Let's talk about business: FRANCHISING | The Blog of Innocence ...

Franchising is the business practice of using one company's successful business model. It means, taking advantage of a business that's already proven to profit and have been tested in the real world. The word 'franchise' is of anglo-French derivation - from franc- meaning free, and is used both as a noun and as a (transitive) verb. For the franchisor (original owner of the business), the franchise is an alternative to building 'chain stores' to distribute goods and avoid investment and liability over a chain. The franchisor's success is the success of the franchisees. The franchisee is said to have a greater incentive than a direct employee because he or she has a direct stake in the business.

Top 8 Best Philippine Franchises

8. Water Refill Franchises

The reason why most businesses succeed and others not, is because they focus on the needs of the people. Water, is a basic need. That?s why, water franchises are all over the place and they make money.

Minimum Investment Required: P20,000
Why Is It Profitable: Water is a basic necessity

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7. Education & Training Franchises

With millions of graduate students finishing their studies on a quarterly basis and expected to rise even more every year, review centers and educational training schools are a good way to franchise. These franchises never go out of style because you can also target the market such as undergrad students who wants to take vocational courses and preschools for toddlers, which are all profitable when done right. Also to note that there are a lot of people wanting to go to vocational nursing schools and care giving courses. It is a good safe investment.

Minimum Investment Required: 1Million
Why Is It Profitable: Fresh graduates reviewing for licensure exams, vocational courses & preschools.

6. Bakery & Food Store Franchises

Another necessity. Who doesn?t eat pandesal? Bakery and food store has been with us since our lolo?s and lola. And there?s a reason why there are still there up to now, they are profitable and time and time again, Filipinos just like to eat. Your morning breakfast just wouldn?t be complete without a pandesal or a bread together with a nice cup of coffee.

Minimum Investment Required: P250,000
Why Is It Profitable: Food is a necessity. Pandesal & bread has been a part of Filipino culture.

5. Bar & Cafe Franchises

Bar?s are always been a go getter. If you own a bar, especially a reputable franchise, you can always assume you will get the return of your investment. Now on the other hand, Cafe franchises are good. Filipinos love coffee. Remember the time when Starbucks first opened their shop in the Philippines? It?s a so much hit that even the socialites go starbucks all well dressed just to drink coffee in the late afternoon. Cafes signifies class and your market will be those that can afford to pay more for every cup. Customers plus high buying potential is equals to more profit.

Minimum Investment Required: P250,000
Why Is It Profitable: With popular franchise, return of your investment is almost at 100%

4. Personal Care Franchises

Celebrities took part in the popularity of this franchise industry. Personal care franchise are easy to promote simply because celebrities are already promoting them. If local stars & celebrities are talking about them rampantly, you know that the followers and fans are going to go after that franchise. Also, spas and sauna has become a weekly habit for some people that became a part of their routine.

Minimum Investment Required: P200,000
Why Is It Profitable: Celebrities creating buzz will most likely ease your marketing campaign.

3. Service-Type Franchises

What are these service-type franchises? Car wash franchises, printing shops, and the most popular call centers these are all profitable franchises under this category. We know how many people wants to work in call centers. And call centers are in demand outside the Philippines because of our ability to talk in English clearly. One of the best in Asia. Picture this, Americans paying you, the franchise owner, dollars and you are paying your employees pesos. This is a lucrative franchise indeed.

Minimum Investment Required: P2 Million
Why Is It Profitable: Very lucrative. International and world market possible.

2. Fast Food and Restaurant Franchises

Yet again, we see the proof that Filipinos really love to eat. Who doesn?t know Jollibee, McDonald?s & KFC? Fast food franchises are almost all the time will never fail. Though the return of investment will be somewhat long, the fruit of long term income is certainly obtainable. Jollibee, McDonalds and other fast food franchises maybe a bit too much for people that are starting up, there are other choices as well. Small fast food franchises are out there and you can still earn from them.

Minimum Investment Required: P150,000
Why Is It Profitable: Filipinos love to eat!

1. Food Cart & Kiosk Franchises

When you?re talking about necessity, food cart has it, we are talking about food right? When you?re talking about accessibility, food carts, they are everywhere! Standing and waiting at a small corner of the street or a mall waiting for you to buy a piece of something to eat. When you?re talking about price, food carts can cost at around 20,000. A very small investment. There?s nothing bad to tell about this type of franchise and highly recommended for people who are starting up and even those who already have the money. Be careful though where you buy your franchise and make sure that you?re getting them from reliable companies.

Minimum Investment Required: P20,000
Why Is It Profitable: Filipinos love to eat. Small investment needed. Accessible to anyone.

Getting Ready for A Franchise Business?

Before starting your dream business into franchising, you must know first the ins and outs of the popular business method that may help you even during the tough times.

During the economic crisis, the entrepreneurs see a bright future in franchising. An opportunity came just in time for entrepreneur to put up a business, as with franchising. No doubt that franchise?s success rate can reach up to 90 percent with direct result of relying on the franchisor, plus with its right business formula. That shows why franchise Philippine is getting more in-demand and still growing up to now.

Franchising is the practice of using another firm?s successful business model. For the franchisor, the franchise is an alternative to building ?chain stores? to distribute goods and avoid investment and liability over a chain. The franchisee is said to have a greater incentive than a direct employee because he or she has a direct stake in the business.

Vice-President of the Philippine Franchise Association (PFA) and chief executive officer of Francorp Philippine, Alegria ?Bing? Limjoco stated that an ideal franchise business must be in ?win-win situation? for both parties: the franchisor?s success is the success of the franchisees. Or as the franchisor grows and expands the franchisee gains an opportunity to operate small business and the customer benefits from convenience and the quality of product or service.

Why Go into Franchising?
Because of the global economic crisis, companies limit their employees and some people had a hard time looking for jobs. Like stated earlier, the past economic crisis was the perfect time for the franchising to boom into market. Because franchising is much cheaper and less risky, entrepreneurs find it a great chance to somehow make a source of income for them. Going into franchise doesn?t need too much experience or knowledge in managing business, because franchisor will provide training and seminars for franchisee. The franchisee can start with something small and be optimistic about getting back the investment. Even graduates can be a franchisee. It would be better for the parents to give their children a franchise business rather than giving them cars. They can buy cars on their own if they run their franchise well. With this business model, a franchisor can readily deal with problems common in franchise business.

Limjoco said that franchising is not a ?get rich-quick scheme?. I agree with that. Even small business cannot assure you a quick return of your investment, or getting you a rich immediately. And not all those who bought franchises become successful. Dare to research. Just bear in mind that franchising is still a business, though you have your franchisor to support and help you with your business, still, don?t have the assurance of success. A right business formula plus patience and focus can somehow help.

1. Credibility. A company must have credibility in every franchisee. Most franchisee look on the number of outlet the company has, how long the company is being operated and the customer?s awareness of the brand/products/services.
2. Distinct advantage over the competitors. Every Franchisee wants a good status over its competitors. Remember, there are lot of franchise business today that are just around the corner, so better go for a company that has a great attraction or status in franchising.
3. Franchisor?s readiness to go into franchising. The franchisor must have the ability to transfer the documented system to his franchisee. This is all covered by the company policies. It is complicated to have a franchisor who cannot give you a assurance of support, so, it?s better to consider not only their willingness to invest but also their passion operate the business.

Crisis Gave Franchising A Great Opportunity
Not all in the business industry dropped it?s success rate. The entrepreneurs found it a great step toward the development of franchising. By the end of 2008, the PFA notes that franchising opportunities in the country reached 1,000 with 66 percent of that number comprising of local franchise and a big jump from just about a total of 50 foreign and local franchises in 1995. Another opportunity for the Filipino entrepreneurs to expand the franchising business here and abroad. Even the overseas Filipino workers found franchising a great source of income while working abroad. Pretty cool idea for business-minded Filipinos.

Partnership Between the Franchisor and Franchisee

Trying to get the hang of a franchise Philippines business? Not to worry. In this article, we will help you understand the role of each side in this industry, the franchisor and the franchisee.

Franchisor cannot run his business without his franchisee. For the franchisor, the franchise is an alternative to building ?chain stores? to distribute goods and avoid investment and liability over a chain Just like any other relationship, one must do its part and responsibilities. Each needs time, effort and care for the sake of the business. The franchisee and the franchisor must work together to make their business successful. ?The franchisor?s success is the success of the franchisees?, like most people say. But don?t make an assurance of that. There are still franchises that fail, maybe because of lack of understanding between the franchisor and the franchisee or maybe they don?t have the formula in business, which is somehow helpful to businessmen.

However, running a franchise appears less complicated than having your own business. Aside from less risky, your franchisor will help you with manage your business and gives you more ideas on how to make it successful. The relationship between the franchisor and the franchisee must be mutual. Like in marriage, they must benefit each others. One?s idea must be share and talk about.

Ma. Alegra Sibal-Limjoco, vice-chairman of the Philippine Franchise Association (PFA) said , ?a franchisor must guide, mentor, ad take care of his franchisee especially during the early years.? On the other hand, the franchisee must do his part. Limjoco added, ?He (franchisee) cannot just implement his own plans; he needs to follow the rules laid down by his franchisor,? If one fail to do his part, then the relationship or even the business will be affected. To strengthen this relationship, here are some tips that you may keep in mind.

1. Do your part. Not because your franchisor is there to help and support you, you will no longer do your part. Like I?ve said, franchising is built on mutual benefits. The franchise setup ?may be distinct from other means of expanding a business, but the expectation of a good financial return will always be at the root of it?, Armando O. Bartolome, president of GMB franchise Developers, explained. The franchisee needs to do his homework such as doing his reports, navigating entire websites and reviewing documents. In other words, being hands-on franchisee is needed. The franchisor, on the other hand, do the same thing. Monitor the progress of their business, reports and document each transactions.
2. Each others commitment. One thing that bind the franchisor and the franchisee, it?s the contract. Aside from it binds the franchisor and franchisee, it also details requirements that each side must fulfill. This contract must be follow, or else, one who violated it may be punish, in a legal way.

Because their main goal is to make a good status as the business is running, they should be able to speak their minds, especially about sensitive issues or areas of conflict. Anyhow, in a relationship requires both parties to encourage and inspire each other, for the benefit of their business.

1. Consistency for the customers. Like any other business, ?customer is always right.? Costumers feel loyal to business that offer them a feeling of familiarity and comfort. Do not fail your customers expectation on your product/service. For most consumers, a brand is not just about the label or trademark, it?s about an entire experience. The franchisee still has a huge control over his franchise business. Franchisor have the right to insist on preserving their basic system. The franchisor is the root of franchisee?s success. Just do each others part.

Like any other relationship, there are times that conflicts may occur. And if you already experiencing such problems, try to make a decision and talk to your franchisor. And so, before you sign a franchise agreement, you must think of an exit strategy. But you need to consider the contract. You must not violate your agreement with your franchisor. Try to think a better way how to walk away with the contract. There are two factors you need to consider: your financial capability and your emotional readiness. With your financial capability, you must ask your self if you have enough funds to start a new business? Is it enough to surrender your present business to another? Well, if yes, then time to throw the towel and get up a new one. And as with the emotional readiness, some people find it difficult to start a new business. Try to ask your self first, ?are you ready to let it go?? If yes, then go with it.

You still have the full control over your franchise. Your franchisor can be your backbone but you still need to do your job as a franchisee and as a partner to them. Of course, be aware that at this point, you must be sure that you?re dealing with the right kind of people and avoid franchise scams.

Franchise Scams

Dreams of owning your own franchise can turn into a nightmare once you fall prey to franchise scams. Here?s what every potential franchisee should know.

People who get scammed in the franchising business naturally don?t want to talk about the experience. After all, it is proof positive that their ?gullibility? has made them lose not just their money but also their self-respect. Indeed, it would be foolhardy for anyone to publicly admit that they have been scammed in a franchising deal.

But people will continue to be victimized by franchise scams unless they are forewarned that other than legitimate franchisors, there are unscrupulous operators who are only after their hard earned money rather than their participation in a supposedly successful business formula.

Would-be franchisees should keep in mind that if they aren?t discerning and cautious enough, nothing can protect them from falling victim to a well-laid franchise scam. Thus, for those being propositioned to buy a franchise, we have gathered pointers from knowledgeable people to help them decide whether to sign that franchise contract or just politely walk away.

Falling Victim

Ma. Alegria Sibal Limjoco, chairperson of the Philippine Franchise Association says that the two major reasons why people are victimized by franchise scams are the following:

• Lack of awareness and information about the franchising business
• People?s attraction to putting up only a small capital for a business

?Prospective franchisees should know that a business that hasn?t proven to be successful can?t really franchise itself legitimately,? she says. ?In particular, the public should beware of businesses that require a franchise capital of only P10,000 to P20,000. Not all businesses that require such low capital could be genuine.?

This concern over very low priced franchises is shared by Rudolf Kotik, a franchise consultant.. ?Franchise sellers who offer franchises for as low as P10,000 will often tell you later that this amount is just a down payment,? he says. And Kotik says that not all scams are confined to franchises in the P10,000-range. He particularly cites the case of a halo-halo cart operator who succeeded in running off with P330,000 from a prospective franchisee. Once the later had paid the franchise fee for a similar cart that he intended to put up in another mall, the supposed halo-halo franchise and his cart simply disappeared.

To guard against being taken by such scams, Kotik advises prospective franchisees to check first if the franchisor is legitimate and for real. A good indicator, he says, is a franchisor?s affiliation with any of the three franchise associations in the country, namely, the Philippine Franchise Association, the Association of Filipino Franchisers Inc., and the Filipino International Franchise Association.

Warning Signs

In a recent seminar for overseas FIlipino workers, Armando Bartolome, president of BMG Franchise Developers, Inc., identified three telltale signs that a seemingly great franchise opportunity is a scam. The franchise agent would make you believe:

• that the franchise comes very cheap
• that you can recover your investment in such a short time
• that you would become a millionaire as a franchisee and could then afford to stop working.

Bartolome warns that all these simply can?t be true with legitimate franchises. ?one more thing, people pushing a franchise scam won?t even let you know who owns the franchise,? he says. ?Often, the agent of a franchise scam will simply give you a three-page franchise agreement to sign. When this happens, simply ask yourself: How can you put down all of the franchisor?s and franchisee?s obligations in just three pages? A real franchise agreement will probably be as long as 35 to 45 pages. In fact, some very thorough agreements can have as many as 200 pages.?

In a legitimate franchising arrangement, Bartolome explains, the franchisor and franchisee have to work together in running a specific business. Their relationship will be defined by a contract called the franchise agreement. Without this agreement, there?s no franchise to begin with.

Staying Protected

Bartomolome suggests that to avoid being victimzed in a franchise scam, the prospective franchisee should do the following:

• Evaluate the prospective business franchise
• Check out the longevity of the product to be sure that it isn?t just a fad
• Appraise the product?s competitiveness with other products in the market
• Find out how profitable the product is
• Identify the business model (Is it a cart investment? Will it be located inside or outside a mall?)
• Determine the total investment a franchisee needs to put up
• Identify the various support programs that will be extended to the franchisee.

?When you buy a franchise, you?re actually buying the experience of the franchise owner in running the business, and you?ll be selling the name of the franchised product,? he says. ?Obviously, you can?t get all of these for cheap. These days, you may be able to get a legitimate franchise for as low as P150,000, but you should be suspicious of these being offered for only P10,000 or P15,000. They are likely to be scams.?

This view about the pricing of franchises is shared by Richard Sanz, president and CEO of Tea Square Food & Beverage Inc. He suggests that for prospective franchisees to appreciate why a franchise can cost so much, they should ask themselves this hypothetical question: If you?re a franchisor who has spent so much time and money to put up a system for an efficient and profitable business, and if it took you several years to make your brand name well known, would you sell that business for only P10,000?

Sanz then explain the logic behind franchising: ?A franchisor sells a franchise because the business has proven to be successful, and one way to expand the business is to replicate it through a franchise. To be able to franchise the business, however, the franchiser has to develop the whole operations system and document it. This way, the franchisor can teach the franchisee every aspect of the business.- the product, the marketing strategy, the accounting system, the customer service.?

What surely marks a franchise scam, Sanz points out, is the absence of support to the franchisees. ?Once you have paid the franchise fee of, say, P10,000, you can be sure that the scam franchisor will be gone in a matter of days.? he says. According to Sanz, victims of a franchise scam usually will find themselves in the following situations:

• They couldn?t find the supplier for the franchised product when they start operating and the franchisor is nowhere to be found as well.
• They will be enticed to sign the franchise agreement with the assurance that there would be no franchise fee, but before they can begin to operate, they will be asked to pay hidden charges as much as P200,000.

Paying Attention

Mercedes ?Chedeng? Anglo, a retiree from a paper manufacturing company, says that people get victimized by franchise scams because they don?t study their prospective business well enough. ?Most of them only think of how much they can earn big money fast and don?t really pay much attention to the business details,? she says.

She herself got scammed once. That was when a friend invited her to invest in the selling of some very popular brands of consumer goods. She readily shelled out P5,000 for the supposed franchise but nothing came out of her investment.

Despite that experience, Anglo kept an open mind about franchising. In 2003, she decided to buy a Zagu Pearlshake franchise. She did so because she had been impressed by the long line of customers at Zagu outlets in the malls. So one day, bringing with her some of her reirement money, she went directly to Zagu?s main office to apply for the franchise.

She took note that there were many employees in the office, and that the company?s officers were also on hand to entertain prospective franchisees. This convinced her that Zagu was legitimate.

Based on this experience, she has this advice to would be franchisees: ?Before deciding, observe several outlets of the franchise to see for yourself if the product really sells well. Then once you have decided, negotiate in the franchisor?s office and don?t pay for the franchise just anywhere. Do it in the franchisor?s office.?

Still another strong indication of a risky franchise is when its owners are not selective in choosing franchisees. This is a bad sign considering that the brand name of the franchise is greatly dependent on the performance of the other franchisees in the system. As Sanz says, ?It takes just one bad egg and you?re done for.?

How to Deal With Common Problems in Franchising?

Franchising is said to be a partnership between the franchisor and the franchisee. Like any other relationship, problems do exist, so with franchise. If will not be solve the problem immediately, it may worsen.

Not because franchising is less risky, you will no longer experience problems with it. Michael Hemenway, founder and CEO of brandEXPANSION (a United States-based firm that deals with all aspects of franchising) says ?Everyone buys a franchise with the ultimate aim of succeeding as a franchisee.? In fact, most people thought that franchising is a quick-money return business and has the assurance of success rate. Which simply shows that some people still don?t understand franchising even though they already have it. Keep in mind, the key to have a successful business is to work hard, and being optimistic.

Some entrepreneur says that franchising is like a marriage that bind with at contract. I agree with it! In marriage you have to be loyal, and respect each other. However in franchising, the contract binds the franchisor and franchisee, with respect, trust and loyalty as a business partner. If one of these quality break down, problem begins.

One common problem in franchising is the communication. ?Communication is at the core of every franchisor-franchisee relationship,? says Steve Whiteside, an entrepreneur and consultant for franchise organization. If one will not communicate well with his partner, probably this can cause problem, especially if its a business matter. And so, most franchisors try to build a rapport the moment they meet their franchisee for the first time. Communication barrier sometimes a hindrance to build a good communication and work together effectively.

The Expectations and Perceptions
What do you expect in putting a franchise business? Or what are your expectations about your franchisor/franchisee? You may think of so many expectations in your mind, but the real expectations of the relationship start to form at the first meeting between the potential franchisee and the franchisor.

Some people expect that franchising can make them rich in just a short period of time. I may say that there is no assurance on that. Once you expect for something, it must be in a positive side. Partnership works at this time. Communicating with each other and both aiming high for the business is useful. As long as you are with a good franchisor, and you are doing your part as a franchisee with focus, so no reason to fail, just be optimistic.

Communicate Effectively
Communication barrier arises when franchisees feel they are not on equal footing with franchisors. Things are always unequal if one party feels that its input has no sway or power to influence. Poor communication cause trouble between franchisee and franchisor. It is very important that both parties receive what each other wants to say. Even in franchisee-staff relationship, communication is very essential. You better prioritize the information going in and out. If problem occurs between you and your franchisor, try to discuss it formally and be professional.

Building Trust
Before signing in a franchise, always remember that you are entering a relationship with your franchisor, which trust is required. If there so many hidden agendas or your instinct tells you that something is wrong, you might be a victim or franchise scams. However,trust is earned and not comes naturally in each and everyone of us.

Trust is one of the most important element in a relationship to work, without it, there is no way to ground the relationship, and so communication may break too. In franchising, trust is important not because of the money involve, but its your passion or willingness to put a business.
It all starts from the first meeting between the franchisor and the franchisee. Once trust is applied to the relationship, effective communication follows and so on. Together with a proper support from the franchisor, hands-on franchisee, focus, patience and being optimistic, then your franchise will somehow be successful. Just bear i mind that, ?never break the trust that you earn.? Once it break, it is difficult to bring it back, and conflict may occur if trust is missing in a relationship.

Advantages, Benefits of Franchise

There are a lot of benefits of franchising.

Some of the advantages to franchising include:

• Your brand name becomes widely known through franchising.
• Strong possibility for rapid growth with minimum capital expenditures.
• Your share of the franchising program becomes a valuable, marketable asset.
• You receive an ongoing share of revenues of the program.
• As the number of franchisees grows and they learn the business, they will provide new ideas that can be used in your own business as well as in the franchise network.
• With increased volume comes increased buying power for the entire franchise network and your business. This should result in the potential to lower your overall cost of sale, and therefore increase profits.
• As you develop new products and services, you benefit not only by marketing them in your original business, but also from having them sold throughout the network.
• This business expansion is accomplished while you maintain and run your original business.
• Franchisees will have invested quite a bit of money to get into the business, have a pride of ownership and self-motivation that enables them to showcase your original concept and business in the best possible light.

Other Benefits of a Franchise

Lower Risks. Most business experts agree that a franchise operation has a lower risk of failure than an independent business. The statistics on this vary depending on the definition of failure. Yet, whatever statistics are used, they consistently suggest that a franchise is more likely to succeed than are independent businesses.

Established product or service. A franchisor offers a product or service that has sold successfully. An independent business is based on both an untried idea and operation. A great factor that will help you predict the potential success of a franchise is the length of time that the franchisor have been in successful operation.

Experience of franchisor. The experience of the franchisor?s management team increases the potential for success.

Group purchasing power. It is often possible to obtain lower-cost goods and supplies through the franchisor. Lower costs result from the group purchasing power of all franchises. To protect this benefit, most franchise agreements restrict the franchisee from purchasing goods and supplies through other sources.

Name recognition. Established franchisors can offer national or regional name recognition. This may not be true with a new franchisor. However, a benefit of starting with a new franchisor is the potential to grow as its business and name recognition grow.

Efficiency in operation. Franchisors discover operating and management efficiencies that benefit new franchisees. Operational standards set in place by the franchisor also control quality and uniformity among franchisees.

Management assistance. A franchisor provides management assistance to a franchisee. This includes accounting procedures, personnel management, facility management, etc. An individual with experience in these areas may not be familiar with how to apply them in a new business. The franchisor helps a franchisee overcome this lack of experience.

Start-up assistance. The most difficult aspect of a new business is its start-up. Few experienced managers know about how to set up a new business because they only do it a few times. However, a franchisor has a great deal of experience accumulated from helping its franchisees with start-up. This experience will help reduce mistakes that are costly in both money and time.

Marketing assistance. A franchisor typically offers several marketing advantages. The franchisor can prepare and pay for the development of professional advertising campaigns. Regional or national marketing done by the franchisor benefits all franchisees. In addition, the franchisor can provide advice about how to develop effective marketing programs for a local area. This benefit usually has a cost because many franchisors require franchisees to contribute a percentage of their gross income to a co-operative marketing fund.

Proven system of operation. An attractive feature of most franchise in the Philippines is that they have a proven system of operation. This system has been developed and refined by the franchisor. A franchisor with many franchisees will typically have a highly refined system based on the entire experience of all these operations.

Know the Law in Franchise Business

Most of the articles about franchising business were about teaching the franchisee on how to apply, story about the successful franchisee, and so on. However, I haven?t read an article dealing with the basic legal aspects of running the business. One essential information in business is knowing the law and how to apply it to avoid problems upon running a business. Basic law in business is a must to know for you to manage your franchise in a right path.

One reason why some franchisee failed to run their business successfully is because they are not aware of the basic law. They only knew is that business can raise them from poverty, or it can give them an extra income. But they are not aware of the laws in business. So, here are some of not so commonly known legal laws that franchisees ? business owners in general must know:

#1 ? A 20 percent final tax on all payments made tot the franchisor (including initial franchise fee), should withhold by the franchisee.
The first law is based on Section 24 (B) of Republic Act No. 8424, otherwise known as National Internal Revenue Code. Under the Section 57 (A) of the NIRC, the franchisee is the ?payor? and is thus constituted as the withholding agent. And the franchisee?s responsibility is to withhold the equivalent of 20% from amounts paid as franchise fees or royalties. The said ?royalties? are defined as the sums paid to a creator or a participant in an artistic work, based on individual sales of the work. In order to receive royalties, the work must generally receive a copyright or patent. As well, often the amount of royalties received is negotiated by contract. Because this is a law, if the franchisee failed to withhold and remit this tax, the franchisee may be subject to a criminal or civil penalties under the NIRC in addition to the payment of the tax.

#2 ? The franchisee may choose between registering as a VAT taxpayer or as a percentage taxpayer.
As a franchisee, you need to register yourself as a taxpayer. However, you need to choose between VAT taxpayer or a percentage taxpayer. If you choose to be a percentage taxpayer, your business may expect the gross annual sales and receipts, or both, not to exceed P1.5 million. The business that is under the percentage system shall pay a tax equivalent to 3 percent of the gross quarterly sales or receipts (Section 116, NIRC) and is remitted every month, instead of quarterly. If the business exceed the threshold amount of P1.5 million during its taxable year, the taxpayer must amend from percentage to VAT taxpayer.
On the other hand, the VAT tax amount is 12 percent rate, unlike on percentage tax which is 3 percent only. For the sake of those who don?t know about the VAT, this VAT is not fully passed onto the consumers. On the law, Section 8 of RA 0337 (B) provides that in computing the net Vat payable, the input VAT that may be credited for every quarter shall not exceed 70 percent of the output VAT. Simply means and stated that not all the VAT are being passed to the consumers.

#3 Not all sales transactions requires issuance of official receipt.
Like what the government said to the consumers, ?Always ask for the receipt.? However, according to the law, official receipts must be issued for the following transactions: (1) sales merchandise or services of the transaction amount exceeds P25, (2) transactions by VAT registered businesses, and (3) payment for rentals, commissions, compensation or fees. As the law said, issuance of the receipt requires these said transactions. And know we know why some business don?t give receipt to their consumers.

#4 Businesses must withhold the income tax on the salaries of their employees and remit these to the BIR.
Stated on the Section 79 of the NIRC which provides no with of tax on salaries compensation income of an individual does not exceed the statutory minimum wage or P5,000/month. If the employee?s wage does not exceed on P5,000, the employer must refund to the employee the amounts withheld, at the end of the year. Aside from that, the owner of the franchised business must withhold tax on rentals, SSS, Philhealth, Pag-Ibig contributions and insurance which is required and a must to do as a business owner.
Knowing the basic law is important for all business owners. Having a business is not about money-making, or managing your business. It?s a package responsibility that you need to do. Being aware of the basic legal rules and regulations in business will help you to avoid any penalties or conflict upon running a business.

Food Cart | Kiosk Franchise Business

Food cart franchises are one of the most popular Philippine franchise today and are easy to manage and start. For as low as P30,000 you can have your own food cart / kiosk franchise business. Great for OFW with little to no experience in business. This is the best franchise business to start.

The fact is, food cart franchises are easy to manage, with over 400 different kinds of food cart businesses sprouting all over Manila in just a year. Food cart business in the Philippines is one of the most sought after business model popular among OFWs.

Philippine Lotto Franchise

One of the best franchises in the Philippines is the Lotto Franchise. To gove some clarification, here are some of the information you need for having a Philippine Lotto Franchise.

How to Apply as an Online Philippine Lottery Agent?

1. The applicant is requested to fill-up the On-Line Lottery Application Form
The Application Form for Philippine Lotto Franchise shall include the following attachments:

• Sketch/Location Map of the proposed lotto outlet site.
• Picture of the building of the proposed lotto outlet site.

2. PCSO shall conduct the inspection and technical evaluation of the proposed outlet site/s.
3. The applicant shall be informed of the evaluation result. If the proposed outlet site is viable, there are still some requirements needed for the lotto franchise. Different requirements are required for individual lotto franchise applicant & for corporation.
4. PCSO shall notify the applicant on the status of the application concerning the availability of communication facilities in the proposed outlet prior to installation of facilities.
5. The applicant shall be informed when to fabricate lotto franchise booth.
6. For Terminal Installation.
7. Payment to PCSO for Processing Fee.
8. Payment to PCSO of an Installation Fee.
9. Payment of Surety Bond to the GSIS. PCSO based station at the Annex I Bldg., 2/F)
10. Request for training in the operation of terminal.
11. Proceed to Merchandising Section for outlet provisions. NCR outlets will be provided by the Main Office, Quezon City. For NCL/STBR outlets, provisions will be given at the respective PDO covering the said locality.
12. Signing of the Agency Contract with the PCSO.
13. For On-Line Activation.
Note:

• Please ensure that Application Form is complete and that all required documents are attached. Incomplete requirements will not be processed.
• All application are subject to evaluation prior to approval.

Gas Station Franchise

Gas Station Franchise is one of the most highly searched option for franchising in the Philippines. It is also one of the necessity that we need in order to continue living our daily lives. Without gas, we can not cook our food nor drive our cars. Which makes the market for gas station franchise a hit for Filipinos.

An example of gas station franchise is 1st Auto Gas Franchise. If you are interested in their franchise, please have a look below with their details.

Auto LPG or Liquefied Petroleum Gas is a generic name for mixtures of hydrocarbons (mainly propane and butane) which exists as vapor under ambient conditions and can be changed into liquid state by applying moderate pressures.

Auto ? LP Gas used as a transport fuel- is by far the most widely used and accepted alternative automotive fuel in use in the world today.
Why use LPG as FUEL?

• *Clean. LPG is very clean burning and has lower greenhouse gas emissions than any other fossil fuel when measured on a total fuel cycle.
• Efficient. LPG gas is cost-effective, since a high portion of its energy content is converted into heat. It can be up to five times more efficient than traditional fuels, resulting in less energy wastage and better use of our planet?s resources.
• Safe. LPG gas compared to other fuels has an excellent safety record worldwide when handled properly and is non-toxic.
• Practicality. LPG Auto gas has a higher octane rating than gasoline which reduces engine wear and maintenance requirements.

Auto LPG benefits from fiscal benefits in many countries which makes it the cheapest fuel per liter at the pump. Auto gas vehicles are very economical to run; Conversion and maintenance of an Autogas vehicle is low cost.
We promote LPG as an alternative fuel and offer competitively-priced petroleum products and services:

• a. by establishing profitable multi-fuel stations at safe and convenient locations
• b. serviced by properly trained, highly motivated and well-compensated employees.

We make every effort to deliver, on time and within our business policies and guidelines the commitments that we make to each other and to each customer. We are here to stay accountable in good and bad times.

Franchise Packages

Package 1: Basic LPG Refuelling Station

• Simple pump and tank canopy installation

Package 2: Basic Multi-Fuel Station

• Combination of LPG and Diesel products

Package 3: Bundling Option

• Stations bundled with allied retail businesses like the famous Goodah Restaurant, Gal?s Bakeshop and Crystal Clear.

Printing Franchise

It is just recently that we have seen the profitability of printing franchise in the Philippines. With the release of new cellphone models having cameras, low cost digital cameras, picture printing and the need for more printing are just overwhelming that owners of printing businesses are taking on a lot of profits.

Inks & Print Printing Franchise

Ink & Prints started its operations on February 1, 2006 at the 1st Floor of Lotus Mall, Imus, Cavite. It started as an ink refilling station then eventually, ventured to the digital printing business. It was formerly known as Ink Queen Refilling Station then, until after a year, the management decided to change its name to INK & PRINTS. To date, we have 8 branches in total (5 in Cavite area and 3 in Manila area).

Ink & Prints services include ink and toner refilling and sales, digital photo printing, invitation and tarpouline printing, and other computer related services. We also have two shops operating 24/7 located at Dasmarinas and Nueno Avenue named INK & PRINTS + GAMING CENTER. From the name itself, we also cater internet and gaming services ? which includes internet gaming and other gaming consoles like X-Box, PS2 and Nintendo Wii. In these shops, we are open on Mondays thru Sundays. These shops are known for it?s the very first refilling, printing and computer rental shop in the Philippines to operate in 24 hours and for its P7.50 per hour computer rental.

Ink & Prints opened its doors to franchising last March 2008 and had its first franchisee on April 12, 2008. Our first franchisee is located at 2nd Floor, Victory Mall, Monumento, Caloocan City.

Franchise Information

Ink and Prints is pleased to announce that Ink & Prints is now open for FRANCHISING. THE BUSINESS STUDY is detailed on the menu at the side.

Ink and Prints Franchise offers the best value for your money. The amount of investment is almost equal to computers and supplies that will be given to. If you read thru the business study just by the supplies of ink you will earn as much as 1600% from your investment. Just on the second month, If you have picked the correct location and manpower, we guarantee that you have already gained your investment.

Ink and Prints will also train you on how to run your business. The training that will be given to you is very fool proof. Ink and Prints also gives you the best support. We live by the code of service excellence.

How to franchise these companies?

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