GROWING THE FRANCHISING INDUSTRY: THE PHILIPPINE EXPERIENCE
By Samie Lim, Chairman Francorp
Speech delivered at the Myanmar Franchise Association Conference
I come from a family of retailers and by natural progression ended up working for the family business. Our appliance retailing business was founded in 1948 making us a pioneer in the industry. When I was given the opportunity to manage our family business, I transformed it into a chain of lifestyle stores selling appliances, furniture, and other home accessories.
Majority of Philippine retailing, however, at the time was characterized by traditional shop-houses.
With my background and track record in the retail industry, I was elected President of the Philippine Retailers Association (PRA), which I co-founded with the objective of modernizing Philippine retailing.
This goal of modernizing Philippine retailing was given the stimulus when I championed the hosting of the Asia Pacific Retailers Conference and Expo (APRCE) in 1993. During that time, we invited the best retailers in the world and learned from what they shared that there was still much room for improvement for Philippine retailing.
I am proud to say that because of that pioneering effort to steer a new direction for the Philippine retailing industry, our country now boasts of a sophisticated retail network with 4 Philippine malls included in the top 10 biggest malls in the world.
But not the type to rest on my laurels, I continued to look for other ways to revolutionize the retailing industry in our country. Then, in several conferences I attended abroad, I discovered that as much as 50% of small , yet successful, retail stores are under the franchising model.
This discovery inspired me to promote franchising as a strategy to create thousands of small enterprises and millions of jobs and thus stimulate economic growth. And so in 1995, I co-founded the Philippine Franchise Association (PFA) together with my colleagues in Francorp Philippines, Bing Sibal-Limjoco and Manny Siggaoat.
Before the founding of PFA, there were only 45 franchises in the Philippines. But with the founding of PFA, franchising grew at a rapid rate that today, we already have 1,500 franchise brands – both homegrown and foreign – making us the leading franchise industry in the ASEAN region. 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.
Earlier, I said that the Philippines was second only to Japan in terms of economic growth. Not only that, there was a time when the Philippines was one of the most respected nations in Asia and even the world. In fact, we have produced some of the world’s greatest statesmen just like your very own U Thant.
That was back in my youth and whenever I’m in other countries, I was amazed at how people would go out of their way to speak to me just because I am a Filipino. This was the time when many of our Asian neighbors would go to the Philippines to study and learn from the best schools.
But then we became the sick man of Asia and I dreamt of making my country retrieve its pride and give it a fighting chance in a fast changing world. Then I saw that franchising can help achieve this vision because of its ability to create businesses and jobs; because of its ability to create wealth. But then a dream will continue to remain a dream unless there is a plan.
SUCCESS SECRET #1: CREATE A ROADMAP
The first thing we did was to prepare a 300 plus-page master plan to unleash the power of franchising. This master plan conceptualized a 15-year, 3-phase agenda to grow the food, retail, and service sectors of the industry. The first 5 years was allocated to developing the food sector, followed by the retail sector for another 5 years, and capped by another 5-year growth program for the service sector. Having successfully finished our 15-year plan, we are now on our 2nd cycle of franchise development for the next 15 yrs. I can discuss this with you in some future conference, if you are interested.
SUCCESS SECRET #2: LEARN FROM FRANCHISE LEADERS
Yes, we had a plan but we also realized that we need help from those who were more advanced or ahead of us. So we invited the best minds in the industry to give talks during our annual conferences. We organized business missions and visited the best franchise shows in the world to benchmark with and draw inspiration from them.
SUCCESS SECRET #3: FORGE INTERNATIONAL LINKAGES
Closely related to this, we forged international linkages to sustain our intentions to learn the latest best practices in global franchising as well as help open opportunities for the international expansion of Philippine franchise brands. We became a member of the World Franchise Council (WFC) and a founding member of the Asia Pacific Franchise Confederation (APFC).
Today, we are a key player in global franchising. We are proud that PFA, represented by myself and Ms. Limjoco, has been elected to be part of the WFC working committee tasked to create programs that will further advance the agenda of global franchising. On top of this, PFA was also appointed to be the Secretariat of APFC as it intensifies its efforts to bring franchising in Asia Pacific to new horizons.
SUCCESS SECRET #4: PROFESSIONALIZE THE INDUSTRY
Another important thing we did was to professionalize the industry by bringing in the Certified Franchise Executive (CFE) program to the Philippines in September 2001. The CFE program, which is a mini- MBA course, is the only internationally-recognized development program for franchise executives. We are proud to say that the Philippines has the most number of CFE graduates in Asia. But we are more proud that this program has been instrumental in growing the franchising industry in the Philippines.
This is also the reason why it has been attracting enrollees from other countries in Asia and even the Middle East.
We must have done something right because I, or my fellow founding trustees of PFA like Ms. Limjoco and Mr. Siggaoat, have been invited to represent the Philippines or Asia in various conferences, forums, symposiums across the globe to talk about the Philippine experience in franchising.
SUCCESS SECRET #4: INTRODUCE FRANCHISING TO SMALL-MEDIUM ENTERPRISES (SMES)
Lastly, but definitely not the least, 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 SMEs 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.
We will be more than happy to share in detail with our Myanmar brothers our experience in growing the Philippine franchising sector. Before I end my speech, I would like to share with you an ideal which I have nurtured since my youth. I realize that in order to have a meaningful life, one must seek one’s higher calling. This higher calling for me is to be of service to the most number of people. Franchising, which has created about 140,000 franchise outlets and generated more than a million jobs in our country, has helped fulfill this ideal. It is my sincere wish that this will also happen to your country.
Francorp is the world’s leader in franchising. Take a free franchisability test (http://francorp.com.ph/are-you-franchisable/) and learn whether your business is ready to grow through franchising. For more information on franchising, contact Francorp Philippines at (02) 638-3149, (+63917) 835.55.30, email email@example.com, or visit francorp.com.ph.
Samie Lim is the acknowledged “Father of Philippine Franchising.” He is currently Chairman of franchise consultancy Francorp Philippines, Chairman Emeritus of the Philippine Franchise Association and Chariman of the Blims Lifestyle Group
Originally published in www. entrepreneur.com.ph