What makes business pandemic-proof?

Philippine Franchise Association (PFA) is the country’s premier franchising association. In this interview, some PFA officers share their thoughts on postpandemic franchising issues. They are: Chris Lim, chief executive officer (CEO) of LaZBoy; Sherill Quintana, CEO of Oryspa; Richard Sanz, CEO of Bibingkinitan; Joseph Tanbuntiong, president for Philippines of Jollibee; Glenn Yu, chair of Seaoil; Joey Garcia, CEO of Wendy’s; Alice Liu, chief revenue officer of Penshoppe; and Bing Limjoco, CEO of Francorp.

What kind of franchises appear to be pandemic-proof? What did they have or do that made them so?

Lim: Pharmacies and groceries did very well during the pandemic as they served the more basic needs for health, food and safety. Though this industry did indeed experience growth, what really made some of the key players pandemic-proof was not just because they were in the right industry, but how quickly they pivoted their business. The businesses that were able to adapt quickly by keeping their stores open despite lockdowns, those that were able to deliver and service their customers more quickly and conveniently through new channels and those who were able to adapt to their stock keeping units and services to the consumer needs were the truly pandemic-proof businesses. In the end, they were not just defined by what industry they were in but how they understood the changing customer needs first, and quickly adapted their business model and their resource to address those needs.

What are your realizations about the limitations of franchising during the pandemic and how do you propose to address this?

Quintana: The pandemic has its silver linings for the franchising sector, prompting pivots and adjustments to address some of the limitations brought about by the health crisis. Most of the franchises which were heavily dependent on their brick-and-mortar operations, specifically mall-based concepts, were badly hit. Those who had omnichannel presence were able to effectively cope. PFA held several programs during the pandemic to address best practices sharing, digitalization campaigns, and negotiations with landlords and government to avoid closures.

Moreover, franchises which were hampered with their mobility in particular areas of business operations were assisted in business-to-business and outbound missions overseas, allowing ready concepts to find possible partners in areas with fewer restrictions. We believe that crisis is a precursor for innovations, paving the way for organizations to survive, if not to thrive together.

What new franchising concepts have emerged during or after the pandemic?

Sanz: The years 2020 and 2021 were one of the worst for franchising in the Philippines. Being a mall-loving country, the government-mandated lockdowns resulting in the closure of malls were a challenge for franchising companies and brands which are mostly located inside the malls. However, despite that, some were able to thrive and even grow.

Here are some interesting pivots and startups that I observed during and after the pandemic:

1. Cloud kitchens: When I was going back and forth to Shanghai in 2018 and 2019, cloud kitchens were thriving. With hundreds of them all over the city, one could scroll endlessly on their delivery apps. The lockdowns of 2020 opened the gates for cloud kitchens in the Philippines, not only in Metro Manila but also across the country. It forced entrepreneurs to either pivot their brands or create something that would not have been feasible before. Examples are Kraver’s Canteen and Mad Eats, to name a few of the major cloud kitchen players in the country today. Interestingly, even after the pandemic, the consumer behavior of food deliveries still continues to thrive.

2. Outdoor cafes and restaurants/pickup hubs: When it was proven that COVID-19 was airborne, consumers suddenly had a strong preference to dine and hang out in establishments with sprawling, well-ventilated outdoor spaces. Management of restaurants, bars and coffee shops suddenly set up alfresco areas to entice diners to eat out again. Examples are: Pancake House, But First Coffee, Kurimi Milk Tea and Gang Gang Chicken Wings.

3. Mobile wellness services: Since service-oriented establishments were the most affected during the lockdowns, spas, salons and even optical shops took their services on wheels to reach even the remotest clients at the comfort of their home. Some examples are: Sunnies Optical, Beauty Concierge PH, Blink Studio PH, etc.

How did the pandemic affect the essence of a franchising contract?

Tanbuntiong: The purpose and principles embodied in the franchise agreement have aided the franchiser and franchisee in navigating the challenging business landscape during the pandemic. In the case of Jollibee Foods, our relationship with our franchisees has always been built on open communication, shared values, and mutual support and trust, which help foster cooperation and shared responsibility between and among us. The nature of our relationship with our franchisees enabled each party to comply with their respective commitments in the franchise agreement and allowed us to identify the appropriate support that we can extend to our franchisees and vice versa. While the pandemic greatly impacted businesses, it also presented an opportunity to strengthen our relationship with our franchisees and allowed us to successfully pivot toward achieving our shared interests and goals.

How has the pandemic influenced the qualities franchisers should look for in franchisees and vice versa?

Yu: At Seaoil, we pride ourselves on our ability to find opportunities amid difficult situations, and the pandemic allowed franchise applicants with this same quality to come through. They remained deliberate and committed to succeed in the fuel and lubes retail business with us.

Likewise, it became easier for prospecting franchisees to recognize competent and adaptive franchisers which continue to thrive and navigate the difficult path of doing business amid the ongoing pandemic. Also, for Seaoil, our franchise applicants value our readiness and capacity to provide support for our partners and employees during these challenging times, as well as our innovations that enable us to continue caring for our customers, such as the PriceLOCQ mobile app that is now protecting over 200,000 Filipino motorists from volatile fuel prices.

The pandemic brought out many changes in the consumer buying behavior. Which change surprised you most and what does this mean to the franchising business?

Garcia: During the pandemic, Wendy’s off premise—take out, delivery and drive thru—grew significantly. But this was not much of a surprise to us. We saw this coming even prior to the pandemic. It was already part of our long-term plan.

Which franchise, local or international, are you most impressed with in 2020 and 2021, and why?

Liu: Food concepts like Jollibee, Max’s and Potato Corner continue to break barriers for our country, bringing Filipino brands to the rest of the world. Being able to open more branches outside the home country needs solid operational excellence and a good franchise management team to support it. The strong brand recognition in other parts of the globe is also part of the brand DNA of Filipino food—always tasty and well seasoned.

What franchise concepts abroad do you wish someone will do in the Philippines?

Limjoco: We need a franchise concept that must inspire the next generation of great minds. I would like to see concepts that will help bright minds of the future feed their curiosity and explore the exciting world of computer science and will help enter the world of limitless possibilities. —CONTRIBUTED

Josiah Go is the chair and chief innovation strategist of Mansmith and Fielders Inc. PFA will have its annual conference from Sept. 20 to Sept. 22 at SMX Mall of Asia. Register at franchiseasiaph.com.