Food tops franchise business

Food tops franchise business

The Jakarta Post, Jakarta

Forty-nine-year-old Kalista Darmadipuro likes to visit bubble
drink stalls, which are highly popular with teenagers and can be
found in most malls in Jakarta.

While enjoying the beverages on offer, she questions the
uniformed staff on how many customers the stall gets and how the
business is developing.

"I'm interested in obtaining a license to open one of these
stalls. I figure that going into the franchise business would be
more challenging than other investment instruments," said the
human resources manager who works for a foreign bank
representative office in Jakarta.

Kalista is trying to decide whether to open a beverage stall
or an English language center, either of which she plans to do by
obtaining a franchise license.

"F&B (food and beverages) has become part of the urban
lifestyle, while the demand for English courses will grow as the
population grows," Kalista reasoned.

According to the License Holders and Franchiser Forum (Wali),
food and beverages as well as the education business are the top
options for those wanting to start a franchised business.

Currently, 237 foreign companies franchise their businesses in
Indonesia, of which more than 50 percent are in the thirst-
quenching and taste-bud-teaser business.

Meanwhile, the same proportion of the 70 local franchisors are
also in the food and beverages business.

Although the Indonesian Franchise Association predicts a
slower growth of 7 percent for next year, this year's total
turnover of Rp 30 trillion (US$3 billion) is considered highly
attractive.

"Aside from F&B and education, health, books and the toy
businesses will also develop, especially in major cities," said
Wali chairman Amir Karamoy last week.

The situation reflects the better living standards of the
urban middle to upper class.

The increasing interest in such businesses was evident at a
three-day expo in the Jakarta Convention Center that closed on
Sunday, showcasing 120 foreign and local franchisors.

Franchising is a business concept in which a company -- the
franchisor -- lends its know-how and license to another -- the
franchisee -- to sell its products or services under a royalty-
based scheme.

Through the mechanism, a franchisor can expand its business
without having to raise its own capital, while a franchisee can
open its own business without the need to establish a brand name.

Kalista said she had set aside Rp 500 million for a license as
well as to rent a strategic place for the business.

Starting a business through franchising has indeed become an
attractive option for newcomers. At present, with a paid-up
capital of Rp 10 million, one can obtain a local burger
franchising license.

The fee could amount to more than Rp 200 million for a license
for an educational business, which requires a more complicated
managerial system as well as a quality supervising system.