3 Mindsets you need to change when investing in a Franchise

The Philippines continues to remain the franchising capital of Asia. One of our greatest successes as a country is having over 150,000 franchise outlets with thousands of happy franchisees. The Philippines continues to remain the franchising capital of Asia. One of our greatest successes as a country is having over  150,000 franchise outlets with thousands of happy franchisees.

With its high acceptability and 90% success rate over traditional do-it-yourself businesses, it has been a pretty typical case that a franchisee can own two or more franchise stores. Another great story is that a franchisee can actually own two franchise concepts that are different in category, because of the great business experience with the first franchise store.

Although there are a lot of success stories, there are still a few that have failed, and it almost always starts with their mindset. Here are three mindsets you need to change when entering franchising:

1. “I just want fast returns; I don’t really care about anything else.” In starting up a business, most Filipinos are more enticed on how fast the returns can get. The mindset is “I don’t care about the brand and products, I just need fast returns”. Some are frenzied by one to two months of return of investment (ROI) without thinking about long-term sustainability.  We tend to generally think that it is safer to get your capital back 100%, the fastest way possible, than thinking about how long the business can compete in its industry and its potential to be a market leader.

When thinking about the franchise business you’ve been waiting to have, it is a good exercise to do a long-term, big picture way of seeing things. It may not necessarily protect you from a whole list of failures, but it will surely give you the morale to just keep going and be more equipped as a franchisee. Returns may took a longer time to come back, but wouldn’t it be a lot better to have a sustainable business for 5 to 10 years versus 6 months?

2. Choosing a brand you’re not passionate about. Every time we dive into franchise consultations, we often tell aspiring franchisees to franchise a brand or industry that they love. If they have that zeal for food, then try not to invest into a car parts retail or a salon business concept.  At the end of the day, your brand should be something that makes you your first and last customer.
Figuring out the business you want to get into is figuring out the things you are passionate about. Thinking of it as a hobby that you occasionally do and soon forget will make things more perplexed for your franchise business as you give so little time and heart to focus on a hobby. Your passion for the business will supply you with more reasons to work harder, bring up your A-game and make you a better employer  as you share the passion with your people.

3.  “I don’t need to understand franchising, as long as I choose a brand that’s already successful, it’s enough.” One question we always get asked with our inquiries is if the Franchise Fee is all they have to pay to start the business. As most experienced franchisees know, the Franchise Fee is the upfront fee paid to the franchisor for the use and privilege of using the franchisor’s business name, system and support. And Capital is the total amount of money to be invested to put up the physical store and make it operational, which may sometimes already include the franchise fee.

More often than not, due to this perception, aspiring franchisees get a little uncomfortable once they see the numbers towering higher than they expected. And they will soon get uninterested to the entire business structure of the franchise concept they are inquiring about.

Equipped with the right tools and techniques in Franchise education, we can all understand that the franchise business would be more than just about the initial numbers. It is appreciating the professional system model, financial structure and how it contributes to grow the business exponentially.

If you really plan to get a franchise business or let’s say, any kind of business you’d like to venture in, it is highly important to invest in getting the apt education. It definitely helps to meet with franchise consultants to help match the right franchise concept for you. They should be able to unlock more insights, the pros and cons, and financial and market feasibility studies to boot your confidence in really engaging to the business.

The success of the franchising industry in the Philippines should bluntly tell us that there is success in franchising. All we need to do is be well informed in its every nook and cranny and have our mindsets changed for the better.

By Sam Christopher Lim
Chief Marketing Officer, Francorp Philippines