In the past four or five years, franchising an existing brand of product or service proved the logical and convenient choice for entrepreneurs, who wanted to own a business without going through the hassles of testing a brand through time.

But with franchising having gone unregulated, a lot of overseas Filipino workers (OFWs) are being victimized of their hard-earned savings by people posing as franchise consultants and selling mere concepts that have yet to be market-tested and barely passed a year of market trials.

There is now a need to regulate the franchising sector, either by legislation or by the legitimate associations policing their ranks against such malpractices that victimize the poor OFWs who have to part with their hard-earned money to these illegal operators, Pacita Juan, past president of the Association of Filipino Franchise Inc. an 80-member group of homegrown brands, said.

Oftentimes, she said, legitimate franchise groups, which stage annual expositions and need to fill up a whole hall good for 200 to 400 exhibitors will include even the untested brands in their expo thereby giving the participating exhibitor a semblance of legitimacy as a tried-and-tested product or service brand in the market.

Juan said would-be franchisees, especially OFWs need to do a lot of due diligence in scouting for their businesses.

You must research on the brand of product or service, the company's affiliations, the length of stay in business, the credibility of the people behind the company and even conduct surveys among banks if the company has a lot of unpaid obligations or not, Juan said.

Never plunge into a brand just because you attended one seminar or hands-on training or just because of special offers from franchisors, she said. Better yet, go for a franchisor who would hold your hand and guide you every step of the way and not just forget about you after getting your money, Juan said.

Juan said even the most well-managed and tested brands go through business uncertainties such as the current global economic crisis, or even a mere change in traffic flow" such as one way traffic – which would suddenly make your business inaccessible to your clientele.

For instance, in the coffee shops business alone, a lot of famous foreign brands are going through downsizing or closing down some outlets because consumers are forced by the crisis to scrimp on their budgets by changing their spending options.

Juan – who co-chairs the Philippine Coffee Board which promotes coffee production and marketing excellence throughout the country to help the Philippines regain its previous dominance in the sector – suggests that it is always better to have a small business that you can run and manage yourself no matter how lowly the location.

She said in her rounds in the provinces, she gets delighted seeing small coffee shops being put up in plazas and other traditional venues, using the name of the proprietor. But the process of roasting the beans, grinding and brewing them becomes so personal and very distinct that customers keep coming back for that particular brew. In a matter of months or years, branches sprout in other localities under the close supervision of the proprietor.

Coffee shops now have to reinvent themselves or face closure of their businesses because of the competition posed by fastfood centers, which now offer the same products (pizzas, pastas, cakes) and services (free newspapers, free wifi usage). Fastfood operators even offer free unlimited refills that coffee shops do not provide, Juan said.

Even in the US and other most advanced countries, the coffee shops are adding new product offerings such as wines or cocktail drinks to attract even the night crowd or those who do not want to stay awake by drinking one cup after another, Juan said. (By the Business Agenda Staff)