbucks, Burger King, Kenny Rogers, Pizza Hut, Shakeys, Mister Donut, Dunkin Donut, Wendys and Fridays. Some of the thriving local food franchises are Chowking, Greewich Pizza, Go Nuts Donuts, Tropical Hut, Goto King, Lot's a Pizza, Padiz Point and Red Ribbon. There are also 30 Filipino franchise companies are extending overseas, especially in the Asean region, US, Canada, the Middle East, China, India and UK.
Philippines has developed about 900 franchise concepts within the past 10 years, which is a phenomenal growth but still just a third of the 3,000 in the US, with 350 new ones sprouting every year.
The $15 billion Manila Bay Tourism Center is the next franchise destination. The 60 hectare entertainment complex anchored on a casino would be home to various shops and services that can accomodate franchises. The country's seat of commerse and industry, Metro Manila is home to a great number of local and foreign franchises vying for strategic places of business and premiere locations that suits their preference. The biggest city in the Visayan region, Cebu is a potential market with its approximately 8 million population. Developed cities often visited by tourists like Davao, Baguio, Cagayan De Oro, Naga, Angeles and Olongapo are viable business locations for franchise as well.
The Philippines is a key location for succesful businesses to branch out and achieve national market presence. Filipinos are already competing globally, adding that Filipino food, clothing and services franchises are on a par with international brands. However, the biggest threat faced by franchisors is that 75% of them fail within a 10-year period. This means that not every concept is franchisable or maybe because there are certain keys that they need to learn in the Philippine franchising context such as innovation rather than invention.
Indeed, the industry is a key driver of the country's economic growth. The truth, if sales made by franchises were translated into a national product, the industry would rank among the top 10 largest economies in the world.