Pinoy brands making waves in Middle East via franchise

CEBU, Philippines - Filipino brands are now slowly gaining ground in Middle Eastern countries through master franchise deals with Arab capitalists, said franchise consultant Rudolf Kotik.

Kotik said homegrown brands specifically those into food, wellness and vanity are opting to expand in the Middle East instead of in the ASEAN region.

Restaurants, spa brands, and beauty salon names from the Philippines are now hot franchise opportunities the Arabs are looking into, Kotik reiterated.

"Arab companies are extremely active in buying franchise brands from the Philippines, maybe because they have good working relationships with Filipinos in their countries, or they have closer Filipino connections," said Kotik, who owns the 18-year-old RK Franchise Consultancy Inc.

The expansion trail now of local companies are more on investing on market presence across the country, or going out to Middle Eastern countries like, United Arab Emirates, Oman, Qatar, Kuwait, among others.

Franchise export to Middle East started three years ago and this year, Kotik said the industry is seeing much stronger interest from Arab investors.

For a master-franchise deal of 20 years to 25 years lock-in agreement, the lowest franchise rights cost could fetch within US$20 thousand to US$50 thousand, excluding the royalty fees.

Kotik said local companies are still not keen on expanding in the ASEAN region as the focus now of Filipino brands, particularly the small and medium players, is to maximize the potential of the growing Philippine market.

Franchise export to other countries, other than Middle East, is still under-developed.

On the other hand, inbound franchise is mostly dominated by American brands, not so much from the ASEAN member countries, he said.

Some attempted to come to the Philippines, especially after the Asia Franchise Expo, "but nothing is happening yet."

Earlier, local brands were told to tighten their belt some more, and guard their own turf, as the ASEAN integration may kill the local brands as the market will be largely dominated by competitive foreign brands across industries, said Philippine Franchise Association (PRA)  chairman emeritus Samie Lim.

Along with local brand build-up, Lim also encouraged Filipino brands to simultaneously make their presence overseas. And the best way to hasten this move is to open the business for franchise.

Lim said international brands made it successful in the international market because of franchising. Thus, Filipinos should take a higher leap this time in conquering the borderless marketplace via opening their doors to franchise platform. — Ehda M. Dagooc (FREEMAN)