Module 6

TRENDS
IN
FRANCHISING
 CONTENTS
01 The Evolution of Franchising
02 Franchising Trends in the Philippines
03 International Franchising
 THE EVOLUTION OF
FRANCHISING
(Comparison of Franchising
in the Past and Present)
History of Origins

• Franchising can be traced back to the

Middle Ages when land distribution granted
power and control to individuals incharge of
certain territories.
• This early form of franchising was
estbalished to create armies and levy taxes,
considered the earliest instance of
franchising.
The Rise of Modern Franchising

• Isaac Merrit Singer revolutionized the

modern franchise business model with the
patent of a high-speed sewing machine in
the 19th century.
• Singer's introduction of licensing
arrangements allowed others to sell
sewing machines, a precursor to modern
franchising.
Martha Matilda Harper:
An Early Female Franchisor
• Martha Matilda Harper, an entrepreneur,
transformed the hair salon industry by offering
unique features such as reclining shampoo
chairs and customer-centric services in the late
19th century.
• Harper's low-cost franchise opportunities in
1891 enabled salons to open under her brand,
providing motivation, coaching, and advertising
assistance to entrepreneurs.
Current Trends in Franchising

Franchise Evolution:
McDonald's exemplifies the maturation of franchising, with
massive global sales growth, predominantly driven by
franchisees.

Changing Operators:
Franchising has shifted from individual single-unit owners to
multi-unit professionals who focus on strategic management.

Rise of Multi-Brand Franchisees:

The trend of multi-brand franchise ownership is increasing,
allowing for diversification, risk management, and expansion
into new markets.
Trends in Franchising Today: SHIFTING DEMOGRAPHICS
• Millennials: With over 70 million strong, this tech-savvy generation
offers opportunities for services catering to their needs as they
establish careers and families.
• Baby Boomers: Aging but active, this demographic demands
various services, from health and fitness to caregiving and financial
advice.
• Seniors: The growing senior market seeks healthcare, home
renovations, and "cosmeceuticals."
• Minorities: The rising numbers of Hispanics, African Americans,
and Asians provide opportunities for businesses spanning food,
fashion, real estate, and services, reflecting their needs.
Trends in Franchising Today: GROWTH SEGMENTS

• Recession-Proof Brands: Businesses like hair cutting, tax

preparation, and used goods maintain appeal in all economic
conditions.
• "Green" Businesses: With increasing government support for the
energy sector, eco-friendly businesses, including energy reduction
and eco-certified buildings, will see expansion.
• Fitness and Health: This sector offers prospects in gyms, fitness
centers, and nutrition services tailored to different demographics,
including the fight against childhood obesity and catering to Baby
Boomers and seniors.
 FRANCHISING TRENDS IN THE
PHILIPPINES

The Philippines offers an attractive market for franchising due to its large
consumer base, strategic location for Asia-Pacific expansion, and
favorable factors like English language proficiency and low labor costs.
However, the competitive urban environment demands quick adaptation
and innovation. Challenges include political instability, currency weakness,
corruption, and security issues. Despite these challenges, the Philippines
presents investment opportunities, especially for flexible franchisors. The
past decade has seen a vibrant economy with diverse products,
technological advancements, and investment opportunities.
1. Milk Tea Mania: The Philippines witnessed the rise, fall, and
resurgence of milk tea, becoming a favorite beverage. Local and foreign
brands innovated to cater to the escalating demand, making milk tea a
beloved choice for both consumers and franchisees.

2. Shawarma Sensation: Shawarma stands are now ubiquitous, offering

diverse flavors and formats. Brands like Shawarma Shack and Turks
Shawarma introduced unique tastes and marketing strategies, propelling
their businesses to national prominence.

3. Fruit Drinks for Health: With growing health concerns, fruit drinks
gained popularity as a healthier alternative to carbonated beverages.
Brands like Citrus Zone, GuriGuri, and Pure Nectar offered refreshing
fruit-based drinks that attracted health-conscious consumers.
4. Accessible Healthcare: The proliferation of healthcare franchises,
including dialysis centers and diagnostic clinics, made quality healthcare
more accessible to Filipinos. This development addressed the need for
affordable medical services.

5. Education Franchises: The demand for education in various forms has

grown, enhancing learners' skills and competencies. Franchises like
Canadian Tourism and Hospitality Institute, ALOHA Mental Arithmetic, and
Bricks 4 Kidz contribute to skill development and career opportunities.

6. Convenience on the Rise: Urbanization and busy lifestyles have

fueled the demand for convenience. From convenience stores to home
services and self-service laundry franchises, businesses are catering to
customers' desire for easier access to products and services.
 INTERNATIONAL FRANCHISING

A strategy to expand a business globally through franchising with low risk,

minimal investment, and potential for growth. It involves foreign master
franchise owners who operate in designated areas.
Companies Franchising Internationally: Domino's
Pizza International and
McDonald's serve as examples with global reach, focusing on collaboration
and success in various international markets.

Getting Started: TheInternational Franchise Association offers guidance for

those seeking to venture into international franchising, despite potential
challenges like cultural differences and legal issues.

Multi-Unit Franchises: This involves owning multiple franchise units in a specific

territory. It offers benefits such as cost savings, increased stability, and stronger
branding but requires a higher upfront investment.
 Multi-Unit
Franchise
• Involves developing and
operatiNg multiple units in a
designated territory.
• Typically requires an area
developer agreement.
• Offers territorial protection
but may risk rights if
development schedules
aren't met.
• Requires a higher upfront
investment, calculated
based on the number of
units desired.
• Incur ongoing expenses
such as payroll, rent, and
inventory.
Single-Unit
VS Franchise
. • Focuses on owning and
operating a single franchise
unit.
• Maintains a single franchise
agreement with the franchisor.
• Generally more involved in
day-to-day operations.
• Often chosen by individuals
with limited capital.
• Suitable for those not planning
immediate expansion.
 ADVANTAGES OF MULTI - UNIT
FRANCHISE (FOR BOTH FRANCHISOR
& FRANCHISEE)
• Franchisor Benefits: Enhanced financial security during economic
challenges, facilitated rapid expansion through experienced operators
with strong industry relationships.

• Franchisee Benefits:
a. Lower Overhead Costs: Despite higher initial setup expenses for
multi-units, per-unit overhead costs decrease due to shared fixed costs
and better negotiation power with common vendors.

b. Improved Stability: Multi-unit ownership from the start boosts

success chances by allowing units to support each other during tough
times.
 ADVANTAGES OF MULTI - UNIT
FRANCHISE (FOR BOTH FRANCHISOR
& FRANCHISEE)
c. Cost-Efficiency: Discounts and incentives from franchisors for multi-
unit purchases can make the initial investment more manageable.

d. Stronger Brand Development: Multi-unit ownership enables

franchisees to establish a distinct brand identity within the larger
franchise, reducing advertising expenses with a unified message.

e. Enhanced Networking: Owning multiple units leads to expanded

connections within the franchise industry, as well as with vendors and real
estate agents.
THANKS