The Philippine franchise industry has an aggregate value of P605 billion, contributing 7.8 percent to the country’s gross domestic product, boosting the industry’s goal to land in the five largest franchise markets globally in five years amid strong interest among enterprises to grow via franchising.
Trade and Industry Secretary Alfredo E. Pascual at the Franchise Asia Conference cited the industry’s data which showed that food makes up almost half (43%) of the estimated 1,800 franchise brands in the Philippines. Food franchises have an aggregate value of P538 billion or $10.8 billion.
On one hand, the non-food service and retail subsectors each serve close to one third of franchise brands in the country with service accounts for 29 percent of franchise brands in the Philippines, and retail, for 28 percent.
The contribution value of retail and service franchises amounts to P67 billion or $1.34 billion per category. Non-food franchising trends cover health and beauty products, affordable indulgences, clinics, laundry services, homeschooling, and microfinance among others.
Together, the entire Philippine franchising industry has an aggregate value of P605 billion and employs two million direct and indirect jobs.
With that, Philippine Franchise Association (PFA) President Chris Lim said the industry aims to be in the top five largest franchising markets globally.
“In our goal, to continue to grow, strengthen and advocate for the sector, we will accelerate and exceed our growth so that we become top five in the world,” said Lim, adding the industry will aspire to be in the top five in five years or by 2027.
Aside from the Philippines, the current top eight franchising global markets include South Korea, US, India, Taiwan, Brazil, and France. In Asia, however, the Philippines is considered the regional franchising hub which PFA would like to cement as such.
Pascual also supported the association’s target. “With a growing middle class, our country is considered one of the largest franchise markets in the Southeast Asian region. Eating at a popular establishment or owning branded items signals societal status in one of Asia's most social media savvy populations,” said Pascual.
The DTI chief also expressed optimism for the sector noting that pandemic or not, the Philippine food service sector is growing as demand for convenience grows.
He also noted that the liberalized retail trade landscape and to some extent, the reduction of import duties have contributed to the growth of the food service sector.
In Philippine manufacturing, food accounts for nearly half of its total output, growing at an average annual rate of 8 to 10 percent per annum. This excellent growth prospect stems from the country's resilient economy and strong consumer base.
Almost all, or about 90 percent, of the food and beverage processing industry's output, is consumed domestically. The growing consumption, in turn, contributes to the rapid expansion of the processed F&B subsector. This trend presents excellent opportunities for raw material and high-value ingredient producers.
“As quality and efficiency improve, such producers can exploit export opportunities due to the country's strategic location and free trade agreements with other countries,” he said.
Many franchisees are micro, small, and medium enterprises (MSMEs). DTI is directing its efforts to support MSMEs post-Covid-19 by helping them access capital, access technology, and access to marketing resources.
Through SB Corporation, DTI has been extending financial assistance to MSMEs to provide them access to capital. The micro lending attached to the DTI assists MSMEs in their debt obligation payment, repurposing existing business capital, and acquiring new technologies and systems.
Lim said that PFA’s mission is to “grow, strengthen an advocate” for the local franchising industry. As an industry champion, he said, PFA will make sure the industry will grow from strength to strength by good stewardship and by building on past achievements. “It's about nurturing and developing the future leaders,” he said.
As such, Lim was confident of a more vibrant Franchise Asia Expo on Oct. 14-16 with over 270 booths.