The Philippines, considered one of the largest franchise markets in Southeast Asia, expects more international franchise brands to enter the market. This is according to the Philippine Franchise Association (PFA), which recently held its annual franchise expo, where both homegrown and foreign brands participated.
The country has also recently hosted the twin meetings of the Asia-Pacific Franchise Confederation and the World Franchise Council. The Philippines, due to its young and English-speaking population, is considered a factor in choosing the market as the gateway to Asia for foreign franchise brands. Although the majority of the country’s franchise market is still composed of homegrown brands, the PFA said that the share of foreign brands could grow bigger or more given that the market is still growing annually. Some of the foreign brands that are interested in setting up shops are mostly from Asia—South Korea, Thailand, Taiwan, and Singapore.
Some of the issues being faced by foreign brands include finding the right local partners, and adapting their offerings to suit Filipino tastes, which the local partner could help with, as well as the supply chain. Foreign brands are encouraged to source their supplies locally for the benefit of the local economy and to raise local employment, citing Jollibee and McDonald’s as examples.
Currently, there are 1,800 franchise brands in the country—55% local franchises vs. 45% foreign franchises. More than 90% of all foreign franchises present in the Philippines are of US origin. Interestingly, the younger generation of Filipino consumers is not as emotionally tied to American brands as before since they are now choosing between Japanese, Korean, Chinese, and European options and enjoy Korean cosmetics and makeup brands more than American ones.
(Sources: Philstar; US International Trade Administration)