PH in franchising ‘sweet spot’ – Binalot CEO

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THE Philippines is currently in the “sweet spot of franchising” amid its economic boom and would-be franchisors should take advantage of this window of opportunity to start their own franchises, the chief executive of homegrown Filipino fast food chain Binalot said.

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Rommel Juan, president and CEO of Binalot Fiesta Foods, said there are unique highlights in the Philippine economy that make it attractive to someone interested in franchising a business.

He noted that the country has a population of some 100 million, which is growing at a rate of 1.0 percent a year, and most Filipinos are known to be enthusiasts for new or foreign brands, with evolving tastes and preferences that have become more cosmopolitan.

The younger population is also more proficient in the English language compared to other Southeast Asian countries, with about 65 percent in the working-age bracket which should be beneficial to any franchisor entering or challenging the local market.

This is because younger age groups tend to patronize and be more welcoming to new brands, which results in a “quick return of investments,” he said.

Juan said franchisors have more opportunities for growth if they expand beyond Metro Manila and get popular celebrity endorsers to market the business.

The Philippine market has several sub-groups, such as the groups of call center agents and overseas Filipino workers, whose demands are somewhat different from each other, and aspiring franchisers “need a strategy to target these sub-groups.”

The Binalot chief cited a study by Actrium Solutions which said that the global market value of franchising was estimated at $3.79 trillion in 2014, led by the US which cornered 63 percent of the market, with Asia getting only a 16 percent share.

Still citing the study, he said that the US and parts of Western Europe are nearly reaching domestic market saturation, giving way for growth in franchising in other markets such as the fast-growing Asian countries.

With its 6 percent to 7 percent growth in the past five years, the Philippines has been hailed as one of the fastest growing economies in the region. Despite the potential, Juan said most Asian countries have just begun to embrace franchising in recent years.

According to the Actrium Solutions study, international franchisors are very much interested in entering the Asian market but they encounter some challenges along the way, which include: “hard to find qualified franchisees” (74 percent); franchisee management (72 percent); license application procedure (54 percent); foreign exchange controls (46 percent); localization of brand and products (43 percent); and IP/patent registration and protection (43 percent).

With the onset of the Asean Economic Community, the trade of goods and services has become freer. Because of the economic integration, Juan said Binalot is planning to enter Asean countries with a strong Filipino presence aside from their current expansion efforts in the Middle East and the Gulf Cooperation Countries.

Binalot earlier bared its five-year plan to open 20 branches in the Middle East by 2021. This year, Binalot is set to open 10 outlets in the country. To date, Binalot has 34 outlets nationwide.

The homegrown fast food chain is known for its All Time PinoyVorite Meals wrapped in banana leaves.

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