FRANCHISING in the Philippines has remained vibrant amid the country’s recovery from the Covid-19 pandemic, with more local brands wanting to go global as foreign players set their sights on penetrating the domestic market, according to the Philippine Franchise Association (PFA)
“Through franchising, we will now be seeing 12 to 15 percent growth in terms of the outlets, or in terms of expansion of our Filipino brands [in various territories abroad],” PFA Chairman Sherill Quintana told reporters at the Franchise Asia Philippines (FAP) 2023 media launch in Mandaluyong City on Wednesday. “That’s why we want to help them scale up. We want our homegrown brands to seek the opportunity beyond the Philippines.”
Before the pandemic, PFA targeted to have 50 global Filipino brands. Two-fifths of these, or 20, have now gone internationally.
“We’d like to be able to sell 30 more brands to fulfill our vision of having 50 Philippine brands all over the world,” PFA Chairman Emeritus Samie Lim said of their aspiration for local brands to expand overseas in the next five years. Such growth, he said, would be driven by several factors, including the rising inflation that will lead to revenue increase, and cheaper rentals in the malls that have been vacant for a while due to the ensuing health crisis.
“And so with that, we don’t only export products from the Philippines, but we actually export brands that started here in the Philippines,” added Joseph C. Tanbuntiong, overall chair of FAP 2023 and chief business officer of Jollibee Foods Corp.
While most Filipino brands want to go to the United States, Canada and other North American territories—location-wise—Lim said that the easier place to go to is Southeast Asia, Australia and New Zealand.
Apart from the food industry that has dominated the franchise space, Quintana said they want to help the retail sector as they see them having “the potential to actually expand immediately” offshore, as well as “the subsector in franchising that has been left out during the crisis,” which is the service sector, comprised not only of the spa or salons, but also the laundromat, educational, and wellness and health providers.
PFA President Chris Lim, likewise, noted that agriculture franchise is also expected to be at the growth center. He explained: “It’s still an underdeveloped sector here . . . Right now, everything is mom-and-pop. So this [franchising] will revolutionize or standardize, bring in the best practice and quality, and also bring down the prices as well, [so agriculture franchises can] have economies of scale.”
On the flip side, international brands are now interested to come to Southeast Asia, particularly the Philippines, as the region has been “very hungry for global brands.”
“There is this soft spot that is now happening. The low-lying fruit tree actually is the Asean and everybody is looking at us because Southeast Asian countries have now a vibrant young population. And so in terms of consumer market, we have that, plus it coincides with the power to purchase. So foreign brands really want to come in and bring their brands,” Quintana said.
He pointed out that those in the retail and food sectors expressed their interest to enter the Philippine market during their attendance to the recent International Franchise Association’s Annual Convention in Las Vegas, Nevada.
This was seconded by PAF 2023 Overall Co-Chair Richard Sanz, who said at least 10 American companies in the franchise business—40 percent to 50 percent of which are in food, and the rest in the service sector—that comprised the delegation of the US Commercial Service during their business matching activity hosted by the US Embassy last week wanted to look for partners here.
“For European brands, we have seen a few—Spain [and] France. But we’re hoping to bring more of these brands,” he added. “Other than that, I’ve seen in the past few years a lot of Japanese brands, who have tried to get into the market; a lot of Singaporean brands; a lot of Taiwanese brands, mostly milk teas; and a lot of Thai brands as well. So these are the brands who are really excited about the growing market in the Philippines.”
Locally, franchising is back on track with the economy’s reopening. In fact, 48 percent of new franchisors would come from outside of Metro Manila, per Lim, who added that “franchising now is a nationwide thing that’s happening. Not only people want to buy franchise, but people want to franchise their businesses from the provinces.”
Proof of which, San noted, is that “there were a lot of businesses that were born out of the pandemic, and the good news there is some of these businesses went into franchising. And having Philippine Franchise Asia is a platform for the nationalization of these brands. So it provides them with the opportunity from one, or maybe five, to scale to hundreds outside Metro Manila.”
To date, PFA has more than 800 brand members, making the Philippines the seventh largest franchise market in the world, providing 2 million direct and indirect jobs.
“We want to create entrepreneurs so we can generate millions of jobs,” PFA President Chris Lim said. “We know that the thrust of government right now is we want to be upper-middle class in the next two or three years. And we believe franchising is going to be a critical catalyst to creating a stronger middle-class to bringing the Philippines to an upper middle-class status.”
He is bullish about this goal because franchising equalizes the playing field, spreads the wealth, and creates employment opportunities not only in Metro Manila but across the country.
The PFA is hosting the Franchise Asia Philippines (FAP) 2023, with the theme “Fun. Friendship. Franchising” on June 7 and 8, at the SMX Convention Center Manila; the International Franchise Expo, from October 27 to 29, also at the SMX Convention Center; and the two-day Certified Franchise Executive (CFE) Program, June 5 and 6; and seminars and other learning sessions for aspiring franchisors, franchisees and entrepreneurs.
The FAP 2023 will be doubly significant as it will coincide with the country’s hosting of the World Franchise Council and Asia Pacific Franchise Confederation meetings that will bring in industry leaders from over 40 economies and are expected to draw in 75,000 participants.