It's the ultimate dream of many Filipinos to own a franchise business in the Philippines. How many hopefuls have fantasized about winning the lottery, then purchasing a franchise of Jollibee, easily the most popular restaurant in the country? We've all wanted its supposed perks: unlimited Chickenjoy, free food, and a lifetime of financial security ensured by a single fast-food restaurant. But are these all just misconceptions? We did some digging and interviewed franchise owners to see what it's really like to own a fast-food franchise.
How much does a Jollibee franchise cost?
A franchise business in the Philippines like Jollibee can set you back by as much as P55 million, depending on several factors (size of the restaurant, location, logistics, etc.). Considering the steep cost of franchising, many investors choose to finance this through loans from banks. In a few cases, the franchisor (Jollibee, McDonald's, KFC, etc.) provides the franchisees options on how to finance the franchise, like helping with loan approvals.
Are there other costs aside from the franchise fee?
"We pay for a one-time franchise fee for a 10-year term," says Margaret Tan, a franchisee of Greenwich, a subsidiary of Jollibee Foods Corporation. "We also have monthly payments for ads, promos, and royalty, which is based on a percentage of our sales."
According to Tan, owning a franchise of a big brand doesn't always lead to fast cash. "People think that owning a franchise means easy money, especially with a successful franchise like Greenwich. However, a lot of factors come into play such as location, overhead expenses, and competition within the area, which, when not factored in during the initial planning period, can cause challenges to the business."
What are some of the biggest misconceptions about owning a fast-food franchise?
The truth is, fast food franchises are not the invest-and-forget type of businesses. "The biggest misconception about having a franchise is that it can already run on its own given that everything is already in place," says Tan. "Like any other business, a franchise won't succeed if it is not managed well. Manpower retention, addressing customers' demands, and profitability issues are all present and need to be carefully attended to."
Many people also wonder about the privileges of owning a fast-food franchise in the Philippines. Can you get money from the restaurant every day? Do you always get free food? Are you allowed to improve on the store's design (like the bathrooms)? There are many privileges in owning a franchise, but there are also limitations.
"There is a misconception that owners get free food all the time, or that we can take home the raw materials and make our own products at home," says Tan. "Personally, I pay for everything I order because this was how I was trained in the family business ever since I was young. By doing so, I am also able to set an example for my employees. I make it a point to follow the rules because I want to show them that even if I own the place, I am also bound by the same regulations because I am also employed by my own business."
What are the privileges of a fast-food franchise owner?
The most obvious privilege of owning a franchise is being associated with the brand's prestige. This means you have access to the brand's established customer base, which helps in recovering your investment faster. If you are starting a similar restaurant business, it would take years before you build a loyal customer support base.
For big brands like Jollibee, Mang Inasal, Greenwich, McDonald's, KFC, Pizza Hut, and more, franchising comes with a package deal that covers expenses for the following:
- Store signage
- Store construction
- Furniture and fixtures
- Store layout and design
- Air-conditioning system
- Kitchen facilities and equipment
Franchisors also help the franchisees in recruiting staff for the restaurant, who will be the employees of the franchisee. The franchisors will also provide all the necessary training for the recruits, including the store's manager and the franchisee.
According to Tan, franchising is like getting a business with a template-you are given all the systems needed to be able to operate the store. Initially, you are provided with construction plans, which need to be followed so that all stores will have a standardized design. All restaurant managers and franchisees are required to attend product training and management development programs conducted by the main office to ensure quality store operations, ultimately leading to consistently awesome customer experience across the system.
The top consideration of franchisors in approving franchise applicants is how well they can protect and maintain the brand's prestige, more than their ability to finance the business.
What are the requirements for a fast-food franchise?
Your personal traits are actually some of the important requirements that franchisors consider in approving applications for franchising. For example, Jollibee lists the following as its top requirements for franchise applicants:
- Track record of strong leadership skills
- Excellent people management skills
- Good community standing
- Availability, especially in devoting time for the business
An applicant must also pass the training program before being considered eligible to be a franchisee. Clearly, the top consideration of franchisors in approving franchise applicants is how well they can protect and maintain the brand's prestige, more than their ability to finance the business.
Once you have all those skills covered, you'll need to submit the following requirements:
- Letter of intent indicating the exact address of your proposed site, your mailing address, and your contact details
- Vicinity map of the proposed site that will be used by field personnel to inspect the site
- Legal document that certifies the applicant's true ownership of the proposed site
- Detailed biodata
What if you don't own a site or location for a fast-food franchise?
You can still apply for a franchise, but most big franchisors prefer applicants who already own the site they are proposing. This does not mean that you cannot own a franchise. Most likely, you will be put in the database of applicants without a site.
In some cases, site locations can be offered by the franchisors. "I can offer a site which I may think will be a good area to put up an outlet, subject to the assessment of the franchisor's corporate real estate/network development team. On the other hand, if they find a feasible site on their end, they can also offer it to me," said Tan.