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Franchising sector optimistic for record 2016 growth

With the optimistic outlook on the Philippine economy and the increasing number of growth areas for the franchising sector, the Philippine Franchise Association (PFA) is optimistic of attaining record 30 percent growth in 2016.

DR. ALAN ESCALONA

DR. ALAN ESCALONA

According to the new PFA President Dr. Alan Escalona, the franchise sector may grow to as high as 30 percent this year. This optimism comes from many factors which include the steady economic forecasts and studies such as that of the World Bank and the International Monetary Fund with projections of 6.4 percent and 6.2 percent  Gross Domestic Product (GDP) growth respectively for 2016.

Apart from country’s bright economic outlook, Escalona noted that personal optimism of Filipinos has also increased.

Escalona cited the Social Weather Stations (SWS) survey conducted from December 5 to 8 last year, which showed that two out of five Filipinos expect their quality of life to improve this year, the highest turnout in the last three decades. Around 39 percent of the respondents also bet that the economy would improve in the next 12 months.

In the past two to four years, the franchise sector enjoyed steady growth at 20 to 25 percent.

“But being an election year, we see higher growth for the Philippine franchise sector, hopefully at 30 percent,” said Escalona, who is also the President of Fruit Magic.

FRANKLIN GO

FRANKLIN GO

In addition, Escalona also sees growth coming from emerging homegrown franchise concepts, the continued, entry of foreign brands and the increasing global footprint of Filipino global brands.

This optimism is likewise shared by Franklin Go, the new PFA Chairman, who noted of the growing number of Philippine franchise brands going international and taking advantage of the opening up of international markets such as the ASEAN economic integration, and the Middle East as primary markets for overseas expansion starting this year.

Homegrown brands such as Jollibee, Max’s, Pancake House, Potato Corner, Bibingkinitan, Figarro, and Oryspa to name a few, aggressively continue their international presence in various parts of the world. Pancake House, which is under Max’s Group Inc., recently inked a deal with a partner in UAE to open 10 stores in the said country in the next five years while Yellow Cab recently announced its entry to China as it aims to take a slice of the Asian economic powerhouse’s billion dollar pizza market.

SAMIE LIM

SAMIE LIM

Bibingkinitan just recently announced the opening of its first outlet in Dubai, while Oryspa now sells in Singapore.

In the national front, the regional expansion of franchise brands will continue to be more aggressively as PFA members revealed that many are actively looking for franchisees or area developers in the regions particularly in Cebu, Davao, northern and southern Luzon, and Northern Mindanao.

PFA was founded in 1995 to promote franchising to create thousands of businesses and millions of jobs. When PFA was founded, there were only about 50 franchises in the Philippines and most of these were foreign brands, today there are an estimated 1,300 franchises in the country, and 69 percent of these are homegrown brands.

PFA Chairman Emeritus Samie Lim remarked, “because of PFA’s thrust to promote franchising as a growth strategy for MSMEs, franchising grew by an average of 60 franchises per year. Before PFA, franchising grew by only about two franchises per year.”

That is why PFA is also keen at looking into emerging concepts that will contribute to the growth of the sector.

Lim also cited the rapid increase in high-rise condo living, which will open opportunities for housekeeping and laundry services, as a good economic indicator.

Also, he said the high number of health-care professionals will facilitate the creation of retirement homes and assisted living facilities.

“Continued rise of tourist arrivals, OFW remittances and the fact that the Philippines is the call center capital of the world will be a boon to those in food, retail and services,” he concluded.