Franchise Sector Seen to Grow 25% This Year

The country’s franchising industry is expected to increase a whopping 25 percent to USD 31 billion this year on the back of increased consumer spending brought about by strong economic growth.

“Generally, the Philippine franchise sector is thriving and actually is not only thriving but it’s really on a roll,” Philippine Franchise Association (PFA) President Richard Sanz said in a press briefing on Thursday.

Sanz said the increasing disposable incomes and consumer spending of the middle class, which is expected to comprise majority of the Philippine population over the next few years, is among the key growth drivers of the sector.

He also cited the dispersion of jobs into key cities outside Metro Manila, particularly in Laguna, Cebu, Iloilo and Bacolod.

“When you move around, a lot of demands are also there. You have the demand for the malls, for food, for services and that is what is driving the franchising growth,” he said. “And we saw this (trend) starting late last year that is why, our (growth) projection increased slightly.”

Sanz noted the continuous creation of new homegrown brands is serving the needs of consumers amid the expansion of the second and third-tier cities.

He said this year’s projected growth for the sector is much higher compared to 10 to 15 percent, and 15 to 20 percent during the past years.

“But this year, we are very bullish on this growth because of these circumstances that we have seen,” Sanz added. “Recently, we have seen a great leap on the performance in terms of revenue expansion that is why, we are projection a 25-percent growth this year.”

He noted total revenues of the sector increased from USD22 billion in 2017 to USD25 billion last year, which was equivalent to 7 percent of the country’s gross domestic product (GDP).

In 2019, Sanz said food franchises are expected to dominate the sector.

“We are projecting maybe right now, food is around 55 percent of the total pie, but we are looking at 10 percent plus for health and services. Fashion is a bit challenged, but they can be taken up by the health and the service sectors,” he said in an interview.

Meanwhile, the PFA is set to hold Asia’s biggest franchise show, Franchise Asia Philippines 2019, on March 27 to 31 at the SMX Convention Center in Manila.

Franchise Asia Philippines overall co-chair Chris Lim said the expo will feature over 700 franchise and other business opportunities.

“We are also happy to announce that our expo this year will showcase country pavilions from Indonesia, Japan, Korea, Malaysia and Singapore,” Lim said. “This is proof positive that the Philippines has indeed become the Franchise Hub of Asia.” (PNA)