Franchising industry seen growing 70% in 2012

THE LOCAL franchising industry is expected to grow by as much as 70 percent in 2012, with more international brands seen entering the country in the latter part of this year.

In an interview Friday, Philippine Franchise Association chair emeritus and World Franchise Council chair Samie Lim said this was the best time to invest in a franchise.

“This year, we’ll still see a lot of homegrown concepts, but there will be a spike in foreign franchises coming in. We see franchise growth from 2011-2012 to reach around 70 percent, making it one of the fastest growing industries in the country,” he told reporters.

He related that among the international firms coming to the country in the next few months was high-end recliner and sofa brand La-Z-Boy. Some Indonesian brands would also be entering the Philippine market.

In a separate interview, PFA president Bing Limjoco said many of the international brands that would be breaking into the country this year and next were those in the education, retail, food, and services sectors.

These companies’ home countries ranged from as far as Europe to those within Asia.

The openness of banks to lend capital to entrepreneurs wanting to go into franchising had also paved the way for explosive growth in the sector, Lim said.

“Many banks are now giving franchise loans, with some willing to finance up to 70 percent of the capital cost. These banks include [Bank of the Philippine Islands, Philippine National Bank, Banco de Oro and United Coconut Planters Bank]. They now recognize that franchisees may be the best clients because franchises have a 90-percent chance of success,” he said.

According to PFA data, franchised businesses accounted for $9.45 billion, or 30 percent, of total retail output in the country last year. To date, more than 1.02 million people are employed in the sector.

“The country is riding the crest of political and economic stability that is highlighted by new investors’ confidence in the country. With the consumer confidence index at an all-time high, the Philippines offers the most strategic place for expanding and investing in franchising,” Lim said. “The Philippines has yet to enjoy the full benefits of franchising as a strategy for growing one’s business.”

Limjoco said the Philippines aims to be Asia’s franchise hub. The country now occupies the No. 5 spot in terms of number of franchisors and the No. 2 position in terms of number of franchisees.

The Philippines will be hosting meetings of the Asia-Pacific Franchise Confederation and the World Franchise Council in September, a gathering that will bring to the country franchise experts from all over the world. These events will be held in conjunction with the International Franchise Conference and Expo.

Lim said these events would serve as a venue for international franchisers to bring their brands to the Philippines, as well as to bring local concepts back to their home countries.