The
Chamber
Volume I Issue 4 • 2018 OCT - DEC
The Official Newsletter of Ormoc City Chamber of Commerce and Industry, Inc.
The future of franchising in Ormoc looks… ‘shining, shimmering, splendid’ Yes. You read it right. The future of franchising in Ormoc looks “shining, shimmering, splendid”, to borrow Aladdin’s “A Whole New World” ballad for Princess Jasmine. It seems that in the past three years, the franchising frenzy has caught up with the Ormocanons. When in the past, only a few Ormocanons were courageous enough to bring in brands – popular food chains, mostly – from capital Manila or neighboring Cebu, today we see a flurry of young blood and up-and-coming entrepreneurs investing in franchises. More so with the entry of the big malls – SM Center and Robinsons Place, and soon City Mall – everyone is encouraged to introduce to Ormocanons and neighboring towns newer, more popular, better brands – both in food and services. The return of investment might not be instantaneous, but, nonetheless, the Ormocanon businessman is confident in the market it has in fellow Ormocanons and those from other municipalities who would regularly come to Ormoc for rest and recreation. Truly, franchising in Ormoc looks promising and income generating. But what is franchising? The Philippine Franchise Association, in its website, defines franchising as, “a method of practicing and using another’s perfected business concept” wherein the franchisee is “granted the right to market
a product or a service under a marketing plan or a system that uses the trademark, name, logo and advertising owned by the franchisor”. Furthermore, per Security Bank, there are two main forms of franchising. There is firstly, product distribution franchising while the second form is called business format franchising.
Accordingly, in product distribution franchising, per the Security Bank website, “the relationship between the franchisees and franchisors is very much like a standard dealersupplier relationship” with a franchisee being allowed to use “the franchisor’s trademarks and
distribute its products, but in return, must pay fees and purchase a minimum amount of products”. Meanwhile, in the second form of franchising, that is, the business format franchising, “the relationship between the two parties is much more complex where there is also an emphasis on sharing business methodologies, operating systems, and support”; and “depending on the agreement, franchisees not only get the license to sell the trademark products or services, but could also get access to the business’s operating systems and a wide range of support on things like site selection, training, quality control, and marketing”. It would seem that the
franchising system is hassle-free, a s all “operational requirements” are already provided for by the franchisor to a franchisee who simply pays the “necessary fees” and / or undergoes the “required trainings” to be able to run the business. But like any other business model, it also has its pros and cons. Only those who are willing to gamble, that is, overlook the “challenges” or tries to work around it while holding on to the promises brought about by the “pros” or the “advantages”. Here is a list of pros and cons from Entrepreneur Philippines’ article, entitled, “Advantages and Challenges of Franchising”, published online on January 7, 2014: Advantages 1. High rate of success. Franchising involves tried and
FRANCHISING... è pg 6