MANILA – It would take five years for the local franchise sector to bounce back and exceed the current number of outlets as the coronavirus disease 2019 (Covid-19) pandemic forced some franchise holders to close their businesses.
Philippine Franchise Association (PFA) chairman emeritus Samie Lim has forecasted that the local franchise sector will lose 9,000 outlets in 2021, or a 45-percent decline from the 20,000 outlets this year.
“In 2021, I predicted that we will have only 11,000 – 45 percent decrease in terms of outlets. In 2022, we will be able to increase slowly by 20 percent. On third year, we will increase by then 30 percent and we will increase by 20 percent thereafter until 2025, and that would be actually 24,750,” Lim said in an online press briefing Friday.
He added that most of the outlets that will not survive amid the global health crisis are those “fake and mediocre” that have no business and operations plans.
But while the sector recovers, Lim expects new franchise businesses would serve health and beauty needs.
PFA vice chair Alegria Sibal-Limjoco, likewise, sees a silver lining for the franchise sector amid the struggling Philippine economy.
“When the economy is down, there are many entrepreneurs that are born,” Sibal-Limjoco said.
She mentioned that during the Asian financial crisis, those who were retrenched and retired from work, as well as displaced overseas Filipino workers, bought franchises, and about 90 percent of them are still around and have grown their franchise businesses.
On the other hand, PFA chair Richard Sanz noted that the projected revenue for the industry this year was around PHP700 billion. However, due to impacts of the global health crisis, 72 percent of those in franchising business expect over 50 percent losses in revenues for 2020.
Among the top concerns of the sector include potential global recession, decrease in consumer confidence, lack of comprehensive and tested company emergency plan, effect on workforce and productivity, and displacement of workers.
He mentioned that among the assistance that the industry needs from the government are tax incentives, loans with longer grace period and relaxed terms, and wage subsidies.
Meanwhile, PFA president Sherill Quintana said the lockdown measures in the Philippines, being one of the longest lockdowns in the world, has inspired many franchisors to grow their business outside the country.
“If you have a company or franchise operating outside Philippines, the chances for you to keep afloat are higher. Aside from having stores outside Philippines, now the interest also is to grow their franchise in far-flung areas or outside metro centers,” said Quintana
Sanz also noted that PFA’s vision of bringing Filipino franchise brands abroad has paid off during the pandemic as oversees franchise outlets became the lifeline for Philippine-based stores that were forced to close due to community quarantine measures.
He added that the PFA eyes to bring 100 Filipino franchise brands overseas. To date, there are 30 homegrown brands with international presence.