Having their own business is the ultimate dream for most Filipinos, but when confronted with the risk that goes along with it, too often this dream remains unrealized. Franchising could be an answer.
Not long ago, franchise investment packages in the Philippines worth at least P1 million were available to entrepreneurs. Today, franchise concepts are offered by successful small and medium-scale enterprises (SMEs) for below P50,000, such as water-refilling stations, beauty salons and food businesses in kiosks, carts and stalls. The latest data from the Philippine Franchising Association (PFA) show that there are close to 900 franchises operating in the country from just 50 in 1995.
Franchising has thus become a major force in the economy, and a good number of entrepreneurs have successfully grown their operations through franchising. Yet at the same time, you’ve probably noticed some franchise businesses that have disappeared from their locations overnight.
In a nut shell, Franchising is a business opportunity that allows the franchisee to start a business by legally using someone else’s (the franchisor’s) expertise, ideas, and processes.
The most obvious advantage you get out of a franchise is like getting a business in a box. There is no need to develop a business concept or build systems. You basically go into business without having to start from scratch. But on the other hand, if you have a true entrepreneurial spirit and you want to do things your own way and cannot resist the urge to make a few tweaks here and there – then you will probably be much happier on your own.
If we got your wondering whether or not franchising is right for you, here are some guidelines to help you decide if it is:
Assess why you want a franchise. Are you considering a franchise because it has always been part of your personal or business plans, or were you just offered an opportunity that seems too good to pass up? Knowing your motivations and interests will play a very important role in your decision making process.
Do a background check. Check out the track record and financials of the franchisor as well as the franchisees. Find out if the person or company is properly licensed and registered in appropriate government offices like DTI and SEC. Try to know how the market responds to their products then decide if the industry is attractive enough.
Know your finances. A franchise may require a substantial financial outlay. Establish the amount that you are willing to invest so you can narrow down your options. Investing in a business, whether it is franchise or not, has its own risks, so you have to make sure that you are comfortable about the amount of money that you will be putting at risk.
Look at the franchise agreement. The Franchise Agreement is the legal document which details the rights and obligations of the franchisor and the franchisee. Review the contract thoroughly and sign only if you are agreeable to all the terms stated in the contract.
Own your franchise and learn it by heart. It is not enough to know about the franchisor, you should also know the ins and outs of the business yourself. Even with pre-existing guidelines, always strive to continuously improve the business in ways that you can. Enhance your marketing skills and keep track of any market or industry trends to keep you one step ahead with your competitors.
Be it franchising or building your own startup, business growth will bring you into contact with several issues that might be outside your area of expertise. Rest assured, Philippine Business School is here to help you. We have expertly designed courses taught by industry experts to prepare you to take on that next step to grow your business to its full potential. Call PBS today and learn how you can avail a SCHOLARSHIP for your choice!
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