Spotting The Winning Franchise Brand

The more successful franchise businesses usually have something in common, according to Tess NganTian, president and co-founder of Lots'A Pizza.

First, successful franchisors usually retain ownership of a significant number of stores. They use the stores they own to test new products and promotions and gain a deep understanding of the business. ''Our experience in our own stores enables us to teach our franchisees how to hurdle the problems and challenges they may encounter,'' said NganTian.

The NganTian family owns 55 of the 188 Lots'A Pizza (LAP) stores in Luzon and the Visayas. Entrepreneur magazine, a widely circulated magazine catering to current and aspiring business owners, named LAP one of the most preferred franchise concepts today. It also conferred to the best local franchise award to LAP from 2008 to 2011 and Best in Franchising Support from 2009 to 2011. Lots'A Pizza participated in the recent 11th Filipino Franchise Show.

Other indicators of a sound franchise business are franchisees who own more than one store and in the case of the food business, efficient commissaries that allow the franchisee to always get the stocks he needs to make the margins he desires, disclosed NganTian.

The former auditor of SGV observed that public interest in owning a franchise has never been greater. Many look to owning a franchise business which already comes with tested systems and products as a means to escape employment and get into entrepreneurship. The more successful enterprises offer manuals to franchisees that detail procedures to be followed in the key functional areas of operations, marketing, training and the like.

Among the pioneers of the Association of Filipino Franchisers, Inc. (AFFI), Tess and husband Ed NganTian have held various positions in the organization that counts many successful homegrown brands as members. Tess related that husband Ed, LAP chairman, was the visionary behind the LAP pizza that appeals to mid-income value seekers wishing to bring home something filling and delicious to their families.

Ed required that the pizza had to be ready in minutes but had to remain fresh and chewy even hours after it had been purchased. It was Tess nevertheless who went to baking school in the US and came up with the winning strategy of a parbaked or pre-cooked pizza. Slathered with their secret sauce made by Del Monte, premium toppings from Purefoods Hormel and special cheese made by Kraft, the pizza needed time in the oven only for the various flavors to meld and fuse together. After perfecting the product and pushing it in their outlets for 10 years, it was Ed once more who pushed for LAP to expand its market through franchising.

Tess pointed out that especially in the food category, a franchise is only as good as its commissary. It is important that a brand's commissary be operated by the owners of the brand themselves - not a third party who will feel less compelled to deliver stocks as needed to franchise holders. Moreover, franchise holders need to study the location of the commissaries. During the most recent monsoon rains, for example, food commissaries located in flood-prone areas were unable to deliver stocks for weeks.

LAP has four commissaries - one in Las Piñas to fill NCR orders; in Pampanga to fill orders from Central and Northern Luzon; in Cavite for Southern Luzon orders; and in Cebu to fill orders from the Visayas. LAP commissaries likewise help each other meet volume orders.

Ultimately, franchising is a relationship between the franchisor and the franchisee, says Tess. When there is mutual respect among the parties, the business as a whole thrives. And when the business does well, a successful franchisee is likely to get another outlet from the same brand. Some LAP partners own as many as 10 to 20 outlets.