Franchise Talk

Seaoil Banks On Franchising

January 28th, 2009 | Author: Jack

Independent oil industry player Seaoil Philippines Inc. said it is ready to face the challenges brought by the global financial crisis and has even planned to further beef up its franchising business.

At the sidelines of the first Philippine Investment Research Challenge, company chief financial officer Mark Yu said they are planning to offer 40 service stations for franchise this year costing between P3 million and P4 million each.

The company ended 2008 with close to 150 service stations nationwide, of which 90 percent are owned and operated by franchisors while the remaining 10 are managed by Seaoil.

Yu pointed out that Seaoil’s franchising model offers attractive opportunities for investors especially during this tough economic environment.

“All [the franchisors] need is to spend maybe P4 million then we will build for them the station. We offer a franchise that enables dealers to maintain ownership of their invested money and double it in four years,” he said.

He added, “It’s [franchising] a great investment opportunity during downturns.”

Without disclosing details, Yu said Seaoil’s sales in 2008 grew 60 percent on the back of innovative packages and series of price rollbacks.

The oil firm was planning to embark on an initial public offering (IPO) in early 2008 to generate up to P3 billion of fresh capital, but was deferred due to poor market conditions.

The plan is to use the IPO proceeds to fund the expansion in the downstream oil sector, specifically on the retail side.

“The market, currently, is underserved with only 3,500-plus stations all over the Philippines. There’s definitely a lot of room for expansion,” the Seaoil executive said. Read more.