Mode of Franchising

FRANCHISING

When entrepreneurs dream about their future, franchising is rarely the starting
place for their fantasy. While it's not always choice No. 1, the benefits of franchising
make it an enticing career opportunity for entrepreneurs. With an established brand and
support system, franchises offer franchisees a chance to taste running a business while
also giving them significant help.

"A franchise is a business with training wheels," said Tom Scarda, founder of The
Franchise Academy, a podcast dedicated to franchising. "For a majority of franchisees,
franchising has proven to be a viable way to become a business owner. For the most part,
it offers the lowest risks and the highest level of support. Because a franchiser doesn't
succeed until the franchisees do, you'll find a team of dedicated professionals willing and
able to help you every step of the way, from site selection to employee hiring to grand
opening."

Franchising is an arrangement in which the franchisor gives the franchisee the

right to distribute and sell the franchisor’s goods or services and use its business name
and business model for a specified period, and possibly covering a geographical area. The
franchisor is the owner of the business that provides the product/service, while the
franchisee is the person who receives the rights to use the franchisor’s business name,
model, etc. Franchising exists in several forms. According to the Franchising Council of
Australia, the most common way franchising is identified is in the “business format
franchising”. In business format franchising the franchisee has the right to sell the
franchisor’s goods or services, but also uses the franchisor’s designs, quality control,
training, and also benefits from his/her advertising and promotions, accounting systems,
and operating procedures. Often the supplier of the franchisee’s goods or services is the
franchisor. If it is a hotel or travel agency business, the franchisee is also part of the
franchisor’s worldwide reservation system.
Examples of franchising relationships include:

 A manufacturer-to-retailer arrangement – as occurs with car vehicle dealerships.

The franchisor supplies the dealership (retailer) with vehicles.
 A manufacturer-to-wholesaler arrangement – common with soft drinks
companies. The franchisor grants the franchisee a license to manufacture and
distribute its product(s). This kind of franchise is common when the franchisee is
in another country.
 A wholesaler-to-retailer arrangement – the franchisor (wholesaler) sells products
to the franchisee (retailer) who sells them to the general public. This kind of
arrangement is common in cooperatives, where the franchisee is, in fact, part of
the cooperative (the cooperative is the franchisor).
 A retailer-to-retailer arrangement – the “classic” business format franchise. The
franchisor markets a product (or service) through a network of franchisee
retailers.

What are the benefits of franchising?

Benefits for the franchisor:

 The business can expand using other people’s money, which not only provides
another income (regular royalty payments) but also allows the franchisor to
expand more rapidly.

 The franchisor may have several sources of income, such as franchise fees,
franchise royalty fees, training fees, service fees, advertising and marketing
administrative fees, rebates from suppliers, and the sales of products and supplies
to the franchisees.

 Being able to open in multiple locations more rapidly gives the franchisor a
competitive advantage over other businesses selling similar products or services.

 The franchisor brings into the company people (franchisees) who are
entrepreneurs, full of motivation to succeed.
 The franchisor needs a smaller central organization compared to a business that
owns all the branches. In other words, he or she does not need such a large head
office.

Benefits for the franchisee:

 A greater chance of succeeding. Franchising businesses have a much higher

success rate than others for people who start in business.
However, Entrepreneur disputes this.

 Get things started more quickly. Depending on the arrangement, in many cases
the franchisor comes and sets the whole thing up, including decorating, shelving
and equipment.

 Initial training and then ongoing training.

 Ongoing support.

 Help in finding the right premises.

 Being part of a known brand. In many cases, benefiting from regional or national
advertising campaigns.

 Group purchasing usually results in lower costs.

 Adopting a proven business model.

 Many franchisors provide customer leads through websites and centralized call
centers.

 Being part of a network of franchisees.

 Disadvantages of Franchising

Disadvantages for the franchisor:

 Loss of ownership – the franchisee has put up money and becomes a kind of
partner in the business. A business that owns all its branches has not lost
ownership.

 Loss of territory. In most cases the franchisee will be granted an exclusive

territory. If it is not fully exploited, there is not usually much the franchisor can
do.

 You may not be suited to be a franchisor. The resources and skills required are not
the same as those needed to manage employees in a branch. You have to be able
to lead and motivate independent entrepreneurs.

 Confidentiality – a franchisor will have to divulge more confidential information

about the business to franchisees than to employees. Even though a franchisee
should have signed a confidentiality agreement, monitoring the provisions of the
contract is not easy, and enforcing them can be expensive.

Disadvantages for the franchisee:

 Lack of independence – goods usually come just from the franchisor, the premises
can only be decorated in a certain way, the range of products available for sale are
restricted, etc.

 Lack of control over prices – the company may decide on a nationwide discount
on products that may not work in the franchisee’s market.

 Generally being at the mercy of the company regarding virtually everything.

 Long-term growth – the franchisee’s ambitions regarding to become large

business one day may be limited by the franchise setup and the franchisor’s aims.
 Characteristics of Franchising

1. License: The franchisee gets the right to use, franchiser’s trademark under a
license.

2. Policies: The franchisee must follow the policies concerning the mode of
conducting business, as stated in the agreement.

3. Marketing support and technology: Franchisee is supplied with continuous

market support and technology, by the franchiser, to undertake business, in the
manner stated in the franchising agreement.

4. Training: Complete training and assistance are provided to the personnel working
in the franchisee’s enterprise.

5. Royalty: For making use of a well-known business model, the franchisee pays
the royalty to the franchiser.
 6. Limited period: Franchisee is allowed to use the business know-how and brand
name for a specified period, as mentioned in the franchise agreement. Although,
the agreement can be renewed further.

Franchising is a most common practice of expanding the business, through a

licensing relationship, wherein the owner provides training, equipment, ingredients, and
marketing support to the other entity.

Importance of Franchising

 It allows franchiser to augment his distribution chain in minimum time.

 It provides feedback to the franchiser regarding the product popularity, needs and
choices of customers, etc.

 It expands the network of franchiser which helps in increasing goodwill.

 As the business is already established, the franchisee need not make efforts in
promoting the product.

 Franchisee get sole rights in providing the product or service

Franchising is a great alternative to developing chain stores, to provide goods and

services to the customers and avoid investment. But there are certain demerits attached to
it such as there is always a fear that franchisee may open the same business with a
different name, after the expiry of the said term. The franchiser’s brand name and
reputation will suffer if the franchisee does not provide quality service to the target
audience. Besides this, as there is a certain restriction due to which the franchisee lacks
freedom in conducting business.

Types of Franchising

There are two main forms of franchising — product distribution franchising and
business format franchising. In product distribution franchising, the relationship between
the franchisees and franchisors is very much like a standard dealer-supplier relationship.
Franchisees are allowed to use the franchisors’ trademarks and distribute their products,
but in return, they must pay fees and purchase a minimum amount of products. In
business format franchising, the relationship between the two parties is much more
complex where there is also an emphasis on sharing business methodologies, operating
systems, and support. Depending on the agreement, franchisees not only get the license to
sell the trademark products or services, but could also get access to the business’s
operating systems and a wide range of support on things like site selection, training,
quality control, and marketing.

Philippine Franchising

Franchising continues to be one of the fastest growing sectors of the Philippine

economy. Demand continues to grow for new products and services, providing new
opportunities for U.S. companies. Population growth, consumer preferences, and
increased economic activity have contributed to the growth of franchises in the
Philippines.

Foreign franchisors offer financing schemes and marketing support to local

franchisees in order to sustain overseas franchises. The most successful companies that
are expanding market share generally receive such support from their foreign principal.
Master franchise fees vary widely depending on the type of business and are defined in
the agreement between the parties. The royalty fee that a franchisor collects from a
franchisee incorporates all aspects of the franchise business, which may include the use
of trade name, trademark, and the system or concept of the franchise.

One hundred percent foreign ownership is allowed for Philippine retail trade
enterprises (which most franchise outlets are) which meet all of the following
requirements: (a) upfront paid-up capital of US$ 2.5 million or more, provided that
investments for establishing a store is not less than $830,000 or (b) specializing in high-
end or luxury products, provided that the paid-up capital per store is not less than $
250,000.00 (Section 5 of Republic Act 9762). No foreign equity is allowed in Retail
Trade Enterprises with less than the above- mentioned capital.

The GRP’s liberalized trade practices are embodied in the Intellectual Property
Code of the Philippines – Republic Act No. 8293. Under the law, franchisors do not have
to register their franchise agreements as long as these agreements do not contain any of
the prohibited clauses under Section 87 and do contain all the mandatory provisions
under Section 88 of the IP Code. The law also removed the ceiling on royalties. Royalty
payments may be remitted through any Authorized Agent Bank (AAB) of the Philippine
Central Bank (Bangko Sentral ng Pilipinas (BSP).

Franchise agreement clauses prohibited under Section 87 are those that:

1. Impose upon the licensee the obligation to acquire from specific source capital
goods, intermediate products, raw materials, and other technologies, or of
permanently employing personnel indicated by the licensor;
2. Reserve the right to fix the sale or resale prices of the products manufactured on
the basis of the license;
3. Contain restrictions regarding the volume and structure of production;
Prohibit the use of competitive technologies in a nonexclusive technology transfer
arrangement;
4. Establish a full or partial purchase option in favor of the licensor;
Obligate the licensee to transfer for free to the licensor the inventions or
improvements that may be obtained through the use of the licensed technology;
5. Require payment of royalties to the owners of patents for patents that are not
used;
6. Prohibit the licensee to export the licensed product, unless justified for the
protection of the legitimate interest of the licensor such as exports to countries
where exclusive licenses to manufacture and/or distribute the licensed product(s)
have already been granted;
7. Restrict the use of the technology supplied after the expiration of the technology
transfer arrangement, except in cases of early termination of the technology
transfer arrangement due to reason(s) attributable to the licensee;
8. Require payments for patents and other industrial property rights after their
expiration or termination arrangement;
9. Necessitate that the technology recipient shall not contest the validity of any of
the patents of the technology supplier;
 10. Limit the research and development activities of the licensee designed to absorb
and adapt the transferred technology to local conditions or to initiate research and
development programs in connection with new products, processes, or equipment;
11. Prevent the licensee from adapting the imported technology to local conditions, or
introducing innovation to it, as long as it does not impair the quality standards
prescribed by the licensor;
12. Exempt the licensor for liability for non-fulfillment of his responsibilities under
the technology transfer arrangement and/or liability arising from third party suits
brought about by the use of the licensed product or the licensed technology; and
other clauses with equivalent effects.

The following are the mandatory provisions required under Section 88:

1. The laws of the Philippines shall govern the interpretation of the contract and, in
the event of litigation, the venue shall be the proper court in the place where the
licensee has its principal office;
2. Continued access to improvement in techniques and processes related to the
technology shall be made available during the period of the technology transfer
arrangement;
In the event the technology transfer arrangement shall provide for arbitration, the
Procedure of Arbitration of the Arbitration Law of the Philippines or the
Arbitration Rules of the United Nations Commission on International Trade Law
(UNCITRAL) or the Rules of Conciliation and Arbitration of the International
Chamber of Commerce (ICC) shall apply and the venue of arbitration shall be the
Philippines or any neutral country; and,
3. The Philippine taxes on all payments relating to the technology transfer
arrangement shall be borne by the licensor. Prepared by our U.S. Embassies
abroad. With its network of 108 offices across the United States and in more than
75 countries, the U.S. Commercial Service of the U.S. Department of Commerce
utilizes its global presence and international marketing expertise to help U.S.
 companies sell their products and services worldwide. Locate the U.S.
Commercial Service trade specialist in the U.S. nearest you by visiting

Philippine Franchise Association

Sam Christopher Lim is the senior vice president

for marketing and strategy at franchise consultancy
Francorp Philippines; president of U-Franchise Sales &
Management; and chairperson and director for special
projects for Asean integration at the Philippine Franchise
Association.

The Philippine Franchise Association (PFA) is the voluntary self-regulating body

for franchising in the Philippines. It is the country’s pioneer and largest franchise
association with members ranging from micro to large, both home grown and
international involved in the food, retail, services and other types of businesses.

How to start a Franchising business in the Philippines?

1.Choose a franchise

Whether you’re aiming for a small food cart business or a restaurant chain, it’s important
that you take into account certain factors and do proper research first when selecting a
franchise business.
a. Budget

Establish the amount that you’re willing to invest, so you can narrow down your
options. If you find yourself being short on capital, you could consider getting a franchise
business loan.

b. Company Reputation and Legitimacy

 Nobody wants to unknowingly invest in an illegitimate and unreliable business,
but it doesn’t mean it’s impossible to find success with lesser known franchise brands.
Find out if the person or company is properly licensed and registered in appropriate
government offices like DTI and SEC. It also helps to check if they’re a part of reputable
franchise groups like AFFI (Association of Filipino Franchisers, Inc.), PFA (Philippine
Franchise Association), and FIFA (Filipino International Franchise Association).
c. Market, Location, and Competition

Brand power alone isn’t always enough to make a franchise business successful.
Make sure that whatever franchise you choose would fit in your preferred site location
and the nearby market. For instance, it might not be the best idea to set up a high-end
restaurant franchise near an elementary school where the primary market are kids.

To give you an idea on what franchise businesses you can consider, here’s a short list of
popular franchise brands here in the Philippines.

- Potato Corner
-Master Siomai
-Siomai House
-7 Eleven
-Dunkin’ Donuts
-Chooks To Go
-Jollibee
-Mang Inasal

2. Apply for your chosen franchise

Once you’ve trimmed down your franchise options to one, you can finally
proceed with applying! Application procedures and requirements differ from franchisor
to franchisor, but in general, you can expect to do the following:

a. Submission of Documents
 Below are the usual documents that many franchisors require. It’s a good idea to
prepare these even if you haven’t fully decided on what franchise you want. But if you
already have a particular franchise business in mind, you can check their website or get in
contact with them for other requirements they might have.

-Letter of Intent
-Application Form (completely filled-out)
-Valid Government-Issued IDs
-Resume
-Target Site Location Details
-Meetings, Site Inspection, and Evaluation

After submitting your documents, the franchisor will reach out to you to schedule
a meeting and/or site inspection. In these meetings, expect to be interviewed and oriented
on the details of the franchise. You can also take this chance to ask them any important
questions that you might have.

b. Contract Signing
Finally, you’ll be contacted again if you’re deemed qualified to be a franchisee.
Review the contract thoroughly, and sign it if you’re okay with the terms and conditions.

3. Manage your franchise business well

Even with existing guidelines, always strive to continuously improve the business
and how you manage it in ways that you can. Enhance your marketing skills. Improve the
quality and speed of your service. Keep track of any market or industry trends. Reach out
to the franchisor or fellow franchisees for tips and advice. Remember, getting approved
for a franchise is just the beginning! Don’t let the journey end so soon by mismanaging
your franchise business.

International Franchising
 International franchising is a strategic way to reduce dependence on domestic
demand and grow new, future revenue and profit centers worldwide. Extending a brand
globally through franchising involves low risk, requires minimal investment, and offers a
huge upside potential for scaling capabilities. Take a look at what international
franchising actually is, what its benefits are, examples of companies that have
successfully franchised internationally, how to get started in franchising, and where to
look for additional help.

What Is International Franchising?

Franchising is a pooling of resources and capabilities to accomplish a strategic

marketing, distribution and sales goal for a company. It typically involves a franchisor
who grants to an individual or company (the franchisee), the right to run a business
selling a product or service under the franchisor's successful business model and
identified by the franchisor's trademark or brand. The franchiseor charges an initial
upfront fee to the franchisee, payable upon the signing of the franchise agreement. Other
fees such as marketing, advertising, or royalties may be applicable and largely based on
how the contract is negotiated and set up. Advertising, training and other support services
are made available by the franchisor.

Benefits of International Franchising

In addition to entering new overseas markets with additional customers,

international franchising can also offer what is called foreign master franchise owners.
These individuals are typically a native of the country and understand the political and
bureaucratic problems in his/her country far better than any outsider.

Foreign master franchise owners pay a hefty upfront fee to acquire a designated
geographic area or, in some instances, an entire country where they operate as a mini or
sub-franchise company, selling franchises, collecting royalties, training the owners, and
overseeing all other related matters. They can even open units by themselves. In general,
a specified number of franchises must be outlined for the exclusive right to use the
business model in an entire country.

International Companies That Franchise

Domino’s Pizza International, Inc. began serving consumers outside the United States
in 1983 when the first store opened in Winnipeg, Canada. Since that time, Domino’s
Pizza International has extended its global reach to include more than 55 international
markets serviced by more than 3,230 stores.

The company claims, “The success of Domino’s Pizza outside the U.S. is due to the
collaborative relationship between our exceptional franchisees and the corporate team
that supports them. Together, we continuously strive to support a policy of 'One Brand–
One System' in order to be the best pizza delivery company in the world.”

McDonald’s, another fast-food giant, does business in 119 countries around the world.
For those markets where McDonald’s does not already have a presence, Afghanistan, for
example, the company does not have any firm plans to open locations in these countries.
The company says it is instead focusing on the markets where it already has a presence.

Getting Started Franchising

The best place to look for getting started is the International Franchise Association. It can
help you with the first steps to take and what opportunities are available in the global
marketplace. As in any new international expansion, there will be challenges: cultural
differences, legal considerations, contract negotiations, and intellectual property issues, to
name just a few. Of course, the process is not without its complexities.

Where to Look for Franchising Help

Here are a couple of resources that will guide you in the international franchising area.

 International Franchise Association: Considered the go-to source on anything to

do with franchising–from country profiles to international franchising articles to
information on international franchising laws.

 Franchising World: Offers digital versions of Franchising World issues and

archives of past Franchising World articles.

 DLA Piper’s FranCast Newsletter: DLA Piper is considered the No. 1 global law
firm in the area of franchise law by Who's Who Legal and is ranked the top
practice in the United States by the respected research firm Chambers & Partners.
Be sure to subscribe to its popular FranCast newsletter.

 International Franchising: A Practitioner’s Guide by Marco Hero: A practical

guide for all those involved in planning and operating an international franchise
program–from in-house counsel to managing directors to those in private practice.

(In the Philippines: Philippine Franchising Association)

International Franchise Regulations

Each country has its own approach to regulation of the franchise model. This may
be through franchise-specific laws, general commercial laws or Codes of Conduct/
Ethics.

Franchise-specific laws:

Franchise-specific laws typically address pre-contractual disclosure, franchisor/-

franchisee relationships and registration requirements. Their main purpose is to protect
franchisees from their own hasty decisions, and from being exploited by franchisors. In
many cases franchise-specific laws are linked to consumer protection laws. Jurisdictions
mandating the provision of pre-contractual disclosure from the franchisor to the franchise
generally follow a similar format. The original American Uniform Franchise Offering
Circular (UFOC), now known as the Franchise Disclosure Document (FDD) has
influenced disclosure requirements in other countries. Categories of disclosure may
include basic information about the franchisor, financial information including sign-on
fees, ongoing fees and franchisor earnings claims, intellectual property registration and
use rights information, real property requirements, details about the term of the franchise
agreement, and information about termination and renewal.

General commercial laws (including competition/ anti-trust regulations:

In some jurisdictions the franchise model is covered under the general

commercial and competition laws. For example, in France, franchising activity is covered
under the exclusivity or quasi-exclusivity provisions in the Loi Doubin (French
Commercial Code). Provisions of competition laws that franchisors have to navigate very
carefully include laws about third line forcing, tying, resale price maintenance and
exclusivity.

Codes of conduct/ ethics:

Codes of conduct/ ethics are either mandatory or voluntary. Where mandatory,

they are incorporated into statute law as regulations. An example is the Australian
Franchising Code of Conduct. Voluntary codes are often established by franchise
associations. Codes state guiding principles for the relationship between the franchisors
and franchisees. For example, in England there is no statutory mention of franchising.
Franchisors must agree to comply with the British Franchise Association’s voluntary
Code of Ethics as a condition of membership

8 Filipino Franchises That Have Gone Global

The Philippines is home to more than 1,500 franchise brands. On average, they
can earn up to $11 billion in combined annual sales. No wonder the Philippines is now
also recognized as “the franchise development hub of Asia,” home to unique franchise
brands which are not only leaving their mark in the region but also all over the world.

Here are just eight homegrown franchise brands which are bringing their
distinctly Pinoy products and services to the world. Which one is your favorite?

1.Potato Corner

This homegrown flavored French fries concept has indeed gone a long way from
its humble kiosk beginnings in 1992. Potato Corner started shaking up the global
franchise market back in 2006 when it opened its first overseas branch in Indonesia.
Since then, Potato Corner has introduced its now iconic flavored French fries to around
30 countries, which include Malaysia, Panama, the United States, Australia, Singapore,
the United Arab Emirates, and Thailand, among others. Today, Potato Corner has over
550 stores, 90 of which are located in overseas markets, and has plans of setting up shop
in China, Mexico, and Spain.

2.Jollibee

Jollibee can now lay claim to the phrase “world-famous Chickenjoy.” From its
humble beginnings as an ice cream parlor and hamburger joint back in 1975, Jollibee is
now not only the largest fast-food chain in the Philippines, but is also an emerging global
quick-service restaurant player. It now has a network of more than 900 stores in the
Philippines, and more than 135 stores overseas which are located in the United States,
Vietnam, Brunei, Saudi Arabia, Qatar, Kuwait, Singapore, and the United Arab Emirates,
among other countries. And as if that’s not enough, Jollibee is poised for further
international growth; this year, it is set to open an additional 100 stores overseas, most of
which will be located in China. The fast-food chain is also planning to set up shop in
Australia, Canada, Indonesia, Italy, Japan, and the United Kingdom by 2017.
3.Goldilocks

This beloved bakeshop, whose dedication cakes and tasty pastries serve as an
important addition to any family celebration, continue to strengthen its local and
international presence even after 50 years. Goldilocks opened its first branch overseas
back in 1976, located in Los Angeles, California. Since then, Goldilocks has expanded to
other major cities in the United States and now has 22 stores located in San Francisco,
Las Vegas, Sacramento, and San Diego, among other cities. Aside from the United
States, Goldilocks now also has two stores in Canada and six storesinThailand.

4.Max’s Restaurant

“The house that fried chicken built” is fast building a global presence thanks to its
sumptuous and distinctly Filipino fried chicken recipe. Founded in 1945, fresh off the
second World War, Max’s Restaurant initially served fried chicken, steak, and drinks, but
has since expanded its menu to include other Filipino food favorites. It established its
overseas presence in the United States as early as 1982. Since then, it has also opened
locations in Canada, the United Arab Emirates, Qatar, Kuwait, and Australia. Today,
Max’s Restaurant has more than 146 branches in the Philippines, and more than 20
branches overseas.

5.Yellow Cab Pizza

Bet you initially thought that this New York-style pizza joint is actually, well,
from New York. Yellow Cab is, indeed, a homegrown pizza-and-pasta restaurant which
opened in 2001 with one goal in mind: to share a slice of New York-style pizza goodness
to every Filipino. Yellow Cab’s signature pizzas and pastas are also delivered to homes
and offices using its iconic yellowVespascooters.

Today, Yellow Cab spreads this love for New York-style pizza through its
network of 130 branches nationwide. It has also set up shop in the United States, Guam,
Malaysia, and the Middle East, with six franchised outlets in Qatar and one outlet in the
United Arab Emirates. Plans are also underway to open flagship stores in China, Jordan,
Egypt, Saudi Arabia, and Singapore by 2017.

6.BENCH

From a small store selling men’s t-shirts in 1987, BENCH/ has grown into a
global fashion powerhouse whose product line has since expanded to include
undergarments, footwear, fragrances, and snacks, among other lifestyle products. Today,
the BENCH/ clothing and lifestyle store has over 186 branches in the Philippines, and
remains the go-to source for affordable yet on-trend fashion pieces among Filipinos. It
also has more than 85 branches overseas, spread across more than 22 countries including
the United States, Canada, China, Japan, Saudi Arabia, Egypt, and Singapore, among
others, and recently opened a flagship store in Myanmar.

7.Oryspa

Who knew that you can make something beautiful out of “darak” or rice bran, a
byproduct of the rice-milling process which is often used as pig feed? Oryspa, a
homegrown beauty company from Laguna, is the first to use rice bran as a base for its
health and beauty products. This includes soaps, body masks, pain relief balms, and
massage oils, among other products. Today, Oryspa promotes natural Asian beauty
through its 23 branches nationwide. And even though its products are already being
exported to different countries in Asia and Europe, and sold worldwide through various
online merchants, Oryspa has also already set up two physical store in Singapore.

8.Bibingkinitan

Thanks to Bibingkinitan, Filipinos can now enjoy smaller portions of “bibingka,”

a traditional rice cake usually served during the Christmas season, all year round. The
name Bibingkinitan is a mix of “bibingka” and the Filipino term “balingkinitan,” which
means small or petite, a clear nod to the smaller serving size of the famed rice cake.
Today, after 10 years in the business, Bibingkinitan wants to share with the rest of the
world this well-loved Filipino delicacy. In time for its tenth anniversary, Bibingkinitan
opened its first outlet in Dubai, followed by another outlet in Qatar. Plans are also
underway to open a flagship store in Abu Dhabi, as well as in other countries rife with
overseas Filipino communities such as Guam, China, Singapore, Thailand, and Indonesia.

Criteria for expanding internationally

There are many factors that a franchisor needs to be aware of as they look to
expand into a foreign market. Some of the most important factors are:

 The size of potential markets

 The per capita GDP in target markets
 The legal maturity of target markets
 The compatibility of the concept with target market culture
 The viability of other more mature franchise systems in the target market
 The direct competition in the target market
 The potential language and cultural barriers
 The physical accessibility of the target market to current operations

Case study of international expansion: The Little Gym

The Little Gym International has successfully grown their company into a global
brand serving more than 100,000 children in 20 countries each week. The Little Gym
International offers programs which aid children aged 4 months to 12 years develop vital
motor skills in a fun and non-competitive environment, while simultaneously enhancing
their self-confidence and social skills.
 Through master franchise agreements, The Little Gym International has already
successfully opened locations in multiple countries in the Middle East, Asia, and Europe
as well as North America, proving that their concept and business model can work well in
virtually any country in the world.

They have recently announced that they have entered into a joint venture that will
bring their concept to mainland China. This brings the number of countries that The Little
Gym has a presence in to 20. The joint venture holds great potential to spread The Little
Gym throughout China.

One of the reasons for The Little Gym’s international success is the significant
amount of time they spend in choosing each master franchisee. Strong people skills and a
deep love of children are the most important qualities that they look for. Once the
franchisee has been selected, The Little Gym provides the tools, training and support
needed for that franchisee to reach their full potential. The Little Gym master franchisees
also have experience and a vested interest in the growth and success of the system. The
Little Gym master franchisee oversees the selection, recruitment, inauguration
and ongoing support of additional franchise owners. This allows The Little Gym’s
development efforts to move forward with full force so they can continue to grow their
international brand.
List of References:

https://www.businessnewsdaily.com/4628-franchising.html

https://marketbusinessnews.com/financial-glossary/franchising/

https://businessjargons.com/franchising.html

https://tycoon.ph/how-to-start-franchise-business-philippines/

http://www.pfa.org.ph/

https://www.thebalancesmb.com/international-franchising-a-global-strategic-initiative-
1953329

http://francorp.com.ph/2017/01/13/8-filipino-franchises-that-have-gone-global/

http://francorp.com.ph/2017/01/13/8-filipino-franchises-that-have-gone-global/

http://www.bi-me.com/main.php?id=46771&t=1&c=35&cg=4&mset=1011

https://www.wileyrein.com/newsroom-articles-339.html