FRANCHISE KING SAMIE LIM ON TRUTHS & TIPS ON FRANCHISING
Manila, August 10, 2002 (STAR) By Wilson Lee Flores - The Philippine economy must aim for faster growth. We must create thousands of small and medium-scale enterprises (SMEs) nationwide for economic development and for true democracy. The emergence of more SMEs will help us create a true middle class which has been eluding our society for generations," said 53-year-old Samson "Samie" Lim, the "godfather" of the Philippine franchising industry and pioneer of the country‘s Mother’s Day celebrations. He is a passionate advocate of using the franchising system to propagate SMEs. A former Trade and Industry undersecretary and now adjunct professor in the Asian Institute of Management (AIM), Samie served as past chairman of the Asia Pacific Franchise Confederation and past chairman of the Federation of Asian Retailers Association. He is now vice-chairman for Asia of the prestigious World Franchise Council. Tomorrow, Aug. 8, Samie Lim will deliver the Opening Statement in the 11th National Retailers Conference at Edsa Shangri-La Hotel as chairman emeritus of the Philippine Retailers Association.
Automatic Appliances, Inc. and Blims Fine Furniture president Samie Lim comes from a distinguished family of achievers. His father is the legendary "Appliance King" Benito Lim, his brother Wilson Lim is president of Abenson, Inc., his uncle Dr. Elson Lim served as past dean of Chiang Kai-Shek College and his cousin Josiah Lim Go is a La Salle teacher and the youngest president of the Philippine Marketing Association. An idealist who as a young man wanted to be a priest, Samie ended up using his diverse businesses for "serving God and society." Samie graduated cum laude from the Ateneo de Manila University and pursued further studies at AIM, Sophia University in Tokyo, Japan and Institute of International Studies and Training in Fujinomia, Japan. He has a Masters in Business and Economics from the University of Asia and the Pacific. Samie Lim recently granted Philippine STAR an exclusive three-hour interview at Shangri-La Makati.
PHILIPPINE STAR: Don’t you think the Philippine economic growth of three percent to 3.5 percent is too slow to overcome mass poverty and that our population growth of 2.3 percent is too high?
SAMIE LIM: I strongly believe that if we as a country do not target minimum economic growth of 10 percent per year, we will never be able to catch up with our Asian neighbors. I’m not saying that we will be able or that we should reach 10 percent economic growth rate next year. I hope that the country will achieve at least six percent economic growth, then later on accelerate to eight percent, then aim for 10 percent economic growth per year. With an average economic growth of three percent and with our high population growth, we’ll only be fooling ourselves to say that we are making real progress. I hope that all of us aspire for higher economic growth for the Philippines.
How do you assess the new anti-crime focus announced by President Gloria Macapagal-Arroyo and its impact on the business climate?
I think the President hit the nail on the head when she pledged to focus on the peace and order problem, because this is the number one concern of most people. Business people here and abroad will not invest in the country if we do not have peace and order. Other than this, all the efforts of the President in economic management are in the right direction.
So you are very optimistic that the Philippine economy will get better soon?
(Laughs) I’m not an economist, let’s just say that I’m very optimistic that the franchising industry in the Philippines will get better.
When did you pioneer franchising in the Philippines, and which country in the world started it all?
I started the franchising business in the Philippines in 1995 due to my involvement in the retail industry. I observed retailing all over Asia, also the US and Europe, and that’s where I appreciated franchising. The US and Europe both claim to have started franchising over 100 years ago. I think the franchising of the business format is really American. The word "franchising" is a very broad term, people use it also to refer to franchises for telecommunications, electric power, water supply, broadcast media, and of course, we refer to franchises of Jollibee or Dunkin’ Donuts.
Can ordinary people afford to buy a franchise and start their own business on a really small scale?
That’s one of the priority programs of our Philippine Franchise Association, which is to encourage many new SMEs. We’d like to bring down franchising costs to as little as P100,000 to P1 million. Yes, ordinary people can afford a franchise and start their own small business.
Which are the best franchises in the world?
I admire McDonald’s, Kentucky Fried Chicken and Starbucks.
Which are the better franchises in the Philippines that new entrepreneurs can consider?
The best in the Philippines is Jollibee, and it’s also possibly among the best in Asia and in the world. In 1997, Jollibee had 209 outlets, but last year it had more than 400 outlets nationwide. Chowking in 1997 had 114 outlets; last year it had 183 outlets. McDonald’s in the Philippines had 100 outlets in 1997, but they had 258 outlets by last year. Greenwich Pizza had 70 outlets in 1997 and 196 outlets last year. Goldilocks had 50 outlets in 1997 and 126 outlets last year. Mercury Drug had 294 outlets in 1997 and 400 outlets last year. 7-11 had 107 outlets in 1997 and 190 outlets last year. Agua Vida had 120 outlets in 1997 and 430 outlets last year. Bench had 31 outlets in 1998 and 136 outlets last year. Crystal Clear had one outlet in 1997 and 160 outlets last year. By the way, Francorp did the franchising system of Jollibee when it started, Francorp is the world’s largest franchise consulting firm specializing only in franchising. I’m the Philippine licensee of Francorp. Arthur Andersen claims to be bigger, but its franchising consulting department is really small and only a small part of its overall business. Francorp now has clients like Bench, Penshoppe, Bayo and other top retail chains like Kamiseta, Plain & Prints which has actress Gretchen Barretto as its model. I read your recent interview of Joyce Jimenez and her lingerie business. Tell her we’d like to do the franchise business for Joyce Jimenez (laughs).
I know people who had gotten lousy franchises and lost money, how come there are mismanaged businesses which have gone into franchising?
Many people turn their businesses into franchises for the wrong reasons. Two of the more frequent wrong reasons are –there are business people whose business is not doing well and who think that if they franchise it, maybe it will do well. Another involves family business. When families reach the third generation, they use the franchising system to give each grandchild or heir one or several outlets of the business. There are also businesses which are not true franchises, or which are not truly ready for franchising.
Are there unethical, unprepared and lousy franchisors in other countries?
Even in the US, Europe or China, there are so-called franchises which are not true franchises, or those that are not really ready to be franchises. Seven years ago, they claim in the US that they have 3,500 franchise business concepts or franchisors. An example of a franchisor here in the Philippines is Jollibee. Last year, when the Americans came to the Philippines for a conference, they corrected their earlier claim, saying that they have 2,000 franchisors, because there is now a clearer definition of what is a franchise and what is not. So as not to be cheated or fooled, people should first check the franchisor if it is a member of the Philippine Franchise Association. Within our group, we have a code of ethics, and we try to maintain our standards of ethics.
Are you satisfied with the Philippine franchising industry?
Yes, in general, franchising is doing well in the Philippines. Last year, 708 business concepts became franchises in the country, and about 55 percent are foreign and 45 percent are local. Although it is not perfect, franchising is today the fastest-growing business sector. It is also the fastest way to create thousands of small and medium enterprises, as well as generate millions of jobs to support the economy. Franchising is a great idea; it is being in business for yourself, but not by yourself only. In franchising, you receive the support and backing of the franchisors, who share their supposedly good business formula or format. Worldwide, over a 10-year period, the success rate of franchises is more than 90 percent, while non-franchise businesses have only success factor of 25 percent. As a whole, the Philippine franchising industry is one of the most developed and sophisticated in Asia. In fact, we’ve become the benchmark for the region.
Despite what our political leaders claim, these are difficult economic times, do you think people will still go into business by way of a franchise?
Franchising is one of the few sectors that continued to grow 20 percent to 30 percent per year in the last five years since the 1997 Asian financial crisis. Franchising does well when the economy is good, and it grows even faster during times of economic difficulties. Why? There are many executives who are laid off by corporations during hard times, and they end up with three valuable resources that fuel the growth of franchise businesses – money (from retirement or separation pay), time, and network of business contacts.
How big is the franchising business worldwide?
There are over 15,000 franchise companies all over the world. There are more than 1.2 million franchisees. Globally, estimated sales of franchise businesses total US$1.6 trillion. Even in the economic miracle of China, franchise businesses are booming.
What are your future plans for the Philippine franchising industry?
We have a five-year plan for Philippine franchisors which are credible and with consistent success records such as the big ones – Jollibee, Chowking, Goldilocks and others – that they would be able to franchise internationally. We foresee that in the next 10 years, franchising will be one of the biggest dollar-earners of the Philippine economy because Philippine companies like Jollibee can collect franchise fees and royalties.
How come our political leaders seem ignorant or not supportive of the development of your industry?
I think our government will increase support for our industry if the government realizes the dollar-earning potential and the employment-generation capabilities of franchising. The governments of Singapore, Malaysia and Thailand give generous support to their own franchising industries, especially Singapore.
Is it true you almost became a Catholic priest?
(Laughs) A lot of people say that I’ve not grown up from my years of being a boy scout. In 1964 when I was 15 years old in high school, I asked a Benedictine monk if I could study to become a priest. He said, fine, I respect your idea, but you go ahead and finish college first, then if you still want to be a priest, then come back. I eventually went into the appliances and furniture businesses, where I have maintained my idealism and my commitment to service. In appliances and furniture, our companies serve people by improving the quality of life of the people.
Is Automatic the biggest in appliances?
Automatic is the oldest appliance chain in the Philippines, but it has now been overtaken by the Abenson chain run by my eldest brother Wilson Lim and also by SM Appliances. My immigrant forebears really started in the furniture business during the late Spanish colonial era of the 1890s with the Catholic Church then as our biggest customer. We were the largest furniture chain until the Japanese invasion of the Philippines in World War II. My father Benito Lim started Automatic Appliances in 1948, the period when the world first invented the transistor radio. My father is a great entrepreneur, he is now 80 years old. I reintroduced our furniture business with Blims in 1977, that’s why we are celebrating our 25th anniversary. I hope to work hard and regain our past leadership in the furniture industry.
What is your guiding principle as businessman, civic leader, and franchising industry pioneer?
My philosophy in life is – I want to do the greatest number of good for the greatest number of people. I had wanted to become a priest when I was young, but I have maintained my love for God and my commitment to be of service to others.
* * * Please send comments/suggestions to wilson_lee_flores@hotmail.com or P.O. Box 14277, Ortigas Center, Pasig City.
Christopher James Conner
Vice President
Francorp, Inc.
The Franchising Leader.
www.francorp.com / www.francorpconnect.com
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