Meet Donald Boroian, father of franchising

Tuesday, Sept. 11, a few hours before a series of terrorist attacks shook America and shocked the whole world, Donald Boroian, a.k.a. the father of franchising in America, was sipping his coffee at the Shangri-La Makati coffee shop and animatedly talking business with local business writers.

A most sought after consultant in the field of business expansion, Boroian has more than 40 years of experience in corporate management, franchising, direct sales, and business administration. In 1977, he did the franchise program for what once was a small hamburger-and-ice cream parlor and is now the biggest hamburger chain in the country, turning in a beefier performance than even America’s McDonald’s – Jollibee, but of course!

Boroian has written two books: The Franchise Advantage and How to Buy and Manage a Franchise.

Beside Boroian at the table was Samie Lim, the father of franchising in the Philippines. The two "fathers" were comparing notes, discussing the business outlook in each other’s motherland. While business is hurting in the US (with some companies laying off workers) because of recent developments, Donald Boroian says that business in the Philippines, particularly in the area of franchising, is alive and well.

Excerpts from The STAR interview:

Philippine STAR: So how’s business these days?

Samie Lim: Business is generally slow except in the area of franchising. Statistics will show that from 1999 to 2000, there were about 200 new franchises that came up.

Don and I were talking about it and he was saying that franchising is taking off during recession because many people are laid off while some opt for early retirement. So they have the two important ingredients to franchising: They have the time because they’re no longer employed and they have the money, which they want to put into something productive.

Donald picks up where Samie has left off: It’s now a worldwide phenomenon. The risk is so high in starting a business from the ground floor while franchising offers even young people an opportunity to have the resources of the parent company who teaches them the business where all the systems are in place – marketing, product, services, pricing and support – yet they still own their own business.

Tell us about the Jollibee program that Francorp, Inc. is doing.

Donald Boroian: I met Tony Tan Caktiong in 1976 in Chicago. He was in his late 20s, very forward-looking, and I was impressed with him. He said he had burgers and wanted to franchise. He flew me into Manila to look at his operations. He only had four stores then. Now, we’re working with Jollibee in their global expansion into the US, Hong Kong, China, Malaysia, Singapore as well as Latin America. Jollibee already has four outlets in Hong Kong and four in the US. They’re selling master licenses to develop multiple units in each of those markets.

What are your other activities in the Philippines?

Boroian: Francorp is also working with Bench, Max Fried Chicken, etc. This is a great market, there’s a great opportunity here. Yet at the same time, it poses a real threat to Philippine companies because the Philippine market is an ideal market for foreign companies to come in to franchise, especially US companies because there’s no language barrier like in Japan or Latin America. The Philippine culture is very disciplined and lends itself to franchising. This is why if the Philippine companies do not themselves expand and franchise, they will leave the market open for foreign companies to come and compete with them. For example, can you name one other company, besides Jollibee, that has 400 outlets that are franchised? There are a lot of sleeping Jollibees in the Philippines. And that’s why we established Francorp in the Philippines with Samie Lim heading the whole operations (call 636-03-66 to 67, 687-41-81).

Lim: We’re also doing the program for Penshoppe, Kamiseta, Bayou, Kameraworld. Recently, we had Caltex and also Unioil. The local guy from Unioil came to us and said he wanted to take on the giants and he knew that the only way he could do that was through franchising. The owners of Mario’s and Padi’s Point also came to us. Padi’s Point was started by a young gentleman straight out of college.

What makes a business franchisable?

Any business is franchisable if it has a good system of operations that can be taught to someone in a relatively short period of time, maybe a month or two, and has a national and international application.

You don’t have to have a secret formula. For example, Kentucky Fried Chicken’s recipe was published in a magazine but you don’t see other companies doing it as well as KFC. I think Shakespeare put it best when he said, "He who steals my purse steals trash." You can take my operations manual but you don’t have what I have in my heart. And this is what we’re exporting with our franchise. We teach someone the secret of our success, which is to perform with a commitment to product quality, quality service, and consistency in a good environment as well as adaptability to other areas.

It could even be ethnic food like your balut. If you see other people coming from other parts of the country and saying they love your product and would love to have it in their neighborhood, you could franchise if you don’t have P200,000 or P500,000 to open another shop. They’ll pay a franchise fee and royalties to get your recipe and learn your business.

How do you see franchising in the years to come?

Boroian: We’re looking at globalization of this whole concept. In the US, we’ve created a fund called Francorp Capital, which has gone into the public markets to raise money to finance companies that want to franchise. And Francorp in the Philippines is going to duplicate this fund. They’re going to bring in investors to invest in Philippine companies that want to franchise but may not have the capital resources to put their whole franchise package together.

Lim: Our next five-year plan is three-phased:

• Bring the top 20 local franchises internationally, like Jollibee, Max Fried Chicken, Goldilocks, Bench, Penshoppe, Bayou, Kameraworld.

• Bring the middle group (they’ve started to saturate Manila but have not penetrated the provincial fringe area) cross-country to set up 100 franchises within five years.

• Bring up products with ethnically 100 percent local content (not only food but other goods as well).

"The surf is up in the Philippines," Donald Boroian gushes. "The waves are coming. The opportunity is here for the Philippine business community."

Here, have a dip.