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Franchising Seen to Boom anew by 2025

03 Oct 2020 - The Philippine Franchise Association (PFA) is upbeat on the future of franchising as it expects the number of franchise outlets to hit 250,000 by 2025.

PFA founder and chairman emeritus Samie Lim said in an online briefing yesterday that while the number of franchise outlets is expected to go down this year until the first quarter of 2021 due to the ongoing health crisis, the industry could bounce back given available opportunities.

From 200,000 outlets at the start of the year, he said the number is expected to be slashed to 130,000 by year-end and trimmed further to 110,000 by the first quarter of next year as fake or mediocre franchise businesses fall and those facing challenges in continuing operations due to the COVID-19 pandemic are forced to close.

PFA chairman Richard Sanz said the industry also sees around P200 billion worth of revenue losses this year amid the pandemic.

Lim said the franchise outlets that close would be replaced by new and stronger ones, allowing the sector to reach a peak of 250,000 outlets by 2025.

There are 2,000 local and foreign franchise brands in the country before the lockdown based on the latest data available from the PFA.

When the government imposed the enhanced community quarantine to prevent the spread of the virus, Lim said the industry was at a loss and the level of optimism was almost zero.

PFA president Sherill Quintana said prior to the opening of the Franchise Asia Philippines virtual conference held last month, the group conducted a poll which showed 72 percent of industry participants were optimistic of franchising prospects.

After the event, a similar poll was conducted which showed the percentage of industry participants with high or very high optimism on the future of franchising rose to 85 percent.

She said the increased optimism after the conference may be due to the practices and strategies shared during the event. Lim said the golden age of franchising and hitting 250,000 outlets would be achieved by applying the three As: assessing and accepting the reality we are in, acting as soon as possible, and accelerating expansion aggressively.

“By 2021, we should accelerate aggressively our expansion plan taking advantage of an unprecedented number of good potential franchisees, available locations all over the country and a good pool of available management talent,” he said.

He said among the franchise businesses seen to grow are those in health and beauty as their products and services are in demand. “After hiding from the public for six months, when we resurface, would like to look good if not better. I think the beauty business and health business will prosper,” he said. Chris Lim, who serves as PFA director for ASEAN and Special Projects, said another segment seen to grow in franchising are technology businesses such as cloud kitchens and delivery apps. “We know it hasn’t been a typical franchise target but now we see a lot of people inquiring how to franchise those businesses and how to replicate that business model across the Philippines and I am hoping eventually across Southeast Asia,” he said.

Philstar Global