To get a franchise or not. That is the question

**gearhead** · May 28th, 2009 09:16 PM

May mga nagsasabi na good investment ang franchise. But from what I see and hear parang not always. We all know there is no sure fire investment or franchise for that matter since there are several factors to success. But I am told a food franchise will often "require" you to buy from a commissary of sorts. One where the prices are higher than market rate. Hmmm you already pay the high fee to get the name. Then you are also made to pay more to help provide the franchisee more profit.

Dunno if this is true but someone said that a group of people who had the Chillis franchise even created an off-shoot that "cloned" the menu but did not bear the name so they wouldn't have to pay the exhorbitant franchise fee and the "clone" is now doing very well since they can lower the costs on the menu.

Is it better to get a franchise of an established brand or one that has not even gotten a "name" out there? Because there appear to be some groups that actually sell franchises like real estate based on speculation. But isn't it a name people tend to go to anyway?

What do you think? Is it worth the premium to pay for a name?

**badkuk** · May 28th, 2009 10:12 PM

depends on what franchise you're getting.

my brother got a franchise a few years ago; nang makuha na yung pera for the royalty, cart and stuff, pinabayaan na lang. no support at all. nung nagpagawa siya ng maliit na roof (made of plywood and vinyl), chinarge pa ng 2,000 pesos. 2000 pesos for a damn piece of crap made of plywood and vinyl on top of the already overpriced cart.

as in lahat ng kasabay niyang kumuha ng franchise pinabayaan na lang. last i heard one franchisee was suing them...ewan ko lang kung ano nang nangyari.

do your research; get feedback from franchise holders about the company.

**tidus1203** · May 28th, 2009 10:27 PM

One way to make sure the franchise is more or less a good business is the FRANCHISOR himself. How many stores does he own and operate. Kung madami, that gives you confidence. Iba kasi dyan mga 2 stores lang tapos pinapa franchise na agad yung name with he himself has relatively low success...

**gearhead** · May 29th, 2009 04:28 PM

Saw one emerging called Pixie's Bangus. That doesn't look too bad. Also heard of one that doesn't seem too hot and the dude just bleeds his franchisees.

Anyway what about doing a rip-off. Like the reports that the Lorenzo group is now "copying" Pepper Lunch (Is that what it is called?). Saw a clone at Pacific Star area. Why not just make a clone and just keep it legal suit proof? That way you don't have to pay a high fee that will already saddle you down.

**ghosthunter** · May 29th, 2009 05:02 PM

Franchising purely depends on the "package" included and the name of the business you are buying into. If you are franchising a known brand name, then it can be a plus to you because the brand itself can draw more customers as compared to a unknown business name even if you serve equal quality products/food.

Now, in the philippines, there are many companies which just sell you a franchise business with a name they just invented. Personally those types of franchise is NOT worth the price because you don't get any premium in carrying the name you are franchising. There is practically no brand recall.

Now compare that to franchising a known brand name, example, Nestle Ice Cream. Although more expensive, the brand name you carry has brand recall plus customer trust in the product's quality as well. There is no need to do any sort of hard sell to get a customer to buy your product, just being present and visible at a certain location is enough to draw customers to you.

Now the alternative to buying into a franchise is to put up your own and source your own materials and supply. It is more work but it is your own brand name. Adding up the hours and expenses, it might be similar if you bought a no-name franchise but the advantage now is you OWN the brand name you are using. If it is a success, you can later sell the business for a quick profit or setup your own franchise chain to further develop the brand/business model.

So is it worthwhile? Only YOU can answer that.

**uls** · May 29th, 2009 05:31 PM

instead of wasting capital on a no-name franchise, why not just create your own brand?

**Memphis Raines** · May 29th, 2009 06:16 PM

Food franchise would always be a good place to start if you decide to get one. In-depth research about the product and target consumer is also crucial so that you won't be like those who want to ride the bandwagon just for the heck of it.

Remember, just because you will be opening in a Mall does not guarantee quick return-of-investment.

Aftersales product support is also important especially when upgrades are needed to improve store efficiency.

**Memphis Raines** · May 29th, 2009 06:30 PM

Originally Posted by uls

instead of wasting capital on a no-name franchise, why not just create your own brand?

This is an excellent suggestion indeed. This is what happened to Zagu (pearl shakes).

Now the key here is also your supplier. Some of those who tried to clone Zagu before thought that they could produce the same, if not better, pearls and flavors by simply going to the supermarket for their ingredients and ending up disappointed with their weird concoctions that barely resembled the popular brand.

This is because as simple as it may look, even the pearls or sago had to be imported from different asian locations (at bulk cost) so that it may have that distinct texture that can't be easily found here. The power flavors are also sourced in the same manner.

The world is much smaller now because everybody is getting on the net which is great for supplier sourcing around the world.

**DonT** · May 29th, 2009 06:42 PM

If an investor has the technical and marketing skill to replicate or even exceed the product of the original franchisee..then its better to start on your own.

Otherwise..nothing more worse than a low quality copycat.

**uls** · May 29th, 2009 11:57 PM

there's a local business that i really admire -- CDR King

the people behind CDR King created their own brand

they started with small stores selling blank CDs

look at them now

look at their product line

look at their customer traffic

sa dami ng customers sa stores nila, you have to take a number

their growth is phenomenal

that's proof you don't need a franchise to have a successful business