Franchising sector eyes 12-15% growth this year

THE COUNTRY’S franchising sector is expected to grow by 12% to 15% this year, as homegrown brands continue to expand here and abroad, the Philippine Franchise Association (PFA) said.

PFA Chairperson Sherill R. Quintana said the organization hopes to see its members scale up their growth through franchising, especially as they recover from the pandemic.

“We will now be seeing 12-15% growth in terms of the outlets, in terms of expansion of our Filipino brands,” she said during a press conference in Quezon City on Wednesday.   

Ms. Quintana said the growth would come from the expansion of these brands in various territories.   

“We want our homegrown brands to seize the opportunity. It is really exporting the brands and not just the products… It’s not just looking at that exact revenues or exact number of stores, but this 12% to 15% growth across the sector will be coming from the territories that we will be occupying or sort of expanding these global brands,” she added.   

PFA Chairman Emeritus Samie Lim said there are opportunities for Philippine brands to expand in other countries, including the Association of Southeast Asian Nations member states.   

Mr. Lim said the franchising industry could potentially grow more than 15% this year as the economy continues to recover.

“I think it’s a no brainer, we will grow at least 12% to 15%. I personally believe it’s going to be higher. Number one, with inflation coming up, we will be factoring in that and we’re talking about revenue from last year. Revenue will increase because of inflation,” he said.

Inflation slightly eased to 8.6% in February, from the 14-year high 8.7% in January. The Bangko Sentral ng Pilipinas (BSP) expects inflation to remain elevated this year, with an average forecast of 6.1%.

Mr. Lim said nearly half or 48% of the new franchisors are coming from outside Metro Manila.

“Franchising now is a nationwide thing that is happening… Many of the businesses, the franchises have closed, but now they are going to open because people are starting to come out… So all of these factors are going to help (us achieve) more than 15% (growth),” he added.   

According to Ms. Quintana, the PFA is seeing growth in franchising subsectors such as food, services, and retail amid “revenge spending” by consumers.

The PFA has nearly 50 Filipino brands that are expanding and may grow into global brands, she added.

“The food (sector) has been always nailing it. But we want to help, especially the retail sector because it’s easier for their footprint to expand their brands outside the Philippines. We see the potential of the retail stores to actually expand immediately,” Ms. Quintana said.   

She noted many service-related businesses were affected by the lockdowns due to the pandemic.

“This is not just about spa or salons, but also the service sectors in terms of the laundromats, the educational sector, and the service sector in the wellness and health. We’d like to see more growth also in the service subsector,” she said.

Meanwhile, PFA President Sam Christopher Lim said the franchising sector has generated over two million direct and indirect jobs.    

“We want to create entrepreneurs so we can generate millions of jobs. That’s why we all believe in franchising. The thrust of government right now is we want to be upper middle class. We believe franchising is going to be a critical catalyst to creating a stronger middle class, to bringing the Philippines to an upper middle-income class status,” Mr. Lim said.   

In the next few years, he said the PFA is expecting more franchises to be established in areas outside of the National Capital Region.

In September last year, Trade Secretary Alfredo E. Pascual said that the country’s franchise industry had an aggregate value worth P605 billion and accounted for 7.8% of the Philippine gross domestic product.   

The PFA is holding several Franchise Asia Philippines events this year, including an international conference on June 7 to 8, and the International Franchise Expo on Oct. 27 to 29.

The PFA will also host the twin meetings of the World Franchise Counsel and Asia Pacific Franchise Confederation in October. — Revin Mikhael D. Ochave