By Bernie Cahiles-Magkilat
Once you have finally established your business and has grown it into a few more outlets, there is always the urge to expand it further. Expanding a business is capital draining, so one way to grow a business without shedding you own money is through franchising.
“It is very difficult for business owners to expand because of the demands on capital, day-to-day management and time. Franchising allows owners to expand using other people’s money, time, and personnel,” said Alegria “Bing” Limjoco, president of Francorp Philippines, the country’s authority in franchising.
According to Limjoco, who is also president of the Philippine Chamber of Commerce and Industry, the first requirement to starting a franchise business is to ensure that your business is doing well. You cannot franchise a losing enterprise.
“Franchising is replicating an existing business concept. If it is doing well, assess its franchisability then work with experienced consultants/developers. Franchising is an effective tool for expansion only if done correctly,” said Limjoco.
If it is not done correctly, it may cause more harm than good. Avoid do-it-yourself franchise development.
To test your franchisability, Limjoco urged interested entrepreneurs to take the franchisability test. This test will determine if the business is transferrable, affordable, profitable for franchisees, has a market, and has a proven record of success.
Once Francorp determines the potential and the franchisability of the business, it will send a proposal.
According to Limjoco, a franchise program takes between 6 to 8 months to complete if all the requirements are submitted on time. The fee depends if the business is small like a kiosk or cart of bigger and different format.
“Fees are different and definitely much lower than in the US or other countries, but definitely worth what they will get to grow a business,” said Limjoco.
Francorp will not ask for any other requirement from an applicant except to show evidence that the business for franchise is profitable. “Just show us that your business is profitable and will take care of the rest,” she adds.
Once the franchise system is completed, the next step is to assess potential franchisees.
In choosing potential franchisees, Limjoco said “Look for an applicant with adequate capital, willing to directly oversee the business and has no conflict of interest.”
Franchise has a proven high success rate of 90 percent versus startup businesses.
Take for instance, entrepreneur Tony Tancaktiong, who had 2 Magnolia stores that he converted to Jollibee. Tancaktiong coined Jollibee from two words, Jolly meaning always happy and Bee meaning hardworking.
According to Limjoco, Tancaktiong told the chairman of Francorp USA that he dreamed of becoming a McDonald’s. The rest is history.
For Joe Magsaysay, owner of Potato Corner, he was thinking small at first believing he was just a Mom & Pop business. He was content if his business would last for five years.
“I told him No. Your franchise must be renewable,” said Limjoco.
These are just a few of the many successful franchise businesses.