Are you thinking of starting your own business but don’t know where and how to start? One easy way to acquire a business is through franchising. But what is franchising? Franchising is a business method of expansion that grants an individual or group of individuals to market a product or a service and to use the patent, trademark, trade name and the systems prescribe by the owner.
Here are some Franchising Frequently Asked Questions (FAQ)
1. Who is the franchiser/franchisor and franchisee?
• Franchisor/Franchiser – a legal entity which owns the patent, trademark, method and products or services that allows others to use under his name.
• Franchisee – a person or a group of persons who invest, own and operate a business under a licensing agreement granted by the franchisor. Likewise, Franchisee are entitled to: use of the trademark or tradename; market the product or service; have access to pertinent trade secrets; enjoy advertising support, and acquire same benefit from the goodwill of the franchisor.
3. What are the benefits of franchising both to franchisor and franchisee?
a. To Franchisor
• Business expansion does not require huge infusion of capital because franchisee pays the cost of the new outlet.
• It provides franchisor a motivated manager for the business expansion.
• Multiple outlets can be established simultaneously even when the business is small.
• Provides franchisor an effective method of business expansion that combines limited risk with profit potential and short-run growth with long-term stability.
b. To Franchisee
• Obtain a working business model and a proven method that is successful for running a business;
• Less costly than to establish a single company owned outlet.
• There is an on-going support service – the knowledge that while franchisee are in business for themselves.
• Acquire a strong marketing and distribution system;
• Use of a brand or trademark recognized by customers;
• Provided with effective mechanism for achieving deep market penetration and saturation
4. What are the procedures in applying for a franchise?
Step 1 – The franchise applicant will submit a Letter of Intent to the franchise company, including the following information:
• Name of the interested party
• Expressed interest in a franchise
• Proposed site and location (with complete address and location map)
Step 2 – The franchisor will:
• Do an initial assessment of the proposed site upon receipt of the letter of intent;
• Determine the most feasible business model; and
• Get in touch with franchise applicant and send over the Franchise Qualification Form and brochure.
Step 3 – The franchise applicant will:
• Fill out the Qualification Form; and
• Send it back to the franchisor.
Step 4 – The franchisor will:
• Review the Qualification Form; and
• Schedule meeting with franchise applicant to discuss other procedures.
All other steps will depend on the outcome of the discussions made between the franchisor and the franchisee.
5. Where can you get additional information about franchising?
Association of Filipino Franchisers, Inc.
88 Rodriguez Jr. Avenue, Libis, Quezon City
Tel. No.: 633.8547
Fax : 638.4330
E-mail : [email protected]
Filipino International Franchise Association (FIFA)
The FIFA Center
Ground Flr., Minnesota Mansion
267 Ermin Garcia Street, Cubao, Quezon City
Philippine Franchise Association (PFA)
Unit 701, OMM – Citra Bldg., San Miguel Avenue,
Ortigas Center, Pasig City
Tel. Nos.: (632) 687.0365 to 67
Fax No.: (632)687.0635
Email: [email protected]