Franchising In The Philippines

Franchising has been in the Philippines for 94developed a business system that is made
years. With the entry of Singer Sewing Machine inavailable for use to franchisees. Compliance to the
1910 which introduced product distributorship.business system is the core and essential element
Numerous companies embraced this concept asof their contractual relationship embodied in a
their vehicle for business expansion over thefranchise agreement.
years. From 1910 to 1965, businesses staked theirThe first survey of franchising in the Philippines
flags in the Philippine economy through PRODUCTdone in 1995 revealed that there were a total of
DISTRIBUTORSHIP. Some of these multinationals50 operating foreign franchisors at that time. The
were tire and pharmaceutical companies.success rate of foreign franchisees is 97%. In
The take off was slow in the early years as the2003, there were 315 foreign franchisors in the
succeeding companies like A&W Restaurantcountry with 87% success rate.
known for its root beer entered in 1965. The firstPhilippine Based (Home-Grown) Franchises
outlet was established on Highway 54 (nowEarliest recorded homegrown company that used
popularly and historically known as Epifanio Delobusiness format franchising was PANCAKE
Santos Avenue or EDSA) near the BigHOUSE. It was franchising since 1978. PANCAKE
Dome-Araneta Coliseum. The concept was aHOUSE is still active in franchising and has
drive-thru where women food attendants garbedtransferred ownership a few years back.
in mini-skirts, black stockings and in roller skatesIn 1996, there were 94 companies using
would serve customers inside the comfort offranchising as their route to expansion and the
their cars. Trays clamped by the side of the doornumber has substantially increased to 481 in 2003.
and mugs with cold refreshing root beerThe success rate is a good 90%.
partnered with foot long hotdogs were served.Philippine Franchise Scenario
Its set-up was exactly the same as found in theFranchising in the country evolved from the US
US branches during those years. What thisFranchise System. There are, however, no laws
company brought was another form ofthat regulate franchising. Companies and franchise
franchising, which is known as Business Format.developers use international franchise practices as
From then onwards most entrants into thereference and as a guide to pursuing this type of
market embraced this concept, in fact, so widelybusiness. The increasing number of homegrown
used not only in the Philippines, but all worldwide.companies using franchising in their expansion can
Product Distributorshipbe attributed to the presence and increasing
This is a form of franchising where owners ofnumber of foreign franchisors. They served as
products allow other parties to sell or distributemotivators and inspiration for the local
their products or even use their trademark as aentrepreneurs.
dealer. There is minimal or no control ofFranchising for years has been the monopoly of
operations. The relationship is centered on thefood sector. It was only in mid-1990's that service
quality of products sold.and retail entrepreneurs used franchising.
Business FormatThere was an absence of franchise education in
A form of franchising used by 90% of companiesthe country for decades. Franchise Conference
involved in franchising. This is the reason whyand Seminars started only in the mid-90's.
franchising is considered the most successful wayFranchise Associations were also formed with the
of expansion worldwide.vision of professionalizing and standardizing the
In business format, the franchisor, more than hisfranchising as well as police their own ranks.
registered trademark and products, has