Franchise
Franchise is a business model where an individual or group (the franchisee) is granted the right to operate a business using the brand, systems, and products of an established company (the franchisor).
In Filipino MSME terms: ito yung “pagbili ng karapatang magtayo ng negosyo gamit ang sikat na brand” — kasama ang training, systems, at support ng franchisor.
Franchising is popular in the Philippines because it reduces risk and provides a proven business model.
Why Franchising Matters
For Filipino entrepreneurs, franchising is important because it:
- Reduces startup risk with a tested business model
- Provides brand recognition from day one
- Includes training and support from the franchisor
- Offers marketing and operational systems
- Improves chances of success compared to starting from scratch
However, franchising also requires strict compliance with franchisor rules.
Key Components of a Franchise
- Franchise Fee — one‑time payment to use the brand
- Royalty Fees — ongoing payments based on sales
- Marketing Fees — contribution to national advertising
- Franchise Agreement — legal contract between franchisor and franchisee
- Operations Manual — detailed guide on running the business
Common Types of Franchises
- Food and Beverage — milk tea, siomai, fried chicken, coffee shops
- Retail — convenience stores, pharmacies, mini‑groceries
- Services — laundry shops, salons, spas, water refilling stations
- Education and Training
- Logistics and Delivery
Example / Context
Example 1 (Food Cart):
A franchisee buys a siomai cart franchise with training, equipment, and branding included.
Example 2 (Retail Store):
A family opens a convenience store franchise with standardized systems and supplier networks.
Example 3 (Service Business):
A laundry shop franchise provides machines, chemicals, and operational training.
Example 4 (Multi‑Unit Franchise):
An entrepreneur opens multiple branches of the same franchise brand.
Related Terms
FAQs
1. Is franchising cheaper than starting your own business?
Not always. Franchises can be more expensive upfront, but they reduce risk and provide support.
2. Do franchisees have full control of the business?
No. Franchisees must follow the franchisor’s systems, branding, and rules.
3. How long does a franchise agreement last?
Typically 3–10 years, depending on the brand.
4. Are all franchises profitable?
No. Profitability depends on location, management, demand, and brand strength.