12 Strategies in Franchising Chapter 1 & 2
12 Strategies in Franchising Chapter 1 & 2
12 Strategies in Franchising Chapter 1 & 2
This book is dedicated to all the Micro, Small, and Medium Enterprises
(MSMEs) in the Philippines who have taken the path of franchising their
businesses to uplift their quality of life and to share the benefits of growth
to others in their community. The circle of progress is being enlarged
owing to their ground-breaking spirit and their drive to make their
products and services truly competitive and world-class.
All of the brands featured in this book were taken from the roster of voice of the Philippine franchise industry, recognized by the World
franchise success stories of Philippine-owned brands. At different stages Franchise Council (WFC) and the Asia Pacific Franchise Confederation
of their development, the hands of business owners were held by capable (APFC).
franchise experts, giving them the appropriate guidance towards their
path to growth. The Certified Franchise Executive Program (CFE) is a career development
program offered by the Institute of Certified Franchise Executives (ICFE)
Since it started creating a buzz in 1996 and steered by the pioneering of the International Franchise Association (IFA) Education Foundation. It
spirit of the three pillars - Samson “Samie” Lim, Ma. Alegria “Bing” Sibal - offers franchise professionals the opportunity to learn, grow professionally,
Limjoco, and Manuel “Manny” S. Siggaoat, who were already big Filipino and reach a recognized standard of excellence in the franchise community.
retailers during that period - franchising in the Philippines was never the While the program was already implemented in the country as early
same. Returning from the United States and learning the ropes from the as 2001, it was only in 2002 when the Philippine Franchise Association
guru of American franchising, Donald Boroian, the three visionaries got (PFA), then spearheaded by Samie Lim and Ma. Alegria Limjoco, formally
back to brass tacks and did the groundwork in the Philippines to promote affiliated with the US-based ICFE to allow PFA to conduct the said
the use of the franchising model for business expansion. program here in the country at discounted rates. By professionalizing the
country’s franchise sector, the Philippines’ position as the Franchise Hub
They gave professional advice to “franchiseable” business owners who of Asia was strengthened.
were at the crossroads - struggling to find out how they can expand
faster; brand owners who were exploring whether or not their business Over the years, the CFE Program conducted in the Philippines has had
meets the franchiseability criteria; and for those who needed an honest enrollees from different countries including Thailand, Malaysia, Indonesia,
to goodness franchise program to grow exponentially, from one to one Hong Kong, and Singapore. The number of elite Certified Franchise
hundred and eventually to a thousand. Executives (CFEs) continues to grow.
The landscape of local entrepreneurship has forever changed with the From “the Sick Man of Asia” to “Asia’s Rising Star”, the Philippines is in
popularity of franchising. And it helped that the Philippines was able a sweet spot owing to over a hundred million strong population whose
to recruit top and key franchisors to establish the Philippine Franchise young people have a median age of 24, are educated, English-speaking,
Association (PFA). This brainchild of Lim, Limjoco, Siggaoat and other and with great consumer power because of higher incomes endowed
forward-looking entrepreneurs, has now evolved to become the influential by their employment in the huge Business Process Outsourcing (BPO)
industry as well as the remittances of their relatives who comprise the The government promoted franchising further by focusing on assistance to
millions of Overseas Filipino Workers (OFWs) spread out all over the the infrastructure and financial needs of micro-small-medium enterprises
globe, the most sought after by employers in the Middle East, Europe, (MSMEs) as this is the sector with a great potential for local employment
Asia, and North America. and entrepreneurship. In order to achieve at least a nationwide network
of at least 100 units, incubation centers at the local level were set up to
For the last five years, the Philippine tourism industry has posted positive promote regional franchise concepts and expand these nationwide. The
trends with international inbound arrivals up by an average of 5.6 million goal is to make these small franchises affordable – within the Php 100,000
tourist arrivals. Most visitors are from South Korea, China, and the United to Php 1 million brackets.
States.
For international expansion, the goal is to make franchise businesses one
Also, the Philippine Statistics Authority (PSA) 2018 report revealed of the top Philippine exports where Filipino entrepreneurs are envisioned
an increase in domestic tourism expenditure from 22% of household to be the foremost master franchise owners of Filipino and Foreign brands
expenditure last year to 24.9% at present , indicating that tourism in the ASEAN region. This can truly make the Philippines the franchise
continues to be driven by domestic travellers who now spend a bigger hub in the Asia Pacific region. The future looks promising because many
chunk of their income to travelling erstwhile mom & pop Filipino brands have already proven to be global
names – Jollibee, Max’s, Goldilocks, Pancake House, Potato Corner,
In the Philippines, the steadily increasing growth of franchises annually Penshoppe, Bench, among others.
has resulted to the country’s attractiveness as a franchise hub. As the
preferred investment option, franchising contributes to the economy. To chronicle these success stories is one way of bequeathing to the next
With more than 2,000 franchise brands generating more than a hundred generation of entrepreneurs franchising lessons which they can use in
eighty thousand franchise outlets, the Philippines has grown to become mapping out the way they want their 21st century businesses to mature
the regional franchising leader in Southeast Asia. or in charting ways for them to benefit from franchising’s multiplier effect
while using other like-minded investors’ money, time, and people.
Franchising is indeed an enabler and multiplier, serving clients in various
stages of their growth, and helping generate millions of jobs. Francorp “Of the 27 Francorp offices internationally
Philippines has assisted in planting Filipino franchise brands in every
serving 45 countries, Francorp Philippines is the
ASEAN country and in every continent around the world except Antarctica.
foremost, most exemplary, and leading edge
Through franchising, businesses are transformed over the years. Some of
them were just mom & pop SMEs or hole-in-the-wall young start-ups before franchise development firm.”
they embraced franchising. Now, as professionally-run organizations, they Don Boroian, Chairman, Francorp International
have grown beyond all expectations.
CONTENTS 82 PART 2:
AS YOU GROW
8 INTRODUCTION 84 STRATEGY NO. 8
Identify Your Continuing Value and Build On It
10 PART 1:
STARTING OUT 88 Waffle Time
Oryspa
90
12 STRATEGY NO. 1 94
SumoSam
Be Guided by the Franchiseability Criteria
98 STRATEGY NO. 9
18 STRATEGY NO. 2 Invest in Strengthening the Franchisor-Franchisee Relationship
Keep It Simple
100
Jollibee
20 Waffle Time 104 PR Gaz
24 Potato Corner
28
Turks 108 STRATEGY NO.10
Continue Investing In Your Brand –Rebrand! Renovate!
30 STRATEGY NO. 3
Think Win Win Win 112 Mont Albo
Goldilocks
116
Golden
32 Cowrie/Hukad 118
Flawless
36 Vibes Massage
I have always believed that the Philippines has the potential to be a As we cross the threshold of our 20th year, I would like to see Francorp
great nation. More so that I came from a generation when the Philippines take a more active role in sharing our best practices with the franchise
was still considered an envy among its Asian peers. But after decades sectors of the various ASEAN countries – particularly the Cambodia, Laos,
of periodic economic mismanagement and political unpredictability, our Myanmar, and Vietnam (CLMV) region. As a beneficiary of how franchising
country plunged to becoming the sick man of Asia – an unfortunate and has become a tool for our economic development and nation-building,
undeserved description considering the wealth of natural and human it is but fitting that the Philippines – with Francorp Philippines as a prime
resources our country has. mover – also extend a helping hand to our ASEAN neighbors and, thus,
contribute in the strengthening of the mission to speed up the ASEAN
That is why I introduced franchising in the Philippines believing that it can Economic Integration so that we can achieve an integrated, peaceful, and
be a tool to build a strong middle class and to bring back our country to stable economic community with shared prosperity for all.
its former glory. With its intrinsic capacity to create nth’s of thousands of
MSME’s and generate millions of jobs, I was confident that franchising can After all, greatness truly lies in our capacity and willingness to be of service
help make the Philippines a nation of opportunities. But I also believed to others.
that the franchising sector can only achieve its purpose if it was built on
a foundation of excellence and world-class standards. It is for this reason Samie Lim, CFE
that I, together with Bing Limjoco and Manny Siggaoat, brought the Chairman
world’s top franchise consulting company, Francorp, to the country in
1997.
STARTING
OUT
Franchising - because it follows a proven system - eliminates the trial-
and-error phase associated with start-ups. This is also the reason why
franchising boasts of a success rate of over 90%. However, franchising is
not for every businessman. At the outset, there are many ways to assess
whether or not one is ready to franchise his own business.
Continuing Value – Can your
STRATEGY NO.1 Franchising is about replication,
franchisees do without you in the
and it is critical that there is a
strong business model that can long run or will they continue to
KEEP IT
SIMPLE
When starting out, an uncomplicated concept is the reason why some In the service industry, this can be done through clustering of services that
brands were able to stamp their DNA on consumers’ minds and buying are related, while outsourcing the rest. This can be seen in the car repair
habits early on. This is one advice which several of the Philippines’ most industry where car repairs are done in store, but auto detailing, though
well-known and successful brands counted on, later becoming a vital offered in store, are outsourced to other experts.
component in the triumph that they have achieved today.
Whatever industry you are in, it is critical that you look at the part of
Franchising relies on duplicating products and systems consistently across your business that can benefit from scaling up through franchising,
hundreds or thousands of stores day in and day out. If you are a restaurant identify which parts of your business can easily be taught to others, and
with hundreds of dishes on the menu, ensuring consistency and quality simplify the business to key products or services and focus on that when
across a large franchise network becomes exponentially harder. Or, if you franchising.
were a business that offers multiple services that do not complement one
another, ensuring that your team delivers the same quality of service day
in and day out will be a very big task.
In the food business, this can be done by focusing on offering key dishes,
instead of having an extremely complex menu. Or, simplify the menu
and steps by using similar ingredients or cooking techniques. In the retail
business, simplification comes from focusing on SKUs that drive business
and profit, while continually taking away non-moving SKUs.
18 12 STRATEGIES OF FRANCHISING 19
5
COMMON
As a small province-grown business
CASE STUDIES
that started in 1998, Waffle Time’s
MISTAKES TO
(WT) first official outlet opened at AVOID WHEN
In the food industry, the following names have confirmed that with one
main product, but in various flavors, and with substantial investment on the Atrium Mall in Gen. Luna St., FRANCHISING
the achievement of quality in all aspects, a mom & pop store can go Iloilo City, a progressive capital in YOUR BUSINESS
national, even global. the Visayas. Four years after their by Sam Christopher T. Lim, CFE
debut, WT got quickly recognized,
enough to confidently spread their
WAFFLE TIME Franchising can accelerate the growth
wings in Metro Manila, though of your business, but it is like building a
Accessible Food on the Go: One Main Item Transcended the house, you need to build it on a stable
there were four other waffle
Fad Franchise Business foundation. So here are a few common
concepts in the market. It was clear mistakes you should avoid when
to them that franchising was the franchising your business to make sure
you build on a solid base.
way to establish a foothold on the
market; another was to consistently MISTAKE NO. 1
I don’t need to write down my
develop new flavors on a monthly process, it’s so simple I can just teach
the franchisee.
basis.
A properly developed operations manual
is crucial to the success of a franchise. It
Waffle Time (WT) is a conspicuous becomes the basis of training, ensures
booth in malls, rail stations, and consistent operations as well as serves
as an ongoing guide for franchisees
sites with high foot traffic. Its one in both operating and managing the
main product is the tasty waffle in business. When developed the right way,
the process of developing the manual
different varieties that are filling can bring out new ideas of improving
to the stomach and easy on the and optimizing your system. In addition,
it serves as a legal agreement between
pocket. It has withstood the test of you and the franchisee, ensuring strict
time because Waffle Time provides compliance to the system you’ve worked
hard to develop.
Filipinos a quick 5 - minute snack
to fit their busy schedule. A key MISTAKE NO. 2
My competitor offers this franchise fee
success factor was locating stores and royalty, so I will just do the same.
in Light Rail Transit (LRT) and
Every business and every industry is
Metro Rail Transit (MRT) stations. different. The most successful franchises
Accessibility to customers was like Jollibee, The Generics Pharmacy and
Bench and many more spent months
important, the changing lifestyle to review the financials of the business
necessitated the need for staple and set a franchise fee and royalty that
will make both franchisor and franchisee
happy. This is important to ensure that a
win-win partnership is established.
Magsaysay was president since 2001 when Bermejo passed on. In 2017,
the new holding company that owned and operated Potato Corner
attributed success to their focus on one main product, target market, and
system of operations. For the past 25 years, Potato Corner focused on
selling one main product: flavored French fries. But that did not mean
it was not innovating, because it continually built on its main product
by introducing new flavor variants. While the cheese, barbecue, and
sour cream flavors remained crowd favorites, Potato Corner has since
introduced new ones such as white cheddar, sweet corn, wacky wasabi,
and garlic parmesan, just to name a few. It has also since introduced other
fried potato products, such as potato chips, hash browns, mojos, and
even loopy fries. And, as can be seen in its branding elements and the
presence of a mascot named “Spudster,” Potato Corner is focused on
appealing to a younger market: children. “If you want your brand to stick,
then you should market it to children. Build the relationship while the
market is still young because, once you get them, they are yours for life,”
shares Magsaysay. Some of Potato Corner’s franchisees in the Philippines,
United States, and even Indonesia started out as young customers in the
It is this focus that enabled Potato Corner to weather out the different
storms that came its way. When the Asian financial crisis hit in 1998, Potato
Corner’s operations were inevitably affected, resulting to closing down its
number of stores from 120 to 40. In 2001, when the market eventually
recovered, Magsaysay then set out to streamline systems and strengthen
supply chains for the company. However, there was a time when the
company lost focus. In a bid to diversify, Potato Corner developed other
concepts such as The Spud Diner by Potato Corner. Launched in 2010, it
was a restaurant concept with a selection of potato-inspired fare, such as
baked potato, potato lasagna, and shepherd’s pie, among others.
However, the concept was not received well by the Philippine market,
and it eventually sold and closed its shops to cut losses. It was then that
Magsaysay realized that Potato Corner’s strength truly lies in its simplicity
and focus on flavoured French fries and the kiosk-format franchising
model.
With growing demand for doner and kebab meals, Mr. Zenarosa expanded
his operations. However, his first challenge was site-related because the
mall where he was located began to disallow grilling facilities inside the
food court. Instead of being disheartened, he used this challenge to
simplify the system and find a smoke-free alternative that would allow
them to sell ready-to-serve pita doners, without sacrificing food quality
and taste.
Turks redesigned the carts to simplify the operations and eliminate the
grilling facilities. In order to maintain the quality, the products were pre-
packaged and re-heated in the store. From one store, Turks branched out
to more than 40 outlets in Metro Manila and nearby provinces, with the
beef doner still being the bestseller everywhere. In 2015, Turks launched
its franchise program where the erstwhile humble food cart grew to over
400 stores in just two years. It continues to build on its success by getting
top celebrity endorser backed with TV Ads and billboards, a bold move
for a relatively new food cart player. With massive scale and a simplified
process, Turks is now a brand to reckon with in the food industry, owing
to their delicious doners (shawarma), strong marketing and a profitable
franchise business.