Bayad Center joins franchising fray
By Carla Paras-Sison
Monday, August 6, 2007
Ten years ago, Bayad Center pioneered the one-stop neighborhood payment shop concept.
Initially collecting bills payment for parent company Meralco, Bayad Center now collects payments on behalf of 45 companies, called billers, through 762 outlets. Of these, only four are company-owned and the rest were established by third-party collecting agents who will eventually be migrated to the full franchising model.
Bayad Center joined the recent 6th Filipino Franchise Show organized by the Association of Filipino Franchisers, Inc. and launched its counter-kiosk and stand-alone franchise models at the exhibit.
The counter-kiosk needs approximately nine square meters of space and P339,000 in investment to cover the franchise fee, equipment, furniture, fixtures, and leasehold improvements. The stand-alone needs about 15 square meters and P487,000 in investment to accommodate two payment counters. Estimated payback at nominal volumes is between 1.6 to two years.
Bayad Center president and chief executive officer Manuel Lorenzo L. Tuason believes the payment center has much room to grow. “We are the neighborhood payment center. Most people get intimated when they go to the banks. So they go to the Bayad Center. They feel right at home and save on transportation by paying several bills in one visit.”
Bayad Center charges franchisees two percent of gross sales for a system-wide marketing fund but does not charge royalties. Since the outlet’s success is based on the number of transactions processed, it is important to choose a good location.
Applicants must make their own market study on the site they are eyeing. This study will be validated by Bayad Center and upon acceptance, staff will be trained for two weeks follow. Bayad Center promises to open an outlet within 60 days from signing the franchise agreement.
The agreement is valid for five years, and is renewable at the rate of 30 percent to 40 percent of the franchise fee at the time of renewal.
In addition to earning from transaction-based service fees, Tuason says its franchisees have the potential to offer other value-adding services such as money remittance and cellphone credit loading, which will definitely benefit clients of Bayad Center going forward.
There are actually 200 Bayad Centers in 20 countries, mostly connected with remittance companies. Stand-alone franchisees will in fact immediately be able to offer remittance services to the communities in which they locate.
More billers or companies requiring collection services are expected to sign up with Bayad Center, including schools. “Billers choose us because we are everywhere. And there is actually a demand for payment to schools since many parents and siblings working abroad want to pay the school fees of their dependents directly,” says Tuason.
Unlike banks, Bayad Center does not require billers to maintain a minimum deposit with the company to collect and account for payments accepted on their behalf.