At the Be Wise, Franchise Expo, which kicked off on July 23 at the Globe Tower i Bonifacio Global City, Taguig, guests eagerly gathered to learn about the basics of franchising and starting their own business. Successful entrepreneurs shared their own experiences about franchising in a lively discussion that offered encouraging insights.
The franchising expo was led by members of the Association of the Filipino Franchisers, Inc. (AFFI), one of the country’s trusted business organizations that aim to promote responsible franchise business ownership for micro-, small, and medium enterprises.
The discussion opened with the biggest question on everyone’s minds that day: “What do I do if I want to start a franchising business?” AFFI President Jorge Wieneke of Tokyo Tempura, who started franchising in the 1990s, replied that franchising a business entails a lot of thought, research, and preparation. One of the first steps, Victor Fernando of Big Apple Express points out, is to assess if you’re truly ready to commit.
Starting a business — not just a franchising business — requires having not just the financial means to fund it, but also the proper mental state and commitment in terms of time and effort in overseeing its growth. You have to know your reasons for starting a business, points out Wieneke, as this will lay a solid foundation for you, especially later on when times get tough.
Ask yourself why you want to start a business: Is it to supplement your current income? Or do you want to become your own boss? Once you are able to honestly answer this question, only then are you ready to take the next step.
If you’re financially capable of funding a franchise business, the second most crucial step is to decide on what type of franchise to get. There are number of options to choose from, and it may get confusing especially for a newbie.
There are two ways to help you decide on the kind of franchise business you can get. First, you can choose a franchise business based on the product or service you want to offer the market. Another way is finding a location with high foot traffic and choosing a product or service suitable for that specific area.
EC Gas’ JC Martinez shares how observing the activities of a certain area provides an insight as to which franchise business would be best for a particular area. For example, a location near an MRT station, where people are passing through at a fast pace, would work best with a food kiosk offering bites that can be eaten while on the move.
If you’re set on the kind of product or service you want to franchise, the next step is finding the right location for it. The rule of thumb is that a good location is one where there is a lot of foot traffic. However, Michelle Velasquez of Maxi Mango points out that malls are not always a top priority. “It depends on where in the mall you’re located,” she explains further. “The specific location within the mall is important.”
A good way to determine if a location has good foot traffic is to actually take the time to observe how busy the spot can be at various times of the day. Wieneke shares a tip: Ask the other businesses in the area about how they are doing, how busy it gets throughout the day, and which days of the week are the busiest.
Then take it even a step further — check out your competition in the area. And while you’re at it, research on the rental rates in your chosen location as well to give you a good idea whether or not you can afford it.
“Location is a challenge,” says Wieneke, “[but for] a kiosk and cart business, it’s easier, because you can always relocate it.” He adds, “If the franchise owner is good, they will help you find the right location, too.”
Your franchising strategy for success involves doing your research about the business itself. “See first if the brand [you want to franchise] is strong,” advises Wieneke. “Pinag-uusapan ba siya?”
One way to do this is to visit various branches of the franchise you have your eye on. “Check if may pila ba,” suggests Wieneke. Also, says Martinez, “Investigate if it’s up to the standards, if the quality is good.”
Fernando emphasizes the importance of doing your homework. “Ask around about the stability and success of the franchise,” he says. “Look at the concepts that you want franchise. You have to study the business model yourself.”
Wieneke strongly recommends researching the background of the franchisor, such as if they have been operating the business for a long time, among others. A sign of a good franchisor is if they are hands-on, adds Martinez. “Find someone who knows what they are doing, and know their product well,” says Velaquez.
By doing your own legwork and research on what the particular franchise business requires, you’re able to analyze and see for yourself if the franchisor really knows the business and is trustworthy. At the same time, you are able to assess the quality and standards that you have to live up to once you become a franchisee.
As a long-time franchise business owner, Wieneke wants to remove the belief that “franchising is a ‘safe’ investment” that yields fast return on your investment. It’s not, he warns, which is why it is important to learn from seasoned entrepreneurs and reputable franchise owners who have the experience and know-how when it comes to operating these kinds of businesses. AFFI also helps new and established entrepreneurs by protecting them from fly-by-night franchise businesses.
Franchising a business requires a deep commitment from the franchisee to operate and manage the business within the standards set by the franchisor. As Fernando succinctly puts it, “Manage your expectations.” This includes allotting sufficient time to manage the business closely, finding and training the right people to help you run the business efficiently, and maintaining (or surpassing) the quality of service or product, even when there is no assurance yet of ROI.
“At first, you’ll be excited,” says Wieneke, but sometimes enthusiasm wanes, especially when faced by the challenges that come with running a business. You can’t do it all by yourself, declares Velasquez. You also have to learn to delegate, as it can be difficult and tiring if you don’t have others to help you. “You have to train and trust other people,” she says. “And lead by example.”
Brush up on the basics of starting your own franchise by signing up to Globe myBusiness Academy.
You’ve taken the plunge and invested your hard-earned cash into a thriving business. You’ve learned the ropes as an entrepreneur, weathered the highs and lows of managing an MSME, and maybe even mastered the art of being your own boss. And now, you feel that it’s time to grow your business even further through franchising.
Here’s how to get started.
Assess if your current business is ready for expansion. Jorge Wieneke, president of theAssociation of the Filipino Franchisers, Inc. (AFFI), advises asking yourself this important question: Are people asking for a franchise from you?
Look back on the past year and review if there have been inquiries if you are franchising your business. Go over past emails, text messages, or any other form of correspondence for these kinds of questions. Ask your staff if there have been customers who asked if your business is open for franchising.
The second question to ask yourself is if you are ready to commit more time and effort into a franchise business. Franchising a business goes beyond just monitoring your existing business; it also means setting aside time to manage and guide your potential franchisees .
Starting a franchise operation means that you are open to letting others help you grow your business. Your role as franchisor is to make sure that your brand stays strong and quality standards are maintained and even exceeded.
Revise your business plan to include your franchising business plan. A franchising business modelincludes the usual components of a typical business plan, such as:
Generally, a franchising business model contains information on what the franchisor will provide a franchisee in terms of rights, trademarks, business processes and operational systems, trainings, and other kinds of support.
Develop a franchising business plan that outlines your company’s growth from when you started it, including your plans for the next five years. This will provide potential franchisees a better idea of your franchise business.
Lastly, your franchising business plan must include a franchise operations manual and training program to ensure a standardized model for your franchisees to follow. This will guide your franchisee through the business’ operations, set quality standards, management policies, and best practices; and guarantee that customers will experience your product or service consistently regardless of location.
Finding an experienced mentor who has been in the franchising business for a long time will help you immensely as you set up your own. They will be able to share insights from their own learnings, as well as provide informed advice when you face challenges.
Attend franchising seminars and join franchising organizations. These not only present good networking opportunities and clue you in on the best franchising ideas, tips, and strategies; they also expose you to potential mentors in the franchising business in the Philippines. One such group is the Association of the Filipino Franchisers, Inc. (AFFI), one of the country’s most trusted business organizations that aim to promote responsible franchise business ownership for micro, small, and medium enterprises.
Once you decide to expand your business into a franchise, you will need to create a franchise agreement or contract for your franchisees. A franchise agreement protects both the franchisor and the franchisee as it maps out all the responsibilities and expectations between all parties involved. Aside from the franchising business model, the agreement or contract can include financing options (should you offer potential franchisees any), site or location assistance, and others.
Now that you’ve set up your franchise business, the next most important step is to strengthen your brand even further. Wieneke points out the importance of being unique. There are three differentiators you must focus on to help create a distinctive brand. “First is the size; second, the packaging; and third, the formula,” he enumerates. “You have to be different,” he stresses, pointing out the importance of standing out and being memorable in a sea of products and services out in the market.
Make sure that your product or service offers more bang for the buck, as many customers expect to always get value for their money. “[Your brand’s] unique selling proposition and differentiator are the keys,” says Wieneke. Once you are able to identify these, “You will be okay.”
Create a marketing plan about your business expansion, that you are now offering franchising. Utilize social networking sites such as Facebook and Instagram, and have marketing collaterals such as flyers and brochures made to let the public know about your franchise business. Grow your network by nurturing your connections. Don’t be shy in asking your friends and acquaintances to spread the word about your business.
JC Martinez of EC Gas advises creating a marketing plan that includes local events and activities as well, in particular for places where your franchisee is located. Work together with your current or potential franchisees in researching about possible marketing points that you can explore.
Ultimately, your franchise business will attract potential franchisees, and your next important decision to make will be on which ones to accept. It helps to have a screening process in place — after all, the right franchisees will be representing your brand, and hopefully help you grow it even more.
List your qualifications for an ideal franchisee. Set parameters on the kind of relationship you envision between you and your franchisees. Finding a franchisee with whom you have similar philosophies and values will create a more fruitful and harmonious relationship that can result in the continuous growth of your brand.
“Businesses are like relationships, like marriage. There’s a honeymoon phase,” says Martinez. When it’s new, it’s exciting, but after a while, the novelty fades. “But if you want a long one, loving your partner or your business is an active effort,” he points out.
Once you’ve set up and expanded your business into a franchise, be patient. The return on your investment varies, depending on the kind of product or service you offer. “[The ROI] is one year and six months for a cart and kiosk business, while it takes three to five years for a restaurant,” says Wieneke.
It may seem like a lot of work to turn your business into a franchise; but the rewards you’ll reap are definitely worth it. As Wieneke wisely puts it, “Franchising is a powerful tool to level up your business and to expand your business.”
Find out more about starting and registering your business and sign up to Globe myBusiness Academy.
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