4 Steps to Apply for a Franchise Business in the Philippines
Published: September 11, 2018 | Updated: September 23, 2020 | Posted by: Venus Zoleta | Personal Finance
Franchise businesses in the Philippines enjoy a higher success rate of 90% versus the general retail industry’s 25%, according to the Philippine Franchise Association (PFA). And with ROIs coming in as quick as less than a year, franchising is an ideal business option for first-time entrepreneurs.
Already decided on the type of business you’ll start? After doing your research and finding a suitable location, you can start your franchise business application with potential franchisors. Expect the application process to take a long time, at least a month for a food cart franchise.
Although the actual process varies from one franchisor to another, a franchise business application in the Philippines typically involves these four major steps.
Table of Contents
- 1. Reach Out to Your Target Franchisors
- 2. Prepare and Submit Franchise Requirements
- 3. Meet the Franchisor
- 4. Review the Franchise Agreement Carefully
- Final Thoughts
1. Reach Out to Your Target Franchisors
Contact various companies that offer a franchise in your preferred industry. It allows you to know more about the requirements, costs, and other important details about running a particular franchise business.
Here are the different ways to contact franchise providers in the Philippines:
Talk to Franchisors Directly
Find the contact information of your target franchisors on their official website, usually on the Franchising or Franchise With Us page. Some franchisors (especially those without a website) can be reached through their Facebook page.
Looking for food franchise business opportunities? Check out this list of food franchise businesses and their contact details.
Get a List of Franchisors From Local Franchise Associations
No idea which franchisors to reach out to? Websites of franchise associations are a great starting point for your search. The PFA website, for example, has a member directory that lists companies in the Philippines that are open for franchising, plus their contact details.
Attend a Franchise Expo
Franchise expos are a one-stop shop for any aspiring franchisee. Companies all over the Philippines (and even abroad) gather in one place to offer franchising opportunities.
Make the most of your franchise expo participation, so you can pick the companies that are worth investing in. Go to the booths of franchisors you’re really interested in starting a franchise business with. Ask a lot of questions, too.
Franchise expos also hold seminars on various business topics. You may want to sign up for one, as it’s a great chance for beginners like you to learn from industry experts.
To check the latest franchise expo schedule in your area, you may visit the Franchise Asia Philippines Facebook page.
Find Potential Franchisors Through a Franchising Loan Provider
Getting a franchising loan from BPI? The bank can help you find and connect with companies that offer a franchise through its Franchise Finder on the BPI Ka-Negosyo site.
2. Prepare and Submit Franchise Requirements
After you’ve touched base with potential franchisors, you’ll be asked to submit requirements for starting a franchise business through email.
Typical Franchise Application Requirements
- Completed franchise application form – Download and print this form from the franchisor’s website. Make sure to fill it out completely.
- Letter of Intent (LOI) – This letter formally states your reasons for applying for a franchise business, including your contact information and the address of your proposed site. Some franchisors provide a template for LOI on their website. If your target franchisor has none, you may use this sample Letter of Intent as your guide when drafting yours.
- Map of your proposed site – It can be a simple sketch or a Google Maps screenshot plus photos of your desired business location.
- Resume or curriculum vitae – Make your resume as detailed as possible, highlighting your entrepreneurial experience, if any.
- Valid IDs – Most franchisors ask applicants to submit a photocopy of at least two government-issued IDs.
Other Business Document Requirements
Some companies ask for additional requirements from franchise applicants. Have these documents ready just in case they’re required:
- Proof of billing under your name
- Latest bank statements
- Business registration papers
- Taxpayer’s Identification Number (TIN)
- Written agreement with the lessor of your desired business site
3. Meet the Franchisor
The franchisor will review your franchise application documents to assess your qualification as a franchisee—particularly your available capital, professional experience, academic background, business connections, and other relevant details.
At the same time, your proposed site will undergo inspection and evaluation to determine its suitability as a franchise business location.
If you pass the initial screening, the franchisor will invite you to a meeting and interview at the company’s office. Follow-up meetings may also be scheduled afterwards.
What Happens During Meetings with a Franchisor?
Meeting the franchisor is a crucial step in your application. As prospective business partners, both parties need to know if they’re a good fit for each other before closing the deal.
The company’s store manager, sales officer, or any representative may discuss the following with franchise applicants in a series of meetings:
- Details of the franchise business – The franchisor will present the company overview, as well as the details of the franchise program.
- Your qualifications for the franchise – The company representative may ask you questions to probe deeper into how you’ll manage the franchise business. For example, you might be asked if you’ll be hands-on in running the daily operations or assign someone else to do it.
- Your target location – Do you own the site? Or planning to rent or buy it? The franchisor might want to know about it and help you find the perfect site for your franchise business or match you with suitable sites in its database.
- Next steps of your application – The representative will let you know what you need to do next if you decide to push through with buying the franchise. For instance, it may require you to attend customer service and management training.
4. Review the Franchise Agreement Carefully
After the series of business meetings, the franchisor will give you a draft Franchise Agreement for your review. This legal document specifies the terms and conditions of the franchise set-up and the rights and responsibilities of the franchisor and the franchisee.
Go over the document meticulously before you sign it. You may even show it to a lawyer to get legal advice or help in understanding any legal terms.
Pay close attention to these details when reviewing a Franchise Agreement:
- Length of effectivity of the agreement
- Renewal period, terms, and fee
- Total franchise investment costs, including the franchise fee, royalty fee, etc.
- Franchise package inclusions
- Franchise territory (The exclusive territory granted to a franchisee)
- Franchisor-approved suppliers of products and supplies for the franchise business
- Grounds for termination of the agreement
If you agree to all terms of the contract, then you can go ahead with signing the document. If not, keep exploring franchise business opportunities in other companies.
At any point in your franchise business application, don’t hesitate to ask the franchisor questions. This can help you decide whether or not to pursue a business partnership with a particular company.
A franchise business application is no different from applying for a job, or even dating. The whole process involves doing background checks and assessing each other’s compatibility. And once you’ve signed the contract, you’re expected to be fully committed to it.
-  Franchise Asia Philippines
-  Sample Letter Of Intent To Apply For A Franchise
-  Understand Key Aspects Of The Franchise Territory
Venus is the Head of Content at Moneymax, with 15+ years of experience in digital marketing, corporate communications, PR, and journalism. She invests in stocks, mutual funds, VUL, and Pag-IBIG MP2. Outside of work, she’s crazy about cats and Korean dramas. Follow Venus on LinkedIn.