‘Franchising will survive this pandemic’

·2 min read

BECAUSE of its proven system, the franchising sector will survive this pandemic-induced economic crisis, a franchising expert said.

“Franchising will survive and will come out on top of it,” said Rudolf Kotik, founder of RK Franchise Consultancy Inc.

“Consider that domestic franchising in the Philippines became popular because of a crisis—the Asian Financial Crisis in 1997,” he added.

According to Kotik, the Covid-19 pandemic’s impact on the sector is “not so bad” because franchisors have been giving discounts on franchise fees and landlords have been lenient (on rental fees) because of empty spaces.

“Opportunities are plenty. But we are seeing challenges in the logistics due to safety protocols,” said Kotik.

Among all franchise businesses, the “milkteas are the clear winners at the moment,” said Kotik. He observed that amid the lockdown consumers continued to spend online with milkteas as one of their top purchases.

Virtual expo

Kotik, who founded the Filipino International Franchise Association, recently launched the 21st Cebu Franchise Expo through cebufranchise.com, the group’s first virtual franchising expo.

A total of 35 franchise opportunities from Metro Manila, Davao, Cebu, Bohol, Cagayan de Oro City, Bulacan, Cavite, Laguna and Australia are featured in the digital expo that will run from Oct. 30 to Nov. 29.

Kotik said budding entrepreneurs who are thinking of opening a business may consider investing in a franchise business to save time and money.

He said franchising remains to be an attractive entry to business because of its proven system and business model with 95 percent success rate compared to putting up a business from scratch.

Decline

Meanwhile, in a Philippine News Agency report, Philippine Franchise Association (PFA) chairman emeritus Samie Lim was quoted as saying that the local franchise sector will lose 90,000 outlets in 2021, or a 45 percent decline from the 200,000 outlets this year.

His outlook is that by end of 2020, franchise outlets will decline to 130,000 before reaching around 250,000 stores by 2025.

Lim said those that will not survive this pandemic-induced economic crisis are those that have no business or operation plans.

PFA chairman Richard Sanz noted that the projected revenue for the industry this year was around P700 billion.

However, due to impacts of the global health crisis, 72 percent of those in the franchising business expect over 50 percent losses in revenues for 2020. (KOC)