Franchising, simply put, is a special type of licensing arrangement for the distribution of services and products. This is as defined by Rudolf A. Kotik, founder and chief executive officer of the RK Franchise Consultancy, the biggest among the three existing franchise consultancy companies in the Philippines.
Two roles are involved in franchising: the franchisor who allows another entity, who is the franchisee, to use its business system, trademarks and corporate identity for a certain period of time; and the franchisee who takes an active role in marketing the brand, and working the operating system or the complete system of doing the business.
Is there a threat of competition among franchisees and their franchisor? What if the market is already saturated?
In answering these questions, Kotik said Wednesday during a press conference that Davao City, or Mindanao in general, is still unsaturated market for franchised businesses.
“There is still a lot of room to grow business here compared to Manila where malls are getting closer to each other and are already hurting each other,” he added.
Kotik noted that most franchisors, especially outside Mindanao, prefer Cagayan de Oro, Davao and General Santos.
In terms of peace and order situation, Kotik finds Davao a safe place, citing that one is more likely to be victimized by hold-ups in Manila than here.
Kotik said the trend in franchising is mostly on food and wellness businesses, while agri-business is not franchise-able. He added that for a business to be franchised, it should be at least operating for a year and is profitable. With his company’s help, he said, all other concerns can be fixed.
The person who started the franchising of Davao’s own business ventures more than a decade ago, and at present has 43 clients in Mindanao, Kotik initiated the 5th Mindanao Franchise Expo in Davao City held at the Gaisano Mall of Davao Atrium last October 15-17.
The event aimed to offer direct access for entrepreneurs to meet and interact with franchisors from Manila, Cebu, Iloilo, Bacolod, Cagayan de Oro, Davao and General Santos City. He said, “It enabled people and companies involved in franchising or who want to be involved in franchising, including suppliers and industry publications to come together and make new contact and obtain useful information and advice from experts in the franchising field.”
It was supported by FIFA Filipino International Franchise Association and sponsored by the PLDT SME Nation, RK Franchise Consultancy, Livingwater Systems, San Miguel Foods Inc., O’Hair Salon, and media partners.
Among the exhibitors were Acebedo Optical, Add-on Systems and Osmosis Technologies, Aficionado Germany Perfume, AMA Computer Learning Center, Aquahealth Pure Drinking Water, Aqualifpure Water Systems and Equipment, Beestop Foodhauz, Botoy’s Litson Manok, Dimsum Diner, Eggmess Express, Empeño-Reyes Pinoy Foods, ETON International School, Generika Drugstore, Greenrose Laundry, Henrich Food Products, Ink2go Ink Refilling Station, Inkman Ventures, Kettle Food Corporation, Lonhro Marketing, LSK Generics Distribution Center, Mamma Maria’s Pizzeria, Master Siomai, Medicus Philippines, Mr. Softy Ice Cream, Organic Thannaka, Nail Treats Hand and Foot Spa, Ng Khai Development Corporation, Rizal Commercial Banking Corp., Seaoil Philippines, Tarpographics Advertising, TBS Beauty Products, Transfer It!, and Uncle Sam’s Burger and Steak.
Kotik also gave a franchise seminar dubbed “All About Franchising” for entrepreneurs to learn more about the franchising industry, held last October 14 at the Regency Inn Hotel, Davao City.
Topics discussed were what is franchising; history of franchising; defining franchising; franchising 101; what does a franchise provide; benefits of buying a franchise; how to select a franchise; advantages and demands of franchising; mistakes by franchise buyers; buying a franchise; franchising your business; legal franchise requirements; franchise operations manual; the future of franchising; and introduction to available franchise opportunities.
In a nutshell, Kotik said, what’s good about business franchising is that the franchisor is able to multiply his brand and products using OPM—other people’s money; and, while the franchisee gets to start his or her business with a ready-made system and concept, the franchisor collects royalty fee and supplies items to the franchisee. He added that as the brand expands, so does its equity rise.
