20 years ago, Franchising was predicted to be the wave of the future. Most business enterprises will be turning into franchising as a mode of expanding their network. On the other hand those who are retiring would find solace in getting a franchise than do a start-up.

Today 2013, the Philippines have approximately 2000 various businesses, which are offering franchises. These include foreign and local brands. The range of franchises is from all different types of food to the retail services. In fact I often term it as from birth to death name it and you have it.

Why is franchising so popular?

First let me define Franchising. It comes from an Anglo-French word “franc” meaning free. For an entrepreneur, starting a business is important prior any idea of franchising is considered. I call this as creating the prototype. From here the success depends on the product/service development, identifying target consumers, laying out procedures. Most of important is the ability to have a profitable business.

The Franchise advantages for an entrepreneur are as follows:

1. Financial Resources: Often times, the entrepreneur has a limited access to expanding due to financial. Getting a branch started may take a series of developmental stages. It is more so in ensuring the day-to-day management. When a business is offered as a franchise, there are interested parties who may provide the capital, location and management. This helps expand the business to different locations.

2. Leverage with Suppliers: With one branch, suppliers may not easily grant access in extended credit. However if the business begins to franchise, suppliers tend to help and cooperate in giving discount. This is due to the expected volume.

3. Brand Equity: As more and more branches are established, the brand harnesses a great goodwill. There will be a creation of consumer loyalty.

4. Cooperative advertising: If the business has few branches, the ability to have a full media exposure or promotions may not be possible. With franchising, both the franchiser and franchisees pool sufficient funds. Creating awareness help in reaching out consumers to avail of the products / services.

For those aspiring to be in business, franchising offers the advantage of the following:

1. Brand: With a established brand, getting into business provides a jumpstart for the franchisee. The brand may have created a following and awareness in the market.

2. Systematic Procedures: The franchise business identifies and establishes standards. The methodology of product preparation to the paperwork is written down. These are placed under the Branch Management Manual.

3. Experience of the Franchisor: More than anything else, the most important is availing the experience and guidance of the franchisor. This eliminates if not all the trial and error.

This post sent by Armando O. Bartolome