Wednesday, September 17, 2008 Companies seek expansion through franchise systems
WITH the common goal of reaching out to a bigger market, several companies—established ones and those still in their infancy—set up a franchising system to woo potential investors and would-be business partners.
The companies were given the free reign to promote their respective franchise systems during the 9th Cebu Franchise Expo at SM City Trade Hall last week.
One of these companies is home-grown Phoenix Petroleum Philippines Inc., whose desire to compete with big players like Shell, Caltex and Petron prompted it to mount a franchising system.
Phoenix, which was incorporated in 2002 in Davao City, had more than 50 stations in Southern Mindanao at the end of 2007.
Brand manager Francis Joseph Magbitang said only 20 percent of Phoenix gas stations are company-owned while the rest are franchised.
Investment
The company is eyeing a total of 100 service stations at the end of 2008 and a total of 400 by the end of 2012. This year, one station will be opened in Manila, another in Talisay City in Cebu and three more in Mindanao.
The franchise investment is P350,000 for Phoenix Regular (dealer-owned and dealer-operated) and P500,000 for Phoenix Premium (company-owned and dealer-operated).
Apart from petroleum, it also sells a line of lubricants and car care products. It is the exclusive Philippine distributor of Emarat Lubricants, a major petroleum company based in the United Arab Emirates.
Another company, Lokal Inc., producer of travel clothing, accessories and shirts bearing designs based on tourist attractions, developed a franchise system five years ago but only recently campaigned for it.
“We have been making improvements in our franchising. We feel it’s the best time now to aggressively promote it since we see that the retail market (has become) aggressive, tourism is booming and many people want to go into the franchise business,” said Lokal vice president for marketing Carlos de los Santos.
With eight outlets in Cebu City, Lokal’s sales have significantly increased due to international and inter-island tourism.
Lokal offers unit franchises (franchise fee of P175,000 for cart or kiosk and P300,000 for boutique) for Metro Manila, giving a franchisee the right to operate an outlet there.
It also awards area franchises (franchise fee of P300,000) in other areas. The P300,000-franchise fee allows the franchisee to become an exclusive distributor in the area and to open three outlets within 24 months.
Lucrative
Like Phoenix, 30-year-old V.Y. Domingo Pawnshop set up a booth for the first time in the 9th Cebu Franchise Expo, to lure would-be investors who want to cash in on the “lucrative opportunity” it offers.
These entrepreneurs, according to pawnshop specialist Annie Del Mundo, must have enough financial resources to sustain the growth of the business.
“People come to us for money. These days, though, we notice that some of our customers could not renew their
transactions with us probably because of the economic times. Still, V.Y. Domingo is doing well,” she said.
As a part of its expansion plans, the pawnshop offers its franchise at a fee of P350,000.
Meanwhile, the congestion in Metro Manila is also prompting small and medium enterprises like Nomimono Refreshment Bar, which is a Japanese-style refreshment and burger restaurant, to look at other areas for expansion.
Owners Wilvin Ang and Gladys Licaros are eyeing five to 10 franchised outlets in Cebu, which they believe is the next big market after Manila.
Nomimono’s franchise fee is P150,000 for kiosks and P350,000 for café-style. (NRC)
