The Philippines slipped to fourth highest from first among the top franchising destinations in the Asia Pacific region, but remained number one in ASEAN with the industry expecting a strong rebound next year with 20 percent growth and 30 percent in 2022 before reaching a peak in 2025.
According to the EGS, a US-based franchising think tank that undertakes the annual Global Value Country Ranking, the Philippines still ranked among the best destinations for international franchises in the entire Asia Pacific region. It lost three points though from its number one spot in 2019 largely due to the pandemic impact. The survey involving 40 countries globally was conducted in May this year, the height of the harsh lockdown in the country.
Despite shedding three notches down, the Philippines still ranked number one in the ASEAN region tying up with Indonesia for the top spot. Globally, the Philippines and Indonesia also tied for the 14th slot, making them the only ASEAN countries in the top 15. The top five globally in this year’s survey are New Zealand, Ireland, Taiwan, USA, and Canada.
“We got an average of 2.1, with 1 as the highest, 2.5 as fair and 4 as the lowest. I say still because ever since we landed on their list, we have always been among those on top. In fact, among ASEAN nations, we were always on top,” revealed Richard Sanz, vice-chairman of the Philippine Franchise Association, in his welcome address at the Franchise Asia Philippines Virtual Conference 2020 on the topic “Pivoting towards the Golden Age of Franchising”.
The EGS ranking was based on a number of indicators, namely GDP growth, market size, IP protection, ease of entry, ease of starting a business, corruption index, political situation, economic factors, long term investment level risk, and projected COVID-19 recovery.
The Philippines ranked high in market size, IP protection, ease of entry, economic factors, long-term investment risk and even in the projected COVID-19 recovery.
Sanz, noted that EGS has been releasing these rankings for many years now and the Philippines wasn’t initially on their list. That ended when their CEO had the opportunity to attend our show and since then the Philippines became a permanent fixture in their list.
“The world believes that the Philippines will rise again. Shouldn’t we also share the same confidence?,” said Sanz.
The top favorite franchise destinations in the May 2020 study include New Zealand, Ireland, Taiwan, USA, Canada, Panama, Sweden, France, Japan, Spain, Uk, Australia, Germany, Indonesia, Philippines and Poland.
Samie Lim, PFA founder and chairman emeritus, also said in his inspirational speech that the domestic franchising industry is expected to rebound next year following a negative performance this year due to the pandemic.
Lim, considered as the father of franchising in the Philippines and globally, projected the industry to grow 20 percent in 2021 and much higher 30 percent growth in 2022. He expects the industry to peak in 2025.
“Historically, when the economy is good, franchising is good, when the economy is bad, franchising emerges even better,” he said noting this pandemic has seen international brands folding up stores. He cited Dunkin that closed some stores in the US only to open more in Europe.
Philippine pride Jollibee also closed some stores locally, but opened in new location in the US and Europe. Lim cited Jollibee’s P7 billion transformation fund as it opened its second strategic store in UK. Coffee Bean and Tea Leaf also opened 1,300 stores last month including new outlets in New York.
Potato Corner, another very successful Filipino brand, opened new franchises in Canada, three in Thailand, 2 in Myanmar and Cambodia.
“The current situation presents great opportunities at unprecedented scale to franchises,” he said.
Lim cited of various franchising concepts and opportunities that arise during this pandemic that Filipino entrepreneurs should watch out for. He said that franchises can easily bounce back because they have the skills, money, training and network to support their come back. The industry also generates 2 million jobs.
For 2022, the domestic industry targets 100 local brands to explore the international markets.
PFA President Sherill Quintana also noted that franchising contributes 7.8 percent to the country’s GDP.
The industry employs about 2 million and contributes up to 8 percent in direct and indirect taxes of total taxes collected by the government.