The Business Mentor answers your questions

Posted at 06/13/14 2:56 PM

MANILA - Ever since this column "The Business Mentor" was launched, I am so pleased to receive a steady flow of e-mail messages from so many people from different parts of the Philippines and around the world.

Indeed technology brings the ability to reach out to those seriously interested in becoming entrepreneur.

For those requesting a webinar series, I am looking for the right telecom provider to support and handle the logistical arrangement. There may be other readers who know or in the line of doing webinars. Email me!

Here are a couple of questions sent to me by readers:

Q: There are so many “low cost” franchise opportunities advertised in the papers, some with franchise fees as low as P10,000. Is this all I really need to shell out to have my own business? - Rose P. from Monaco

Business Mentor: First of all, when looking for a franchise business, it is highly advised that the amount of investment advertised never blinds one. There are franchised businesses, which use “dirty trick” tactics just to attract investors, only for them to discover much later on that the said figure is merely a “reservation” fee.

It is important to I-N-V-E-S-T-I-G-A-T-E before releasing any commitment. Ask yourself questions like “Have I visited the branches?” and “Are the products/services acceptable to me?” Answers to questions such as these will help you gauge the truthfulness and integrity of the franchiser, aside from the profitability of the business.

The next step is to call and make an appointment with the Franchiser. Find out from the franchiser how much you will have to spend for the total investment; aside from the franchise fee you pay.

Do request for a list of the franchised branches. Go get and talk to franchisees. Gauge if they are happy and satisfied with the support the franchiser has been giving.

Q: What is a franchise fee anyway? Does it cover all expenses to set up my new business? - Aileen M from Singapore

BM: “Franchise fee” refers to a one-time payment to he franchiser for the right to use their name during the duration of a franchise term. As a franchisee, you are taught by the franchisor proven techniques in operating and managing the business.

As answered in the question above, there are also other expenses involved aside from the franchise fee. These may include government permits and licenses, design and construction costs, hiring of staff, rent, and acquisition of equipment & supplies, among others.

Some of these expenses are sometimes included in what is called the “Franchise Package” which is the estimated total amount you will need to start a turnkey business that will be ready to run and operate. Ask your franchisers if they have such “packages”.

Q: Is getting a franchise business a sure guarantee for my money? I am not sure how long I will be working abroad due to the on going "nationalization" of the Saudi government. - Jay C from Kingdom of Saudi Arabia

BM: Thank you Jay C! I am glad you brought up two main topics in your question. The first is about the franchise business a guarantee for your money. Compared with starting a business, a franchise business has all the factors to arrive at a success. There are no guarantees, Jay C! These factors are the brand equity established through the years. Reaching this status is a result of the many trial and error experienced by the business owner. This was done by building a model or prototype and working out to achieve profitability and acceptance by the target market.

The role of the franchisor is to provide guidance and support to franchisees. Under no circumstances can a franchise business be on an automatic pilot. The franchisee also has to provide commitment in the management of the business.

Talking now on you second point, of "nationalization", as a foreigner we have to accept that sooner or later the local population would like to gain employment and other benefits. It is but important for the foreigners to concretize plans of returning if and when feasible. You will often catch me with this phrase “preparing for Plan B”.

Q: I am confused on what type of franchise business to choose from! It appears there are so many these days. Appreciate your valuable tips on choosing the right franchise? I'd like to be an entrepreneur but I like to explore how franchising can assist me. I have been an employee for almost 2 and a half decades yet my income cannot meet the expenses of my family of 3. - Ric B from Davao City

BM: Ric, I understand how you feel. In the first place there are now over 1,000+ franchise businesses present in the country. Gone were the days like in the late 90’s when there were few. This is a positive sign of our country as a hub of franchises.

The primary advice I can share with you is to evaluate what attracts you most. Choose between food and services. One caution is to avoid getting trapped into the amount of investment. If you do, it will stifle your initiative. There are no financial institutions, which can further assist you.

The second is to discuss with your family for their comments. The third is to check if what you like will also be acceptable in your local area.

Being an entrepreneur and a franchisee will open a new exciting field and experience for you. Your experiences as an employee may be useful. The hours you devote and the enhanced business relations you and the franchisor established will go a long way. Choose well then and also avoid procrastination. An opportunity may never visit you a second time.

For questions and more information, you may contact Armando "Butz" Bartolome by email: [email protected] His website is www.gmb.com.ph