A: A major lesson I’ve learned working in Unilever and studying Innovation & Strategy in Oxford is that to truly grow global, collaboration is key. The path to growth is in creating an ecosystem where your brand and company can thrive. That’s why for Francorp, not only do we have presence in over 40 countries globally, we are also partnering with various international franchise brokers to help prepare our local brands to go international. In addition, we partnered with a network of suppliers and support services that our clients can tap to grow their business. We’ve partnered with Media (Entrepreneur, ABS CBN News online), BPI KaNegosyo, Franchise Investment Holdings, Inc.,and PLDT SME to name a few, that are all geared towards helping our clients grow.
Secondly, Unilever has helped me appreciate the power that branding brings to growing a business. A strong brands allows you to create loyal fans and command a premium in the marketplace. I’ve learned that branding goes beyond just your logo, tagline, and the ads you put out, but it’s about who you are and who your organization is -your DNA. That’s why for Francorp, we are partnering with international brand consultant A.S. Louken to help our clients develop their brands the right way. Having developed the branding for Bread Talk and Charles & Keith, A.S. Louken will help our clients compete internationally by taking their branding to the next level. With strong systems, a solid franchise infrastructure, and world-class branding, I believe our local brands have what it takes to make it big globally.
A: Based on various studies, among family businesses, 2 out of 3 are sold or fail after the founder has left the company. Franchising is seen to have better success rates because of 2 fundamental things. First, the systems and procedures are well documented and professionalized. This is how they are able to grow through franchising. Second, there are 2 owners always looking into the business – the franchisor and the franchisee. Both have the same incentives of making sure the next generation successfully takes over the business. And according to surveys, 85% of owners want their family to take over the business and grow it for the next generations.
In the US, franchised businesses have been successfully passed on, but it has not always been to family members. A popular route is for businesses to list in the stock exchange or more recently to be bought out by investment groups.
In the Philippines, as modern franchising is still relatively young (about 20 years), the next generation are only starting to take the reins of the business. But we have started to see the next generation reinvent their businesses to go national and international. We are also seeing the next generation of franchises coming from provinces, using franchising to grow both locally and internationally.
Lastly, because franchised businesses continually reinvent themselves with new ideas, new people, and new franchisees, franchise organizations tend to be more dynamic and adaptive to changes, hence, overall, franchise businesses are seen to have success rates of 90% and above.
Q3: What issues or challenges affect next generation franchisors? What about franchisees?
A: A key issue that next generation franchisors and franchisees face is succession. Are their children interested enough in the business? Do they have the right experience and capability to grow the business to the next level? Often times, franchisors are so focused on growing their business, they forget that they need to train the next generation to run and take over the business.
A critical factor in the next generation is the ability to shift from a mindset of operating their stores, to managing and growing a franchise organization. Oftentimes, founders who started the business from scratch are so involved in the operations that it becomes difficult for them to shift and realize that they are now a franchise organization with different sets of needs and priorities. The next generation should be adept at operations, but should also understand the nuances of a franchise organization, the importance of relationships with franchisees, and ensuring that the franchise organization has the proper support in place.
Lastly, the next generation can sometimes come in and focus only on sustaining the business, instead of reinventing and radically growing it. This can lead to stagnant growth. The next generation should come into the business with a vision of helping the business leap frog forward. The next generation should maximize their franchising potential to gain stronger foothold nationwide, or as we are starting to see, use franchising to conquer international markets.
Q4: Are there learning and development programs that can enhance next generation franchising?
A: To enhance next generation franchising, it is important that you involve the next generation in running the business. Even if they are still children, involve them in store operations, have them attend meetings, get them excited and contributing to the business early on. Have them talk to franchisees and employees and understand how the business is in fact helping these business owners, their employees, and the community.
On a more professional level, considertaking a Certified Franchise Executive Program, the ultimate badge of excellence in the franchising field. We are blessed in the Philippines as we were the first country outside the US that was granted the right to certify CFEs. By blending classroom training, on the job experience, and exposure in expos and conferences, the CFE program ensures that its graduates have a holistic view of franchising and are able to build strong franchising organizations. The best thing you can give to your next generation is a strong business with a strong team, as that allows for transitions to be smoother and more successful.
Franchisors that have been franchising for a few years should also consider hiring 3rd parties to conduct an audit of their franchise programs. Some key questions they need to evaluate are – whether the operations manual is up – to – date and still relevant; if there are enough formal and informal communication channels between franchisor and franchisees; if there is a healthy relationship between the franchise operations teams and the franchisees;if the franchise organization encourages innovation and growth; and if there is a strong vision in place.
Lastly, the Philippine Franchise Association, together with the US-based International Franchise Association, is also spearheading a program called NextGen in Franchising. This encourages young entrepreneurs to grow their businesses through franchising while encouraging a new breed of people to get careers in franchising. The winner of the program will be sent to the US to attend their next big franchise convention, thus allowing our local franchisors access to networking opportunities, an opportunity to listen to other international experts in the industry, and finding channels for investors to further grow their business.
Q5: There are many independent franchise consultants. Why should Francorp be top of mind?
A: The reason why Francorp is top of mind for over 18 years is that when someone partners with Francorp, they partner with an entire ecosystem – from strategy experts, franchise professionals, operations consultants, franchise lawyers, marketing experts as well as top leaders in the field. The combined experience and expertise of the team cannot be replicated by just an individual.
In addition, we bring in the global expertise and experience of Francorp from over 40 countries as well as an array of over 3,000 clients globally. This is why we have been able to help brands such as Bench, Jollibee, Max’s, The Generics Pharmacy, Oryspa, Potato Corner, and many more grow from one to many through franchising. As I mentioned at the start, collaboration is key and Francorp has created an ecosystem that focuses on helping brands grow and thrive in the competitive global environment.
Q6: You are Chairman of the committee on ASEAN Integration for the Philippine Franchise Association, other than having a bigger market, how would the franchise industry be affected with the influx of brands from other countries? How should they respond?
A: The Philippines has some of the best talents in ASEAN. In fact, quite a few global franchise brands have used the Philippines as a regional training center. With ASEAN integration, it will be easier for people to work across borders and we may potentially face a new wave of talents deciding to migrate internationally. Also, consumers will be spoilt for choice. We’ve already seen this with the entry of numerous global food and retail brands into the market. Filipino tastes are becoming more sophisticated and more demanding and they would want to get more from our local brands.
To be able to respond, local players need to gain scale and ensure that their systems and brands are ready. Franchising has been a popular way that businesses have been pursuing as it ensures that their systems are at an international level and that brands gain scale in a shorter time. At the same time, local players can take advantage of the talents that reside across the region. Local players now have access to the best talents across 10 different markets, so it is the best time to attract international talents into your organization.
Finally, in my experience both living and travelling internationally, I can confidently say that we have some of the best concepts and ideas here in the Philippines. With ASEAN integration, the door opens both ways, and you now have 10 countries and 600 million consumers to market to, so take the leap and go on the offensive. Invest in creating a strong, coherent brand, making sure your systems are at an international level and have a clear entry and expansion strategy.
Bestselling author Josiah Go is the Chairman and Chief Marketing Strategist of Mansmith and Fielders, Inc. (the leading marketing and sales training company in the Philippines), President and CEO of Waters Philippines (the market leader in the direct selling of premium health durable products in the Philippines) and President and CEO of PT Noah Health Indonesia. He is Chairman / Vice Chairman / Director of over a dozen companies.