Franchisers report over P3B in losses due to truck ban, port congestion

Wikipedia Photo of Manila’s overcrowded port

MANILA, Philippines–Franchising companies have reported losses in excess of P3-billion over recent months as a result of the expanded truck ban policy, as well as the problems arising from heavy congestion at the Port of Manila. This has made it all the more difficult for members of the Association of Filipino Franchisers Inc. (Affi) to reach growth targets set by the group for 2014.

The amount of losses incurred could possibly escalate to P10-15-billion, if the government does not resolve the traffic and congestion issues plaguing the Port of Manila, according to Armando O. Bartolome, chairperson of the Affi board.

“The P3 billion in losses incurred were due to the rising costs of goods and brokerage fees, among other charges.

Suppliers have no choice but to increase their charges, which means that the profitability of the franchisors becomes even thinner and franchisors cannot simply increase their selling prices. We see these losses starting to escalate after (Manila) implemented the truck ban policy in February,” Bartolome said, referring to the city government policy that has since been lifted.

He clarified that the potential losses of up to P10-15-billion may be incurred as a result of lost business opportunities, as “Franchisors are not pushing too hard right now because of the lack of supply.”

Bartolome noted that the Affi, however, remains hopeful that the government would be able to address the issues, which are realistically expected to continue up to the second quarter of 2015.

The group still maintains a bullish outlook on its prospects this year, and anticipates a growth in revenue of at least 25-percent from the P63.4 billion posted in 2013; which marked a 20-percent increase from the revenue of 2012.

Certain factors were pinpointed by Bartolome as drivers of this growth; such as the increasing number of overseas Filipino workers and retirees in search of an alternative livelihood, the strong fundamentals of the economy and increasing development in the countryside, the growing trend in the industry is the development of non-food franchises.