Franchising sector wants inclusion in stimulus program

MANILA, Philippines — The Philippine Franchise Association (PFA) wants the industry to be included in the government’s economic stimulus program as the group’s survey showed most of the country’s franchise businesses need at least P1 million up to P20 million to recover from the impact of the COVID-19 pandemic.

In a statement, PFA chairman Richard Sanz said the government should include the franchising industry, composed mostly of micro and small enterprises, in its planned stimulus package for economic recovery as the sector reels from the impact of the outbreak and the ensuing mobility restrictions.

PFA president Sherill Ramos Quintana said based on a survey conducted by the group with PwC Philippines, 82 percent of PFA members have been significantly affected by the pandemic, with 72 percent expecting over 50 percent revenue losses this year.

Conducted from May 6 to May 25, the survey covered 79 percent of PFA members representing over 1,100 locations in the country.

Sanz said 70 percent of the survey respondents need from P1 million to P20 million for working capital, inventory and materials, and upgrade of technology to bounce back from the crisis.

Other government interventions needed to help franchise businesses get back on their feet are tax incentives, loans with longer grace period and relaxed requirements, wage subsidies, as well as easing of retail and trade restrictions.

According to the survey, global recession topped the list of concerns of PFA members which include foreign franchisees, as it would further erode consumer confidence and lead to lower demand and consumption.

Other concerns raised by respondents include the lack of a comprehensive and tested emergency preparedness plan, reduced productivity of workforce, lack of suppliers or raw materials and logistics issues.

With the reopening of the economy, 63 percent of respondents said they expect to implement temporary furloughs, while 39 percent are planning retrenchment.

The same survey showed that 46 percent of the respondents expect productivity issues due to lack of remote work capabilities, while 35 percent see streamlining of franchise operations, and 30 percent are worried about cessation of their franchise business.

Despite the challenges, the survey showed franchise businesses found ways to adapt to the health crisis by continuing operations through work from home (42 percent), launch of new products or services (39 percent) and use of online platforms (22 percent).

Sanz said that during the implementation of the enhanced community quarantine, 22 percent of the respondents generated more than 60 percent of their sales online compared to less than 10 percent prior to the lockdown.