THE country’s franchising industry, said to be the largest in Southeast Asia, is poised to grow in double digits this year, as more players maximize e-commerce to accelerate their respective businesses, said an industry leader.
In an interview, Philippine Franchise Association (PFA) chairman emeritus Samie Lim said the franchising industry is expected to grow by as much as 30 percent, with stronger interest in entrepreneurship among Filipinos and the use of e-commerce.
In 2016, the industry expanded by 20 percent from P16 billion total sales registered in 2015, according to Trade Secretary Ramon Lopez.
Data from the Department of Trade and Industry (DTI) showed that the Philippines currently has 1,500 franchises where 65 percent are Philippine brands. This translates to 140,000 franchise outlets, with the Philippine franchise sector generating more than a million jobs.
While the use of digital technologies and e-commerce have been supporting the sales volume of franchisees, adoption has been slower than expected.
“I must admit, it is slow, but we know the technology is there. We are just catching up,” he said. Largely, however, the Philippine franchise industry is dominated by the food business. Retail and services follow.
If he were to compare the digitalization level in the country’s franchising industry to developed countries like the US and Europe at 90 percent, Lim said the Philippines could be still at the 10 percent adoption rate in e-commerce.
“Filipinos are different. We love to talk to people, and touch and feel what we buy,” he observed.
To accelerate the country’s franchising industry, he said the Philippines needs to increase the number of professional franchise executives. With 150 franchise executives to date, a practitioner needs to first undergo a certified franchise executive program (CFE) offered by the Institute of Certified Franchise Executives of the International Franchise Association Education Foundation.
In the Philippines, it has been offered through PFA since 2002.
Another hub
Meanwhile, China, a close partner of the Philippines, is anticipated to become the world’s next franchising hub. Based on observations, Lim said most franchising players in China have not crossed borders yet, due to language barriers and the country’s huge market opportunities of 1.4 billion people.
If the second largest economy decides to spread its franchising business outside itself, Lim sees China beating the US, the world’s biggest franchising arena.