Local franchisers make a killing amid influx of foreign brands

The Philippine franchising industry is well poised to sustain a strong double-digit growth in the medium term, fueled largely by increasing demand for services and the continued expansion of food concepts in the country.

Armando O. Bartolome, chair of the Association of Filipino Franchisers Inc. (AFFI), said they expect to sustain at least a 20 to 25 percent growth in revenues yearly despite the influx of foreign brands in the country.

Revenues of local franchisers have already breached to date P96 billion, almost double the P50 billion recorded last year, during which companies had suffered from the impact of the port congestion.

Bartolome said franchising of services continue to gain significant ground in the country, as more companies see the benefits of using this format to expand their presence not only domestically but also internationally. He said there is a growing demand for services from consumers at the same time.

He said AFFI expected service franchises will keep up with the number of food franchises in three years’ time.

In previous years, food concepts comprised 70 percent of the total franchises while the remaining 30 percent belonged to services. More recently, the ratio has shifted, with food accounting for only 55 percent, while services accounted for 45 percent.

Bartolome explained the growing demand for services was due largely to the proliferation of condominium developments, which spurred the need for its tenants and residents to outsource certain services for convenience.

Traffic, he added, was also a factor that contributed to the boom in services.

Bartolome said that a construction company is now looking at franchising to expand their services to more clients and bigger markets.

On the other hand, a group of doctors and nurses are reportedly firming up plans to set up a company that seeks to bring back the traditional “house calls” made by medical practitioners in the past, he said.

Services like tutoring, mentoring, salon, and wellness, among others, have also been booming.

Sen. Cynthia Villar, in her speech during the opening of the 14th Franchise Business Expo yesterday, recognized the need for entrepreneurship as one of the long-term solutions to address poverty and unemployment problems.

“Entrepreneurs are the foundations of the country’s economic growth as they create jobs and social change. What our country needs more of are job creators or a new generation of employers. That is why we never stop promoting entrepreneurship, particularly [among] the youth,” Villar said.

Villar, however, pointed out that micro, small and medium sized enterprises (MSMEs) have to contend with certain challenges such as access to information, market, human resource management and skills, finance, and technology.

“We need to help them to work out these problems. Access to finance is still one of the major factors affecting the competitiveness of MSMEs. Many private banks are still reluctant to lend to them but the number of those who created lending programs for MSMEs are thankfully increasing,” she added.