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Archive for September, 2015

A Primer on Franchise Advisory Councils

Posted on: September 29th, 2015 by Francorp No Comments

by Manuel V. Siggaoat, CFE

Managing Director, Francorp Philippines

A Franchisee Advisory Council (FAC) is a committee composed of franchisees who meet with franchisor representatives to discuss business issues that are relevant to the franchise. The council is a vehicle that facilitates communication between the franchisees and franchisor.

While not a requirement to operate a franchise business, a FAC can go a long way in helping the franchisor by providing an another means by which inputs and sentiments of franchisees can be made known to the franchisor, as well as serve as a sounding board for important decisions to be made by the franchisor.

The following are some of the most important questions asked regarding Franchise Advisory Councils:

Why establish a Franchise Advisory Council?

The purpose of the FAC is to provide an additional channel of communication between the franchisees and the franchisor about such issues as advertising, field support, operations and market trends. It serves as a sounding board to the franchisor for the implementation of new programs before these programs go system-wide. The franchisor will solicit suggestions and ideas for improvements to the franchise system. It provides a forum for franchisees to voice their mutual issues and concerns.

Why not just get franchisee inputs from everyone at a general meeting?

It is not practical to get all franchisees together in one location several times in a year. Especially for a large franchise network spread all over the country, it will be a scheduling and financial challenge to set a general meeting regularly. Besides, many franchisees will tend to discuss issues specific to their store instead of for a collective group.

Is a Franchise Advisory Council the same as a franchisee association?

A Franchise Advisory Council is not the same as a franchisee association. Franchisee associations are set up by franchisees and do not necessarily have a direct line of communication to the franchisor. Franchisee associations pick their own officers independently while members of a franchise advisory council are selected by the franchisor or strongly influence the selection process. Be that as it may, the franchisor should try to get a group of franchisees that the whole feels represents their concerns at the FAC. If the franchisees do not feel that the FAC members represent them, then the FAC loses its credibility.

Who should be members of the FAC?

Generally, the members should be composed of franchisees that are geographically representative of the entire group so that no region feels unrepresented. However, franchisors should avoid appointing only people that are highly supportive of the franchisor, and also appoint those who have been the most vocal complainants, so that the franchisor can address sensitive issues in a more controlled environment and eliminate a confrontation in front of the entire group of franchisees at a larger meeting.

 

 

How many members should a FAC have? What should be their qualifications?

The FAC should be large enough to get different quality opinions but small enough to avoid members from not being heard or not having enough voice time during sessions. In general, 5 to 9 members should suffice. Franchisee members should be those in good standing (those with current accounts and have no material violations of the franchise agreement).

Is the franchisor committed to following the advice or opinions of the FAC?

The FAC is an Advisory group. The franchisor is under no obligation to follow the recommendations of the FAC. It is important, however, that the franchisor shows genuine openness in considering ideas coming from the FAC. This could be of great help to the franchisor as franchisees are frontliners who are very close to the customers and therefore have a good feel of what customers want. Having an open-minded approach also gives franchisees the satisfaction that suggestions not implemented are nevertheless considered very throughly.

Who shoulders the expenses of the FAC?

The franchisor pays for all of the expenses of the Franchise Advisory Council. The FAC should meet about 2-4 times a year to discuss issues important to franchisees as well as items that the franchisor need feedback on. A franchisor may, for example, ask the council’s opinion on a marketing campaign to get feedback before implementing and to enroll the franchisees on the new campaign.

In conclusion, allow me to quote Francorp USA Founder and Chairman Don Boroian:

The Franchise Advisory Council, if done right, can be a total Win/Win situation in which the Franchisor is able to address and solve negative issues, franchisees are motivated to improve and work in conjunction with, as opposed to against, the franchisor. The Council can be a great PR tool, create a bond with the franchisees, create a healthy exchange of ideas, diffuse what could be a contentious and adversarial relationship between the Franchisor and the Franchisees and result in some great input from the franchisees”.

 

CRYSTAL CLEAR

Posted on: September 9th, 2015 by Francorp No Comments

Almost 17 years ago, Crystal Clear Water Refilling Station used to be a small business supplying channels using reverse osmosis, water filtration, and purification systems. Established in 1997 by Solerex Water Technologies, Inc., the brand Crystal Clear already brought quality water within the reach of millions of Filipinos. In 1999, when the company ventured into franchising, its circle of beneficiaries expanded. Mr. Soler recalls “when we first operated our Crystal Clear Water Store, we immediately received many inquiries to franchise the business. However, we did not want to franchise without receiving the right training and expertise in running a franchising company and creating a franchise business.

After reviewing the potential of the business, FRANCORP and their expert team of franchise consultants guided us through all the processes in establishing a proper and dynamic franchising company. Partnering with FRANCORP and its franchise consultants, helped us leverage our business and gave us a seal of approval.” Crystal Clear now has four (4) company-owned units and 496 franchise outlets, with branches in Indonesia, Malaysia and soon in Sierra Leone, Africa. Such success was a product of a healthy relationship with franchisees. Mr. Soler admitted that “franchising is a collaboration. It is imperative that the franchisor informs the franchisee of his expectations at the start of the relationship to help the franchisee understand the extent of freedom the brand will allow. It is also important that the franchisor clearly and explicitly states in the agreement what the franchisee may or may not do with the brand. The roles of the Franchisor and the Franchisee have to be established to achieve harmony.” With Crystal Clear’s franchise success story, new players have adopted their best practices in how to franchise your business and create a strong franchise business in the Philippine and Internationally.

To learn more about how to franchise your business both in the Philippines and internationally, attend a How to Franchise Your Business Seminar or take a free franchisability quiz.

 

Advancing the Franchise Industry in ASEAN; Learnings from the Philippine Experience

Posted on: September 1st, 2015 by Francorp No Comments

Speech delivered at the Myanmar International Franchise and SME Expo

By Samie Lim, CFE

Chairman, Francorp

Chairman Emeritus, Philippine Franchise Association (PFA).

 

The Philippines is an archipelago and is strategically located as a gateway to the Asia-Pacific and the ASEAN region. In a similar way, we recognize the strategic importance of Myanmar as a gateway to China and the Indian sub-continent.

For a time, our country’s economy was only second to Japan in terms of growth. But after years of political instability and economic mismanagement, we became known as the ‘sick man of Asia’ – but not anymore.

Today, the Philippine economy has been growing at an unprecedented rate and is expected to grow between 6 to 8% in the coming decade and even beyond.

This bullishness on the Philippine economy stems from the fact that our economy seems resistant to global economic slowdowns. This is because our economy is mainly driven by local consumption which is supported by a huge population of migrant workers and a growing Business Process Outsourcing (BPO) industry.

That is why, when you go to the Philippines you will see that it is home to some of the biggest malls in the world and our malls are always full. The moment they open, you will already see a queue of people waiting to get in.

Local consumption has kept the Philippine economy on its feet even during difficult moments. And franchising was a part in making local consumption a vibrant segment in the Philippine economy.

Franchising is a powerful tool in economic development and nation-building because of its natural capacity to open thousands of businesses and to create millions of jobs. Seeing the power of franchising in developing our economy, I organized the franchise sector in our country in 1995 and became the first president of the Philippine Franchise Association (PFA).

At that time, there were only about 100 franchises in the Philippines and a majority of these were foreign brands. Today, there are 1,500 franchises in the Philippines and 65% of these are Philippine brands. Moreover, we have about 140,000 franchise outlets and the Philippine franchise sector generates more than a million jobs.

Let me clarify, however, that franchising came to the Philippines in 1965 but since that time until 1995, the growth of franchising was only 1 franchise per year. But since we started PFA, the growth has jumped to a phenomenal 65 franchises per year. How did this happen?

At this point, please allow me to share our strategy in growing the Philippine franchise industry. We are sharing this because we consider Myanmar a brother and we want you to make the most of franchising and make it work for your economy and your people.

This is, after all, the vision of the ASEAN Economic Community – to have an ASEAN where there is equitable economic growth for all member nations.

As I said earlier, franchising has the capacity to create businesses and jobs – it has the ability to create wealth – but only if you do things right. That is why, when we started the franchise industry in the Philippines, we made sure we had a master plan or a roadmap for success.

Through this roadmap, we were able to build Philippine franchising to what it is now – a leader in the ASEAN region. It took us a while to come to this position though. We first developed the food sector and it took us 5 years; followed by the retail and service sectors, which also took 5 years for each sector.

In other words, it took us 15 years to bring Philippine franchising to where it is now. We are willing to share our experience so that Myanmar can achieve the same in as little as 6 years.

The other thing we did was to organize ourselves. A vision – no matter how lofty – is always achievable if many are working to achieve it. We formed the Philippine Franchise Association in 1995 and this year is our 20th year. We started with only 13 members and now we have 250 members. But the most important thing is that our members contribute 70-80% of the total franchise sales in our country.

After organizing ourselves and creating a master plan, we also realized that we need to learn from others. And that is what we did. We cultivated relationships with the more advanced franchise industries and benchmarked with them.

We also organized an international conference and expo where we invited the world’s best franchise brands and the world’s most renowned franchise experts in order to learn from them. I am pleased to note that our franchise show – Franchise Asia Philippines – is now the biggest franchise show in Asia and gathers 40,000 visitors every year.

Moving on, we have taken leadership positions in the World Franchise Council (WFC) and the Asia Pacific Franchise Confederation (APFC). Our membership in these international bodies allowed us to learn global best practices in franchising. We are also willing to share these learnings with the intention of advancing the franchise industry in Myanmar and other emerging economies in ASEAN.

Recently, the Philippines has been appointed Secretariat of the APFC, which is a vote of confidence for the Philippines in advancing the various franchise sectors in Asia-Pacific. Other than this, we were also elected in the 3-member WFC task force, which has been assigned to draft programs that will drive the agenda of this international group of 44 members to bring franchising to the next level.

Another crucial thing we did was to professionalize the Philippine franchise industry by bringing the US-based Certified Franchise Executive (CFE) program to the country. CFE is a mini-MBA professional development program designed to raise the level of expertise of franchise practitioners. Today, the Philippines has the highest number of CFE graduates outside of the United States.

Lastly, a very important key in growing the Philippine franchise industry was introducing franchising to SMEs. We all know that SMEs are the backbone of every economy. There is a concern, however, that most SMEs – especially in less advanced economies – provide very little or even no value added services. Because of this SMEs remain SMEs forever.

Franchising, however, has the power to upgrade the capacities of SMEs – whether in branding, business methods, marketing, and others. Franchising has the capability to make an SME grow big.

Before PFA introduced franchising to SMEs, franchising was a business model reserved for multi-national and large corporations. This is the reason why franchising hardly made a dent in the economy. Things started to change when PFA encouraged SMEs to use franchising as a strategy to grow. Since then, growing big was no longer an impossible dream for SMEs.

I congratulate the organizers of this event for making the dream of growing big much closer for SMEs.