Philippine Business Magazine: Volume 9 No. 4 - Cover
Short Cuts
Franchisees begin with established business procedures to succeed
By Anne Ruth dela Cruz

It used to be that starting a business entailed months of market studies and a lot of risks. What if consumers do not welcome the product or the service you are offering? It also used to be that well-established businesses were limited by resources in their desire to put up more stores and branches. But thanks to franchising, businesses may start (for those buying a franchise) and expand (for those giving out the franchise) in a shorter period of time.

Julie’s Bakeshop
It all started out as a family business in Cebu way back in 1981. Dr. Rico Gandionco, Chairman of the Board of Julie’s Franchise Corporation (JFC), recalled that his mother was a canteen concessionaire in one of the largest rattan firms in Cebu. She observed that workers preferred breads to other snack items. “With the bulk of bread she was buying, she decided to rent a space and started a small bakeshop in Mandaue.” After six months, she opened another branch in Urgello, also in the city and eventually ventured outside Cebu to other cities in the Visayas.

In 1998, the Gandionco family decided to franchise the business and to date, Julie’s Bakeshop has 111 franchisees nationwide—66 in Luzon, 22 in the Visayas, and 23 in Mindanao. In terms of stores, the number reaches 300 and counting, since some franchise owners operate multiple stores. “We have this vision of having a Julie’s Bakeshop in every town in the country,” Gandionco said. “By the year 2006, Julie’s targets a total of 750 branches all over the Philippines.”

A Julie’s franchise costs about P1 million in Manila and P800,000 in Visayas and Mindanao. The cost includes the franchise fee of P150,000; fixed investments for machinery and equipment of about P200,000; pre-operating expenses of P77,000 and other expenses like refurbishing of store, rent, and working capital. Pre-operating expenses cover training, insurance, business permits and marketing materials. But these investments are guaranteed to be recovered in two years’ time, according to Julie’s formula.

In choosing which franchise applications to approve, Julie’s puts a premium on an applicant’s enthusiasm and drive and trust in the profitability of the business. He should already have identified a location, which Julie’s, on its own, checks out thoroughly. If the foot traffic falls short of Julie’s minimum, the applicant recommends another place.

Beyond the store and financial capability of the franchise applicant, Julie’s requires a personal commitment – the franchise owner should spend at least five hours a day in the store. But he will be well-trained for this. Gandionco explains, “If the application is approved, the applicant goes through an orientation and is scheduled for a Break Baking Science and Technology (BBST), a basic course for new franchisees, and the Seminar for Franchisees and Supervisors.”

Sisters Alla and Aimee Andrada underwent these basic courses when they were granted their Julie’s Bakeshop franchises. Alla’s store is located at the very busy P. Burgos Street in Guadalupe, Makati City. Aimee’s store, on the other hand, is in Baclaran. Both stores were inspired by the successful franchise of their brother in Davao Oriental and came on the heels of Julie’s expansion into Metro Manila.

When her franchise application was approved, Alla went to Cebu to learn how to bake the different kinds of bread she would be selling in her store. She could not believe that Julie’s Bakeshop offered 150 types of breads. “We do not offer all the breads at our branches,” Alla explained. “Each branch decides which of the 150 breads it will carry in the branch and that is usually determined by market demand.”
The franchisee’s staff also have to undergo the same training in Cebu to ensure consistency in the quality of products sold in every Julie’s Bakeshop store. Shortly before any store opening, JFC sends a team of Bakery Operations Specialists (BOS) to help out in the last minute preparations. They usually stay for two weeks and “on opening day, the owners come to cut the ribbon and give support to their franchisees,” Alla related.

Franchisees are required to prepare weekly sales and production reports to their principals. A BOS team also conducts surprise visits to branches to monitor and evaluate operations. Alla recalled that she once got a rating of 79 on one of those surprise visits.

“Since it is a family business, the owners want us franchisees to know each other,” Alla said. “The owners also make it a point to know each franchisee and they encourage families to open a franchise.” Alla related that last year, they had a summer conference that brought all franchisees together. Last October, their sales conference was held in Cebu.

JFC conducts quarterly meetings by areas with their franchisees. JFC has company Franchise Relations Officers who are in charge of these franchisees. “We have semi-annual conferences and we give them seminars from time to time,” Gandionco said. “We also recognize outstanding management performance and excellent salesmanship.”

But more than providing freshly-baked bread every hour, Julie’s Bakeshop prods franchisees to be active in the community they serve. Franchisees are encouraged to sponsor one or two elementary schools by providing them with “Leaders for the Future” awards. This program started only last year and provides that the school’s valedictorian is awarded with a medal and cash prize given by the franchisee. “This encourages excellence in education in elementary schools,” Aimee said. “We are also encouraged to coordinate closely with the barangay officials and discuss what sort of projects can be organized to meet specific needs.”

Both Alla and Aimee are highly satisfied with the way their branches have been doing. Most of Alla’s customers already know what time of day a certain bread is available for sale and would eagerly try out new products.