Care needed in choosing franchises

JAKARTA (JP): Indonesian entrepreneurs interested in opening foreign franchise businesses must be very selective in choosing franchisers, a marketing executive has said.

Indonesia Marketing Association's president, Hermawan Kartajaya, said Saturday that those who were interested in becoming franchisees must choose franchise brands carefully.

"Franchising is about selling a brand. Therefore, it has to be one that is well known and saleable," Hermawan, who is also the leading service officer for marketing consultant MarkPlus, told a seminar on marketing Saturday.

Franchising has become a major trend in the country and would continue to grow rapidly, he said.

However, many of the country's existing franchises are not very well known locally or internationally.

Lower costs might be the reason for choosing a franchise brand, he said.

But entrepreneurs must consider whether the costs of having the franchise is worth the brands they are getting, he said.

"Less popular franchise businesses cannot compete with other more popular ones, and operating them would just benefit the franchisers," he said.

Prospective franchisees must also find out whether and how the franchisers would customize their services or products to suit the local market.

The franchising business has shown significant growth in the past five years. Foreign franchises rose sharply to 118 in 1995, from only six in 1991.

Most foreign franchisers are engaged in the sale of fast food and fresh beverages.

The number of domestic franchisers has, thus far, reached only 32.

Saturday's seminar was held by the Ciputra Group. It adopted the topic of strategies to become successful entrepreneurs. (das)