Non-existence of governmental regulation on franchise businesses: A case study of Potdog Yummy Yes Delights

• Main Authors: Andal, Charmaine C., Chan, Janel Erica T., Dela Cruz, Laurence Albert V., See, Clarice C., Yae, Cerwin C.
• Format: text
• Language: English
• Published: Animo Repository 2010
• Subjects: Franchises (Retail trade) > Self-regulation > Philippines
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/14491
• Institution: De La Salle University

Franchising is a well-liked business venture in the Philippines. The franchise sector in the country accounts for approximately five percent of the country's gross domestic product (GDP). Currently there are over 1,000 brands in the country. Franchising is defined as a form of business by which the owner of a product, service or method obtains distribution through affiliated franchisees. Five characteristics that make it a viable business venture are: the presence of a proven business model, formal training, tested marketing strategies, technology and a franchise network. Even with the tremendous growth of the franchise industry in the Philippines, the government still does not have regulation for it. With that said the number of pseudo-franchisors with poor and non-existent systems has increased. In the absence of government regulation, franchise associations in the country have maintain self-regulatory status to maintain certain trade standards among its members in the hopes of eliminating franchise related problems. Using the case study approach, the researchers studied PotDog Yummy Yes Delights, a food cart franchise company. The business currently has 50 outlets strategically located and operating within and outside Metro Manila 52% of which are company owned. In the aim of identifying the impact of the absence of government regulation on a franchise businesses specifically that of PotDog's franchisor and franchisees, several interviews with the Department of Trade and Industry (DTI), the franchisor and the franchisees of PotDog and the in-the-making Food Cart Association of the Philippines (FOCAPHIL) were conducted. Qualitative research method was utilized specifically descriptive research to analyze the data gathered. Methodological triangulation was also used in order to arrive at an unbiased conclusion. The researchers found out that Justis and Vincent's four phases of franchise relationship does not apply in the case of PotDog. The relationship of the franchisor with both franchisees has been so far pleasant and no major conflicts have aroused even towards the end of the franchise contract. In addition, the non-existence of government regulation on the franchise businesses in the Philippines does not directly affect PotDog and its franchisees. Problems experienced within its franchise relationship such as forced termination of contract, nonrenewal of contract, unfulfilled expectations, control issues are not results of the absence of regulation as well. On the other hand, negative effects are seen mostly from start up entrepreneurs and franchisees victimized by fraud and incompetent franchisors. The researchers recommend research on the feasibility of an association comprised mostly of franchisees due to the lack of protection for their part. This can be followed by a research on effective regulation of the franchise industry. Future researchers also widen their scope and increase the number of samples to see a bigger picture of the franchise industry.