EconomyEditor's PickDTI chief seeks investors to establish franchises

September 20, 2022

THE DEPARTMENT of Trade and Industry (DTI) is expecting more franchises in the Philippines on the back of surging demand for popular brands and establishments.

“Investors are encouraged to set up franchises in the Philippines because of its healthy business climate. The Philippines is the 7th largest franchise market in the world, contributing 7.8% to our country’s gross domestic product (GDP) and creating two million direct and indirect jobs,” Trade Secretary Alfredo E. Pascual said in a speech during the Franchise Asia Philippines 2022 virtual conference on Tuesday.

“With a growing middle class, our country is considered one of the largest franchise markets in the Southeast Asian region. Eating at a popular establishment or owning branded items signals societal status in one of Asia’s most social media savvy populations,” he added.

According to Mr. Pascual, the food service sector accounts for almost half of the franchise categories in the country.

“Of the two basic franchise categories, food expectedly takes precedence over non-food. Food makes up almost half (43%) of the estimated 1,800 franchise brands in the Philippines. According to Philippine Franchise Association data, food franchises have an aggregate value of P538 billion or $10.8 billion,” Mr. Pascual said.

He added that aspiring entrepreneurs should start a business via franchising since it has a higher success rate.

“Unlike starting a business on your own, franchisees build on tried-and-tested business models. A team of experts guides franchise owners to achieve management and operational efficiencies, as well as excellent quality control systems,” Mr. Pascual said.

“Market-wise, franchisees have an advantage in terms of brand recognition. Name recall makes franchise brands popular, making sales easier. Building up new brands requires substantial expenditures to generate brand awareness, and new brands also need to develop a steady clientele,” he added.

Meanwhile, Mr. Pascual said that the DTI has been providing financial assistance to micro, small, and medium enterprises (MSMEs) since many franchisees come from the said sector.

“Through SB Corp., the DTI has been extending financial assistance to MSMEs to provide them access to capital. We assist them in their debt obligation payment, repurposing existing business capital, and acquiring new technologies and systems. We help them adjust their business processes to adapt to the new normal,” Mr. Pascual said. — Revin Mikhael D. Ochave

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