CHAPTER II

Alminaza, Elvira
Benting, Ava Maureen
De Mesa, Sharlene Jean
Lumanog, Sarah Jane
Morallos, Joy Lene
Panaguiton, Janilyn
 HISTORY OF FRANCHISING
 “Franchise” comes from the Old French, meaning freedom or
privilege.
 In 1851, Isaac Singer - Singer Sewing Machine.
 The Singer Company - First company to write franchise
contracts.
 White Castle - First fast food hamburger franchise chain in
America, opening 1921.
 A&W (All American Food) started franchising their root beer
stands in 1921.
 In the 1950s, all kinds of services and products started to
franchise in the USA.
 In 1955, McDonald’s, KFC, Dairy Queen and Dunkin
Donuts started to franchise.
 Franchising has powerfully transformed the entire
perception of business culture and practice.
 In the Philippines, business format franchising started in the
1970’s.
 Jollibee, number one franchise company in the country.
 Rudolf Kotik - founder of RK Franchise Consultancy Inc,
who developed more than 350 Filipino-owned companies
into Franchise Systems.
 FRANCHISING SERIES: Basics of Franchising in the
Philippines
 Franchise Agreement is one of the most important legal document that
binds franchisee and franchisor together.
o Terms of Agreement
o Renewal
o Termination
o Fees
o Territory
o Purchase of Products
Where and How to start?
 To avail of franchises, you must undergo the application process.
 Franchising climate in the Philippines
 The Philippines has a very franchise-friendly environment for a
prospective entrepreneur.
 from 2005 to 2007franchising sector contributed 5% of the
Philippines’ total Gross Domestic Product.
 2010 to 2011, the Philippines franchising industry enjoyed 17%
growth, and as of 2011, franchising made up around 30% of all
the retail sales in the Philippines.
 Most Filipino business-people prefer to franchise.
 One great example of a highly successful franchise in the
Philippines is Mang Inasal.
 Franchising Pros
 It is much less risky than putting up a new business entirely from scratch
 Consumers generally go back to the brands that they trust
 It is a good business method for many first-time business owners
 It requires less legal paperwork
Franchising Cons
 Lack of control
 If the franchisor’s business fails, the franchisee will suffer too
 Franchise scams
HOW TO KNOW IF THE FRANCHISE IS A SCAM:
■ If the agent refuses to reveal any information, then it is a
scam.
■ Scammers usually lure investors who are quick to pay
the small amounts, so they can easily run away from
them.
■ See if the franchisor is affiliated with the Philippine
Franchise Association, the Association of Filipino
Franchiser Inc., or the Filipino International Franchise
Association.
 PHILIPPINE FRANCHISE ASSOCIATION (PFA)

 The Philippine Franchise Association (PFA) is a voluntary and

self-regulating governing body for the Philippine franchising
sector.
 VISION
For the Philippines to be the “Center for Franchise
Development in Asia”
 MISSION
To promote franchising as a powerful tool for economic
development and nation-building by developing its intrinsic benefits
to create thousands of businesses and millions of jobs.
 Internationalization of Franchising

 Internationalization through franchising can be a complex

process since the decision can be affected by a multitude of
forces, particularly organizational factors and market
conditions. Although previous research has examined factors
contributing to internationalization through franchising as an
entry mode, most of the research outputs generated are
mainly applicable to the manufacturing industry.