Franchising consultant warns vs fads in picking products

Monday, May 30, 2011

ALTHOUGH he believes that opening up a franchise is the best way to invest, a consultant warned against picking a product that is more of a fad than a lasting item.

Rudolf Kotik, founder of RK Franchise Consultancy, said he discourages clients from choosing products such as pearl shakes and ice scramble, calling these fads.

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While he admitted some of the brands work, he said these brands have to be the first to come out and be serious about their business.

“You can survive a fad if you are on top of the business and not just copy from others,” Kotik said. He pointed out this was why the brand Zagu survived the pearl shake fad.

For Kotik, coffee shops and frozen yogurt are not fads, although he warned that frozen yogurt shops that are not run properly will not survive.

He said brands that want to stay long should invest in quality equipment and not cheap replicas to maintain the quality of the product.

With over 100 years being practiced as a business system, Kotik said franchising a business will remain a viable option for investors. He said that 100 companies grow each year because of the system and that it is the best way for a company to expand without spending its own funds.

For the franchisee, he said it benefits the newcomer because the business has already proven it is profitable.

Kotik, however, warned that if not developed properly, a franchise could flop.

He said that some companies attempt to do things by themselves without proper documentation, training, system standards and manuals. He explained that without the right things in place, it would be difficult to pinpoint what went wrong.

He pointed out that the right documentation protects both the franchisor and franchisee and both parties should see to it that the necessary steps are made before getting into an agreement.

Kotik, who has been in the business for 32 years, said franchising took off in the Philippines during the Asian financial crisis.

He observed that before the crisis, most consumers were buying foreign brands. The crisis made these brands too expensive and led consumers to seek local alternatives.

Kotik said franchises continue to do well, with the expansion of malls and the opening of establishments in centers outside of the big cities. He pointed out that malls are being opened in Surigao and Ormoc and in Danao City and Sogod.