More international franchises expected to enter Philippines

MANILA, Philippines — The share of foreign brands in the country’s franchising landscape is seen to increase in the coming years as the Philippines offers them a gateway to expanding into the Asian market, the head of an industry group said.

“Everyone wants to come into the Philippines because we’re English speaking, we’re a big market. We’re a gateway to Asia,” Philippine Franchise Association (PFA) president Chris Lim told reporters on the sidelines of the Franchise Asia Philippines Expo 2023.

He stressed that the expo as well as the country’s hosting of the twin meetings of the Asia-Pacific Franchise Confederation (APFC) and the World Franchise Council (WFC) are efforts that would help attract more international franchise brands into the country.

“We have delegates from over 35 countries. We want them to explore the Philippines. Come in here set up so that they can then expand in Asia,” Lim said.

According to Trade Secretary Alfredo Pascual, around 90 percent of the 1,800 franchise brands in the Philippines are homegrown.

Given the interest from foreign franchise brands, Lim said the share of foreign brands in the Philippine market would grow in the future, noting that this could reach 30 percent or more.

“We expect that number to increase not because the homegrown [market] is shrinking. It’s because the pie is a lot bigger. We imagine here, I think 20 percent of the exhibitors here are international,” he said.

Asked which countries have expressed the most interest in entering the Philippines, Lim cited mostly countries from Asia.

“Korea has been a big supporter. Thailand as well. We have the Singaporean and Taiwanese brands all wanting to enter here in the Philippines,” he said.

The PFA official cited that country’s young population as one of the factors attracting international franchise brands into the country.

“They see our market. You know, we’re a market of 100 million people. We’re English speaking at the same time. We’re very young, you know, an average age of about 24 years old, so they know that when they enter here they have customers for life,” Lim said.

Asked what are the challenges experienced by international franchise brands looking to enter the Philippine market, Lim cited looking for a local partner as well as adapting their products to the Philippine market.

“A lot of them do adapt their products, their services to the Philippines, and that’s something that their partners locally can help them with,” he said.

In a separate interview, Lim explained that the PFA continues to encourage supply localization.

“We encourage as much as possible when a brand comes in to localize even the supply base, not just because of course, partly because of cost, partly because of supply chain stability, but of course, if we have a brand here we want it to benefit downstream,” Lim said.

“That’s why franchising has so much backward linkages to agriculture. That’s why we have two million people employed in franchising both directly and indirectly, because we try to make sure now, we try to source local when we can,” he added.

He cited Jollibee and McDonalds as some of the big franchise brands that have a lot of backward linkages.