“Asia is fast becoming and will become the most dominant force because the market is in Asia,” said Philippine Franchising Association founding president and chairperson emeritus Samie Lim in the first part of this exclusive interview. “China now is very much into franchising and ahead of everybody else.”
Now, he predicts the franchising sector will become China’s next big conquest. “China will be the biggest franchise country in the world. It will beat America and the whole of Europe anytime."
The rest of the interview follows.
Would you say people choose to franchise because it’s a low-risk way to start a business?
That is one of the reasons. If you were to start a business, you have less than 25% chance of still being in existence 10 years from now. But with a franchise, after 10 years, you have a 90% chance of being successful. Frankly, even franchises [today] are hit by the financial crisis and that percentage is going down. But you’re four times more likely to succeed and you’re not in business by yourself.
What franchises would you recommend to start-up entrepreneurs?
That’s like asking me who you should marry. My answer is, I have no idea. Look for something that you’re happy to wake up to every morning. I can recommend good franchisers but I can’t recommend what kind of business you’ll want to have. If you were to buy a franchise, I would recommend that you talk to an existing franchisee to ask how the franchiser supports them.
How do franchises hold up in these tough times?
Franchises hold up during good times, and get better during bad times. When the first financial crisis hit Asia, franchising boomed. There’s opportunity for new brands that are affordable. If there’s an industry that will boom this year or next, it’s franchising.
A franchiser looks for a franchisee with three things: money, time, and connections. During financial crises, there are people who get retrenched or retire and they have to stop working, but have money. Places for rent now are cheaper. So entry cost is lower and it’s easier to hire people because they’re looking for jobs.
How does the Philippine franchising industry fare compared to other countries’?
We are the leading global player. Japan has more franchises but few are globally franchisable. Korea is catching up.
We have been so successful because we had a plan and followed it. We also have [franchisable] products from the provinces. In Cagayan de Oro, they serve ostrich steak. The concept can be franchised. Whoever owns that should think about franchising. We also believe that if the Manileňo can franchise to Davao or Cebu, there’s no reason he can’t franchise in places like Indonesia or Malaysia, and eventually, China or the US. It’s about time.
I think the Philippines will be the gateway to Asia because of our language proficiency, which is important because franchising is [about] knowledge transfer. We’re prepared for this. We have the most number of licensed international franchise executives. It makes me proud that the Philippines is the industry leader.
However, it’s sad because here we don’t get [government] support, unlike in Singapore, Malaysia, and Thailand. Our government still has to put its money where its mouth is.
As the father of Philippine franchising, what legacy would you want to leave the industry with?
I think I’ve been one of the guiding posts who brought [the industry] from where it was to where it is and where it will be. I was given the gift of developing industries and I think I’ve served without personal interest. I think my legacy is to empower Filipinos so they can create jobs and contribute to the wealth of the nation.
Print ed: 08/09