Tuesday, August 28, 2007

Franchise Value

In recent years, the country has experienced significant growth in the food and restaurant business especially with the ones operating inside the malls. Most of these are franchise businesses. Franchising, particularly food franchises has become very popular in the Philippines and among Filipino entrepreneurs due to a relatively low start up cost, brand name recognition and support compared to starting a business from scratch. . Depending on your budget and preference, some franchises can be had for as low as 10,000 pesos for food kiosks to as high as 10 million or more for a big-ticket franchise like Jollibee.

But not all well-known brands are expensive to franchise. Some are priced just right for the start up entrepreneur. But there are some cheap franchises being advertised that can be had for as little as 5,000 php. Even if it’s relatively cheap to begin with, many sound suspiciously like fly by night companies. Carefully research them first and try to get feedback from previous clients before committing any money. Most of these franchises lack name recognition to warrant paying a franchise fee. There are some food kiosk who are not really well know brands are offering their franchise for an amount not in proportion to their value. In these cases, starting from scratch would be a better idea than paying for a franchise that will go nowhere.

The primary reason for many people in acquiring a franchise is brand name recognition. An established brand is a name that everybody can immediately recognize, no matter if you’re 8 or 80 years old. And only a few franchises in the Philippines have the distinction of that honor. Think about it, why would someone spend millions of pesos just to acquire an established brand name like Jollibee when they could spend significantly less by using another name and offer the same products and services.

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