Why Franchise in the Philippines

So many people who have the capital to buy into a franchise and have the means to fund their own startup venture ask this question. Why do I need to start my own business if I can franchise one anyway?

Event Coming Up: I have a learning event with Marvin Germo this February 13, 2019 at SMX aura 1pm – 5pm. The title of the event is “Make Money, Grow Money” – we’ll be speaking about business, generating excess revenue, and finally where to invest the excess revenue to maximize your passive income’s profits. Join us by clicking this link!

Author’s Note: This entry is part 6 of the series “Business Myths” if you are curious about starting a business or have some questions to ask about starting one, please leave it in the comments section below. 

Starting up vs Franchising

Let’s try to identify the difference between starting up your own company and franchising through a simple pro and con comparison.

Pros of Franchising

1) Risk is Less

Buying into a franchise and setting up your own franchise of a certain brand means that you already have a blueprint laid out for you. You don’t need to make your own. 

You’re buying a system that exists and works and is making money. Plus there is a brand that’s already good enough and big enough to carry its own weight. Yes it will cost you, but people are familiar with the brand already and that means that there’s a higher likelihood of them buying the brand’s products and/or services.

2) No Need for Ideas on New Products and Services

A franchise business has it all laid out for you – the need to come up with new ideas is out of the window. This enables you to focus your brain’s processing power on other things. Expansion becomes easier as you only need to expand horizontally – set-up new franchise locations – rather than expanding vertically (new products/services).

3) No Need to Think of Potholes in your Employee Protocols

When you buy into a franchise business, you’re buying the system it uses to manage employees. This makes it a whole lot easier for you to learn how to manage payroll, employee concerns, potential HR problems and so on. In my opinion, this is one of the best reasons to franchise instead of starting your own as I’ve had tons of experience in making mistakes and dealing with problems with employees.

4) Branding is Already in Place so no Need to Invest Excessively in Branding / Marketing

One of the biggest money-drain in a startup company is marketing. If you’re doing things right, you’ll be spending perpetually for marketing and branding. 

A franchise business eliminates this as the franchise’s main brand owner is marketing perpetually for you.

5) No need to Procure Supplies on your Own

Supplies for a franchise business is laid out. You don’t need to go out looking for your own suppliers. It’s already decided for you. You only need to keep re-ordering and the raw materials will be delivered to you on a regular basis.

Cons of Franchising

1) No room to be Creative as Everything is Dictated by the Franchise Owner

The greatest advantage of a franchise business may also be the biggest downside if you are someone who loves to think of solutions to problems. A franchise business has little wiggle room for change. Usually things are dictated and you have to follow. End of story.

2) You are Getting the Outlying Locations and not the Prime Ones as the Franchise Owner Usually got the Prime Ones Already

A lot of franchises that are great have already gotten the best locations. You’re left with locations that are difficult to access or that are secondary in terms of foot traffic. 

3) If the Franchise Owner Does Anything to Damage their Brand, you are Also Affected

There may be scandals or controversies that transpire because of something stupid that the franchise brand owner did. You’re also tied up in that controversy whether you like it or not as you carry the brand as a franchise owner.

4) You are Required to Pay Royalties as Long as your Business Exists – on Top of Taxes

Nobody is ecstatic when paying taxes – much less royalties. These are things that we would very much like to do without but are a must. Buying into a franchise means that you’re also allowing yourself to be put under the burden of paying royalties as long as your franchise business exists.

5) If There are no Innovations from the Franchise Owner, you are Stuck with a Stagnant Franchise

It’s not impossible for a franchise owner to finally just sit back, relax and milk the brand for what it’s worth. It has happened. More times than we care to admit.

When the franchise owner has stopped innovating, your franchise as a brand is stuck – and will die a slow but sure death like an old, battered brontosaurus. 

Sean Si

About Sean

is a motivational speaker and is the head honcho and editor-in-chief of SEO Hacker. He does SEO Services for companies in the Philippines and Abroad. Connect with him at Facebook, LinkedIn or Twitter. Check out his new project, Aquascape Philippines

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