Chapter 2 Franchising a convenience store

Topics: Franchising, Franchise, International Franchise Association Pages: 7 (2312 words) Published: December 19, 2013
CHAPTER 2
Review of Related Literature and Studies
Local Literature
According to Samie Lim, from the article of Business Today (Feb. 18, 2008) Franchising is considered a powerful tool for economic development. It creates thousands of enterprises as well as millions of jobs. It also helps fuel the growth of entrepreneurship. Samie Lim, chairman emeritus of the Philippine of the franchise Association and also a chairman of francorp Philippines, shares that here are three major reasons why franchising works. Franchising he says, uses three of the most limited resources to expand one’s business. These are other people’s money, time, and other people’s organizations for its operation. The franchisee would be the one who would Shell out the money to open another outlet of the franchisor. He would pay all the expenses for its operation. By other people’s time he means that the franchisee would be managing the business while other people’s network or connections would make it easier for the franchisee to run the business. “He knows the local government authorities, he knows the customers. Knowing the people in the community creates lots of advantages,” Lim simply describes that buying a franchise is acquiring a trusted brand with a consistent quality. It provides assurance to customers that they would be getting the same value whenever they purchase that brand. Franchising also thrives amid challenging times. Studies show that franchising grows even faster during times of recession as it also remains robust despite the odds. Franchising also has a 90-percent success rate compared to traditional retail (or your own business) which has only 25-percent success rate after 10 years of operation. So for non- franchises businesses, 75-percent are not expected to succeed after a decade of operation. From the article of Philippine daily Inquirer (June 25, 2010) Magapayo states that, “the safest way for first time entrepreneur is to go franchising” . Say’s Voltaire Magpayo owner of the food cart business Sweet Corner. In recent years, there has been a significant increase in franchise business in the Philippines notably in the food and cart industry. According to the Philippine franchise Association (PDA), “franchising in the country began in 1980’s, with the sector pre dominated mostly by foreign franchise companies. From around 20 foreign and local franchises, the sector rapidly grew, with the figure reaching around 1000 by 2008. Looking around malls and other commercial centers, home-grown concepts are dominating the local franchises with food and cart businesses leading the pack. Initially, the cart businesses was ruled by food and beverages, this day’s even photo printing is offered in carts- carts getting a new meaning. Still, food makes an impressive 41 percent in the franchise sectors, service establishments 32 percent, and retail outlets, about 27 percent. Magpayo said franchising is not only safest but the easiest way for startup entrepreneur for one a prospective franchise only needs a couple of hundred thousand pesos to start a business he explained, for sweet corner we only require P185, 000 inclusive of the cart, business name, it’s not labor intensive as one cart needs only two person to main the stall, because its ambulant you can change location and its everyday cash. According to Dti dateline (August 31, 2009), Franchising robust despite global crisis , AFFI President and Binalot owner Rommel Juan states that franchising is the “most practical and least risky route for entrepreneurs to go into business ,” as franchises are “trusted businesses with proven concepts and operating models.” Those who do not have any experience with business are thus spared of the difficulties of having to start up their own, which is more risky and difficult route. Franchises are like plug-and-play Businesses that enable entrepreneurs to start their business right from the first day of operations.” Franchises in the country have an...
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