BusinessWorld Online:

I had written in this column before that franchises in the range of P500,000 to P1,000,000 — like a Javaman coffee shop, a Metropole laundromat, and a Mail & More express mail counter — are what the country needs, as they provide middle-income couples the opportunity to operate their own business with a good chance of getting a high return on their investment and labor.

The history of franchising in the United States shows that the most successful franchise chains were those whose initial franchisees were the Mom and Pop types. Because they had invested their lifetime savings in their stores, they operated their franchise zealously. Also, because they had limited experience in the line of business they engaged in, the franchisees adhered strictly to the manual of operations that spelled out in great detail the procedures to be followed in applying the business method the franchisor had developed out of his or her experience in running the original store over the years.

Franchises of Big Name chains require capital investment in the range of P10 million to P22 million.

Putting up a full-service Goldilocks franchise costs about P10 million, while a Jollibee freestanding store franchise costs about P22 million. That is why only corporate groups have the capital to get a Jollibee, Goldilocks, Shakey’s, KFC, or Chow King franchise. But corporate entities do not make good franchisees. Their stores are usually run by hired personnel. Salaried employees are not as zealous as owners in running the store because only their job, not their lifetime savings, is at stake. More.