Getting into the food franchise business as a franchisee can be lucrative. With a food cart/kiosk business specifically, you may find that capital and logistic requirements aren’t as prohibitive as you might have thought. 

You gain access to a proven business model, established branding, and a support network under a trusted franchisor. All these combine to form a safety net that can mitigate many of the risks and challenges faced by new business owners — and to some degree, fairly experienced business owners as well.

But don’t start sending letters of intent to the top food franchises in the Philippines just yet. 

Apart from the right mix of business savvy and luck, here are six important factors that you should consider as a potential food cart franchise operator.

📖Content Summary

• Not all franchises are created equal. Watch out for fly-by-night franchises that pose as legitimate businesses despite lacking good track record. 
• Take into account the franchise fee and recurring royalty payments. Exact amounts will differ from franchise to franchise.
• It’s overused at this point, but “location, location, location” is crucial to food cart/kiosk success.
• Proactive maintenance helps you avoid unscheduled downtimes, which lead to lost revenue and stress around securing repair permits.

 

1. Your chosen franchise should have solid credentials

When choosing a food franchise to work with, find a company that has 10 years of business experience. You may find franchises that are just below that threshold — around five to seven years — and they might fit your business goals and risk appetite. 

But you’ll have a better chance of success if they have 10 years of experience. Why? At that point, it’s highly unlikely that they are “fly-by-night” franchises posing as legitimate businesses, but are essentially run as scam operations. 

In your search for a franchisor, verify if they are a member of good standing in either the Association of Filipino Franchisers, Inc. (AFFI) or the Philippine Franchise Association (PFA).

Here are a few more key pointers when doing a background check on a franchise, according to the PFA:

• Find out who are the people behind the company/brand and check if they have a sufficient track record in franchising or doing business in general.
• Verify if the franchisor owns the trademark to their brand.
• Find out if the franchisor will provide guidance on crew training and offer other support services.
• Check whether or not your interests as a franchisee are expressly stipulated in the franchisee agreement and operations manual.

 

2. Franchises usually charge a franchise fee, plus royalties

All the benefits you get as a franchisee come at a cost. In exchange for selling products associated with the franchisor’s trademark, you’ll often need to pay a franchise fee — on top of royalty fees. 

The exact franchise fee will vary depending on the franchisor. And, you’ll find that amount is usually baked into the overall cost of the franchise package. Take Fruitas, for example, which has a minimum ₱500,000 capital investment inclusive of franchise fee, as of writing.

Some franchises may charge a one-time fee while others implement a renewal fee after a certain amount of years. As of writing, the franchise fee for Potato Corner is ₱150,000, with a renewal fee of ₱75,000 after five years. 

In addition, you’ll also need to consider royalties, which are recurring remittances to the franchisor and typically calculated as a percentage of gross sales. The exact percentage usually differs from franchise to franchise. 

💡Factor in business registration cost per food cart/kiosk location

Individual food carts/kiosks require separate business permits. As a franchisee, if you’re planning to operate in multiple locations, you’ll need to register those as separate business locations.

A business permit is acquired from the Mayor’s Office of the local government unit where you plan to set up shop. Requirements vary per city/municipality, but you’ll usually be asked for the following: 

• Barangay Clearance from the local Barangay where your business will be situated.
• Department of Trade and Industry business name Certificate for sole proprietors or a Certificate of  Registration from the Securities and Exchange Commission for corporations.
• Community Tax Certificate or Cedula from the City or Municipal Treasurer’s Office.
• Sanitary Permit to confirm compliance with the Sanitary Code of the Philippines.
• A Contract of Lease, if you’re renting a commercial space. 
• If you own the property, provide a copy of the Transfer Certificate of Title or Tax Declaration.

And that’s just the business permit alone. Each food cart/kiosk location will need to be registered accordingly with a few more regulatory agencies.

Loft can ease the burden of the business registration process in the Philippines. Our team will ensure no requirement is amiss and save you the trip to government offices. 

Give us a call at +63-917-899-1111 or email us. You can also reach us through our contact form.

3. Franchise support services can make a big difference 

When considering a franchise, inquire about the support services included in the package. Knowing the kind of support — material or otherwise — you can expect will give you an idea of which franchise will bring you closer to a decent return on investment. 

Some franchises will offer pre-opening support in the form of:

• Site evaluation/feasibility study of target location
• Assistance with securing lease agreement for commercial space
• Food cart/kiosk management training 
• Provision of detailed operation manuals, employee handbooks
• Opening day marketing

There may also be day-to-day support for operations such as:

• Crew hiring and training 
• Provision of marketing collaterals (e.g. posters, flyers, standee displays)
• Social media marketing on your behalf
• Dedicated help desk to answer technical franchise queries 
• Routine inspection of equipment/products for quality assurance

 

4. Location can make or break a food cart/kiosk business

Areas with high foot traffic are your key to a steady stream of customers. That’s why you’ll often find food carts or kiosks located near schools, workplaces, transportation terminals, mall entrance areas, and public parks. 

Keep these tips in mind when it comes to food cart/kiosk location and placement:

• Do a foot traffic count. Observe your planned location for several hours on different days. Identify your target demographic in the area. High foot traffic by itself won’t automatically translate to sales, especially if your ideal customers aren’t present.
• Observe the competition. Examine your direct competitors — food carts and kiosks offering similar products. Customers might choose other vendors if your items are too expensive or a bit too inconvenient to consume. In some cases, indirect competitors (e.g. small restaurants, cafes) may also capture a good portion of your target market.
• Consider the purchasing power of potential customers in a specific location. Different demographic groups have varying preferences based on lifestyle, income, and daily food budget. If potential customers in a given location have less purchasing power, you’re likely better off operating in a different location.

 

5. Think twice about using borrowed funds to start a business 

In all honesty, not all food cart/kiosk businesses become success stories. Borrowing money to use as capital isn’t inherently wrong, but if things don’t go as planned, what happens to the loan payable? 

Make it a point to fund your business venture with mostly capital that has no strings attached, whether it’s from personal savings or from pooled capital with business partners.  

Here’s why that makes business sense: 

• With a predominantly self-financed business, you’ll potentially enjoy earlier ROI. And you can reinvest your profits back into the business instead of meeting repayment obligations. 
• Your business partner/s can bring more than just cash to the table as well. They might have relevant experience and expertise that will all come in handy. Plus, they may also have in the food and beverage industry that can benefit the business.. 

That said, if you still think that you need a loan as a kickstarter, try to keep it at a limited amount. 

Some banks in the Philippines, such as LandBank and Metrobank, offer specific loans for starting a franchise business. Just keep in mind the bank’s eligibility criteria, which typically includes good repayment history, collateral, and a thorough business plan.

 

6. Proactive maintenance will prevent long downtimes 

Unexpected equipment issues can be costly. They hamper your operations, leading to lost revenue and often tedious coordination with contractors during repairs.

Sticking to a maintenance schedule religiously helps detect issues before they escalate into full-blown breakdowns. 

First, identify which cleaning and maintenance tasks need to be done daily, weekly, and quarterly. Then, organize them into an easy-to-follow schedule or checklist. Below are some quick examples:

Refrigerator maintenance

• Daily: Clean interior surfaces, check door seals for leaks
• Weekly: Test defrost cycle
• Quarterly: Clean condenser coils

Fryer maintenance

• Daily: Clean the fryer basket, wipe down the exterior
• Weekly: Boil out the fryer
• Quarterly: Inspect the connection to the LPG tank

Soda dispenser maintenance

• Daily: Sanitize the nozzle and dispensing area, wipe down exterior surfaces
• Weekly: Deep cleaning of nozzle and dispensing areas
• Quarterly: Check and replace the water filtration system if needed

Get your food cart/kiosk business rolling with Loft

Finding the right franchise will take out most of the leg work needed in setting up your food cart/kiosk business. But even with the most supportive franchises, you’ll still have to deal with the business registration process at some point. 

This is where Loft comes in. Our team will handle all your business registration requirements so you can focus on growing your business. 

You may complete the short form below to get in touch with us.