Francorp - The Franchising Leader in the Philippines
Francorp - The Franchising Leader in the Philippines

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

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.

 

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