Mon, Mar 22, 2010 page11

• FEATURE : Franchise businesses still booming despite recession

  • By Jason Tan / STAFF REPORTER
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  “There was no turning back for me ... I wasn’t going to allow myself to fail and giving up was never an option,” Lynn Hung (洪蕙婷) said as she recalled her entry into the franchise business in 2006.

  Hung used to be a software engineer, but she was on call 24 hours a day on weekdays to solve a banking client’s technical problems. One day, a call from her children reduced her to tears, when they asked if they could please leave the childcare center early and not be the last ones there again, the 31-year-old said.

  Later, when her hectic work schedule started to take its toll on her health, Hung decided it was time to quit her job and say goodbye to the NT$70,000 (US$2,200) monthly paycheck.

  “Those who want to be a boss don’t think they can just sit and watch the money roll in,” said Hung, who now runs a franchise store under the Zhan Yan Ting comic book rental chain (展燕庭漫畫休閒館).

  The first six months were more than challenging, as she learned everything from scratch, but she never thought of calling it quits.

  “This is a service industry and quality service is key,” Hung said. “If you want to set up your own business, then its best to do so in an area you feel passionate about so you can enjoy doing it for the next 20 years.”

  She printed out a customer list to learn the names of her customers and what kind of magazines or comic books they preferred to rent. The hard work paid off and Hung was soon able to establish good rapport with her regulars.

  Hung’s outlet broke even in just over six months and she now only goes to the store two days a week to “socialize with customers and collect money.”

  For those who want to join the booming franchise business, figures from the Association of Chain and Franchise Promotion (台灣連鎖加盟促進協會) show that they are spoiled for choice with more than 2,000 brands to choose from.

  “Western-style breakfast chains, tea shops and snack stores are the top choices for potential franchisees, given the low initial investment and fast return on investment,” the association’s secretary-general Daniel Liu (劉汝駒) said.

  Before jumping into the franchise business, however, investors should first discreetly evaluate the brand image, while studying actual operations and business performance to make sure they are aware of the pros and cons of the contract and know what the sign-up fee entails, Liu said.

  Laya Burger (拉亞漢堡) was one of the 120-plus franchising brands that took part in the “11th Taipei International Chain and Franchise Spring Exhibition” earlier this month in Taipei.

  About 150 people placed a down payment at the four-day fair, Laya founder Hosen Hsu (徐和森) said.

  He told the Taipei Times on the exhibition’s sidelines: “We will evaluate the candidate’s suitability, but probably only a quarter of the 150 applicants will be able to join our franchise business.”

  The sign-up fee for Laya was a steep NT$690,000, and only a NT$20,000 discount was offered at the exhibition. A competitor across the hall boasted a big billboard with a sign-up fee of only NT$150,000.

  “We don’t do fancy marketing to promote Laya, we rely on word of mouth,” Hsu said. “This is a brand that we hope to continue for the next 100 years.”

  Hsu is a well-known figure in Taiwan’s franchise industry, not as the founder of Laya, but as a success story to be studied by aspiring entrepreneurs.

  He established a wholesale hairpin business that brought him monthly revenues of NT$50 million in the early 1990s. Convinced that China was the place to be for an aspiring businessman, Hsu set up more than 10 companies there in such divergent businesses as real estate, food and beverages and clothing. Unfortunately, the good days did not last long as the ventures in China soon collapsed and he returned to Taiwan NT$40 million in debt.

  By the time he was 47 years old, Hsu had already lost a fortune, an experience that taught him the importance of modesty, long-term planning and not to recklessly pursue business expansion. This became his own personal mantra when he founded Laya in 2002.

  From only eight outlets in the first year, Laya has grown into a national network of 580 outlets ready to serve customers breakfasts every day — with prices somewhat higher than other breakfast brands.

  He plans to limit the total number of stores in Taiwan to 1,000 outlets, a level he thinks is more than adequate given issues of market saturation. Overseas expansion is on the cards, however, and Hsu is looking to bring Laya to China, starting from a small base, by the end of the year.

  Laya is just one of the many franchise operators that bet on the nation’s booming population of franchisee wannabes.

  Among the visitors to the expo was Chiang, a 36-year-old investment executive, who was interested in opening a breakfast outlet under the My Warm Day (麥味登) franchise.

  “It’s the best way to diversify my business portfolio and expand my sources of income,” he said.

  He was waiting for an answer from a few close friends to see if they were interested in paying a share of the sign-up fee and help run the shop.

  “My Warm Day not only offers breakfast, but also a selection of lunches. I would hire pretty-­looking female helpers to serve customers,” he said.

  The Council of Labor introduced the “Micro Entrepreneurship Phoenix Program” (微型創業鳳凰計劃) in 2007, a scheme aimed at helping small business owners to obtain operational capital or funding to purchase new equipment. The program also offers free counseling and courses, as well as loans amounting to NT$1 million for business owners. To qualify, applicants need to be women ages 20 to 65 or all citizens from 45 to 65.

  “Quite a number of single mothers have approached us for financial assistance. They were forced out of the job market for various reasons and chose to survive by running their own businesses,” program councilor Lee Wan-ting (李琬婷) said.

  The council receives around 1,200 applications every year, with an approval rate of around 70 percent, she said, adding that a majority of the applicants manage food and beverage shops or hair salons.
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