1

CHAPTER 1

THE PROBLEM AND REVIEW OF RELATED LITERATURE

Introduction

Many new businesses are being formed to offer shared products and services.

For entrepreneurs, starting their own small business is a big, scary step into the unknown,

but just by considering the option, they are one step ahead. Of course, knowing they want to

start their own small business does not necessarily mean that they know how to make that

dream a reality. There are many paths to business ownership, and the details depend on

their background, connections, and the industry. However, there are commonalities that

apply across the board (Meredith Wood, 2019). A blog by Alyssa Gregory (2019) stated

that not all small business is positioned for success. In fact, only about two-thirds of

businesses with employees survive at least two years, and about half survive five years.

Success for most business owners means acquiring huge profit. So, it is clear that the reason

why every business is operated is because of profit. Thus, they may be in for a real

challenge when they decide to take the plunge, ditch their day job, and become a business

owner.

The stage is often set in the beginning, making sure that they follow all the

necessary steps when starting their business can set the foundation for success-- there will

be many important decisions to make. For potential entrepreneurs, they must first study

what is best for their situation, whether to start a business on their own or buy a franchise.

Are they willing to share the profits in exchange for the relative safety of a franchise, or do

they prefer the risk and rewards of pursuing their own vision? Through a survey in a
 2

specific area, the differences of these groups are examined, particularly in terms of

profitability.

Bamban, Tarlac is gradually becoming a potential business location today. Unlike

before, several businesses are being opened in this town. In the interim, some had

purchased a franchise and some had opened their own businesses. In this study, the

researchers aim to analyze the difference in profitability of franchising and start-ups in

Bamban, Tarlac to help future entrepreneurs to choose what type of business is more

profitable and feasible to open. With the help of this study, future entrepreneurs will

identify the difference in the profitability of franchised and startup businesses that may

help them in deciding what type of business to operate.

Review of Related Literature

For entrepreneurs, deciding whether to buy a franchise or start up their own

business is the first and one of the most crucial part in putting up a business. This factor

can greatly affect the business’ consistently, from the present up to the future progress. In

accordance to the First Financial Institute (2015), choosing between purchasing a franchise

and starting up their own can be quite difficult. They both have advantages and

disadvantages and business owners have to seriously weigh the differences to make the

right choice. There is no straight or simple answer here. They have to figure out what is

best for them. An entrepreneur must begin with an assessment of the realities, possibilities

and the comparison of pros and cons of both.

 3

1. Profitability of a business

In a business industry, an entrepreneur must learn to achieve a satisfactory level of

profitability. According to Janet Hunt (2016), "increasing profitability involves

determining which areas of a financial strategy are working and which ones need

improvement". Understanding the key factors that determine the profitability of a business

assists managers in developing an effective profitability strategy for their company.

1.1. Measuring profitability

Measuring profitability is the same as measuring the success of a business. Don

Hofstrand (2009) explained that the profitability of a business is measured with income

and expenses. Income is money generated from the activities of the business. For example,

if crops and livestock are produced and sold, income is generated. However, money coming

into the business from activities like borrowing money do not create income. This is simply

a cash transaction between the business and the lender to generate cash for operating the

business or buying assets. While, expenses are the cost of resources used up or consumed

by the activities of the business. For example, seed corn is an expense of a farm business

because it is used up in the production process. Resources such as a machine whose useful

life is more than one year is used up over a period of years. Repayment of a loan is not an

expense, it is merely a cash transfer between the business and the lender.

2. Buying a franchise (dependent businesses)

Buying a franchise is a good option for entrepreneurs who want to start a business but do

not want to go through the hard work of establishing a new brand and system. However,

purchasing a franchise is not as simple as it appears to be. (Benilyn Formoso-Suralta,

2018).
 4

Theeranuch Luangsuvimol and Brian H. Kleiner (2004) sum up that there are two key

aspects in the franchise management: which are keep the good relationship between

franchisor and franchisee; and managing day‐to‐day franchise operations successfully.

These factors have a huge influence to the workability of the business. According to

research, communication between franchise partners is related to satisfaction through trust.

In fact, communication is a major precursor of trust. This also states that the direct

influence of trust on satisfaction in both relationships. Developing satisfactory

relationships between partners improves strategic and operational franchise outcomes

(Margarita Fernández-Monroy, Josefa D. Martín-Santana and Inmaculada Galván-

Sánchez, 2018).

Franchising, as a popular form of entrepreneurship, continues to be increasingly

accepted throughout the world. However, it is not as easy as it may seem. Buying a

franchise is like a partnership between the franchisee and the franchisor.

3. Advantages of buying a franchise

Nowadays, franchising is the most favorite business model because of its

satisfactory circumstances to the franchisors. According to Bohi, “Franchising have

some benefits advertising, training, networking, technical support, and other business

support services that many one-man operations cannot afford, or simply do not have the

expertise in” (2010, p.15). The best known advantages are;

3.1.Brand Recognition Branding

Branding is a very powerful component in business. According to the online

dictionary, brand recognition is a marketing concept that shows customers’ knowledge

of a brand existence. To open a franchise offers a brand which has already established and
 5

people are familiar with. A national franchise consulting and marketing firm, works with

franchisers to help them sell to prospective franchisees and to refine their brand (Bohi,

2010).

3.2.Lower Risks for Failure Entering in an industry.

The most important thing for entrepreneurs is the lower risk for failure.

There is a big difference in failure rates for entering in a new market and entering in a

known market. According to Cavaliere and Swerdlow (n.d.), the Department of

Commerce statistics further reveal that franchisor-franchisee failure rates are

substantially below the failure rates for new business in general.

3.3.Easy Setup.

One of the most challenging things for entrepreneurs about entering in a new market

is how to build. Franchising eliminate this problem because they often provide easy setup

for franchisors. According to Cavaliere and Swerdlow (n.d.), “the franchisee gets its

entire business format from its franchisor; this includes marketing strategy and plan,

operating manuals and standards, quality control and continuing two-way

communications”.

3.4.Ready Customer Portfolio.

In franchising, the most important affect is to comfort of knowing which

means customers know that they can find the same quality and same service of the

product or service. Most of the franchise business’ customers are known as loyal

customers. Loyal customer is the most valuable capital for businesses. According to Robert

Bosch (n.d.), “I prefer losing money instead of losing customer confidence”.

 6

3.5.Easy to Find Financial.

Support Banks and similar institutions provides convenience to the franchises

about getting funding and financing because it is known that there is a low failure risk

rate in franchising. Banks will prefer to finance a known business model than a new

business.

4. Disadvantages of franchising

Even though franchising has some advantages, buying a franchise has some

major drawbacks faced by a franchisor. These are;

4.1.High Cost.

Buying a franchise has some costs such as start-up expenses, utilities, rent,

franchising fees, employees and taxes. These costs divide into initial and on-going costs.

4.1.1.Initial Cost.

Initial cost means non-refundable initial franchise fee. Franchisees pay the

franchisor a one-time fee upon joining the system and subsequently pay a percentage of

their gross sales as royalties (Coughlan et al.). In addition to this, the Franchise Disclosure

Document (FDD) requires that the document be presented to potential franchisees, 10 days

before the franchisors receive the first payment from the franchisee (Bohi, 2010).

4.1.2.Ongoing Costs.

Franchisees have to some expenses except initial payment like rent royalties,

advertising fees, equipment maintenance, employees, insurance and inventory, a

percentage of the gross sales to the franchisor. The percentage of gross sales are generally

between 3 o 10 percent of the gross sales and this payments like rent which means fixed

and made by each month.

 7

4.2.Dependency.

Another problem is dependency which means franchisees has own business but

franchisor has their own business independently. According to Cavaliere and Swerdlow

(n.d.), “franchisors obtain money from franchisees, some of which translates into

profits from the franchising activity itself, and also indirectly obtain expansion capital

which is at the sole liability of the franchisees”. Franchisors want to follow franchisees

because franchisees want to convert their investments to the profit and franchisor wants

to be a part of the profit.

4.3.Strict Rules

The other problem is strict rules, it means franchisees have an own business

but it governed by franchisor. Franchisor gives a long list of guidelines to the franchisees

and franchisees have to follow these rules. Franchisees have to serve the same service to

the customers and use same materials and equipments. According to Cavaliere and

Swerdlow (n.d.), “most franchise agreements provide the franchisor with extensive

controls in this regard and are devoid of impediments to franchisor discretion, such as

binding arbitration”.

5. Startup businesses

One of the most significant reasons why a person decides to become self-employed

is that they feel they can make good money. Profits are very attractive. In essence, the

purpose of a business is to make money. If a company is succeeding in what they do, it

means that the business is generating more profit and more profit can lead to a better

lifestyle. According to Mazzarol, Volery, Doss, and Thein (n.d.) starting a business is not

an event, but a process which may take many years to evolve and come to fruition.
 8

6. Advantages of startup businesses

There are many benefits to becoming an startup business owner that hold

precedence over operating a franchise, namely:

6.1. Independence

While making a profit may be assumed as the great motivating factor to starting a

business, there may be other driving factors that are more important to the business owner

(Shepherd, n.d.). When they work for an organized business, they are normally working

for a boss, within a rigid time-schedule. As self-employed business owners, they are able

to dictate the use of their time. One of the great advantages of independence is that they

determine when and where they will work. This can be very attractive when they have an

ability to work at or near their home. Another benefit of independence is that they are fully

in control of the business image. Self-employment means there is no boss telling them to

do something that they do not believe is beneficial to either the company or themselves.

When an entrepreneur runs his/her own company, he/she is in control of the direction that

the company goes, and he/she is in control of his/her own future.

6.2. Product & Personal Satisfaction:

Another aspect to entrepreneurial motivation is the product itself. There are

individuals whose internal motivation for entrepreneurial success is driven by the product

they create, manufacture, and sell. An example of this may be a cabinet maker. While a

small business cabinet maker is their own boss, and can generate a healthy profit, this

individual may be motivated by the work of their hands. The real satisfaction comes from

hard work, ingenuity, and the appreciation received from the customer for the product they

created.
 9

7. Disadvantages of startups

Many people think owning a business is a dream come true. But still, there are

disadvantages that a businessman should consider in choosing to operate a startup business

which are:

7.2. Risk of Investment

Entrepreneurs who start their own business normally requires a significant

investment. Whether they are renting a space, buying machinery or hiring employees, they

are spending money. To start their own business means that they are going to have to either

take out a loan or invest their own personal finances. If the company where to fail, they

would end up losing all the money they invested in that company. For some, this risk is too

great.

7.3. Working Hours

This is part of the other aspect of independence. While they are free to make their

own work hours when they are self-employed, oftentimes the initial success of the

company will require far more working hours than a regular job. It is quite possible that

they will work up to 12 hours a day when they are getting their feet off the ground (Kishel,

n.d.). This immense amount of time can become very stressful. The pressure to succeed

can wear them out if they are not mentally prepared for the adjustment.

7.4. Responsibility

Responsibility can come as either an advantage or a disadvantage. Being

responsible for a business will require continuous decision making, constant care, and

attention. The success of their business may very well be dependent upon them, and them
 10

alone. They must be willing to accept that responsibility and the consequences of their

decisions.

7.5. Income Fluctuation

There are many potential entrepreneurs who see themselves as making tons of

money in a short time. They see only the success stories and not the reality. Yes, it is true

that they can become very rich by starting their own business; however, it is important to

have a realistic expectation as to how much money they will earn. When they are just

starting out their business, they may not receive a steady paycheck, and perhaps even the

paycheck they will receive will be below expectations. Remember, starting a business is

risky and requires a lot of perseverance. Just as they have an ability to earn a lot of money,

they also have the possibility of not earning any. Income fluctuation can cause additional

strain on a family.

7.6. Essential Self-Evaluation Questions

To succeed in starting and running their own business can bring excitement, joy,

and personal fulfillment. However, starting a business requires an immense amount of

persistence, determination, patience, and management skills. While anyone is capable of

starting and succeeding in their own business, not everyone is cut-out to be a successful

entrepreneur (Strauss, n.d.).

8. Franchising and startups

According to the 2018 State of Small Business Survey, entrepreneurs in each cohort

reported an 8 out of 10 when asked about their happiness as business owners. It is true,

there are thousands of people achieve their dreams of business ownership through both

startup and franchise ventures, with one path no less exciting, challenging or fruitful than
 11

the other. The trick to choosing the right option for them is understanding the nuances of

each business model and how they complement their professional strengths, weaknesses

and business goals.

As entrepreneurs, they have the option of purchasing an existing startup business

or a franchise. Each has its strengths and weaknesses. To know which type of business is

best for them, they need to understand both the differences between these two business

types, and their own strengths and weaknesses. According to the Guidant Financial

Institute (2018), even though it seem daunting to choose between launching a startup

business and a franchise, the good news is that each can put them on the path to success as

small business owners. It is important to take the time to consider their personality as an

entrepreneur, how they want their life to look as business owners and how much funding

they have available, and then enjoy the ride!

Summary

In a competitive marketplace, profit is the main goal of every business owner. The

increase of a business' profitability means that the financial strategy is increasing. The

profitability of a business indicates its success. Profit is measured by subtracting the

expenses from the income. The income is the total amount of money that a business gain

while the expenses are the cost of resources and materials used for the business' activities.

Buying a franchise is a good option for entrepreneurs who want to start a business

but do not want to go through the hard work of establishing a new brand and system.

However, purchasing a franchise is not as simple as it appears to be. According to research,

communication between franchise partners is related to satisfaction through trust. In fact,

communication is a major precursor of trust. Developing satisfactory relationships between

 12

partners improves strategic and operational franchise outcomes (Margarita Fernández-

Monroy, Josefa D Martín-Santana and Inmaculada Galván-Sánchez, 2018). Buying a

franchise is like a partnership between the franchisee and the franchisor.

There are advantages and disadvantages in franchising a business. Nowadays,

franchising is the most favorite business model because of its satisfactory circumstances to

the franchisors. To open a franchise offers a brand which has already established and

people are familiar with. The best known advantages are; The Branding Recognition.

Branding is a very powerful component in business, to open a franchise offers a brand

which has already established and people are familiar with it. The Lower Risks Failure

Entering in an Industry. The most important thing for entrepreneurs is to lower the risk in

entering a new market. The Easy set up. Franchising eliminate problems because they

provide entire business format from its franchisor. Ready Customer Portfolio. In

franchising, the most important affect is to comfort of knowing which means customers

know that they can find the same quality and same service of the product or service. Easy

to Find Financial. support Banks and similar institutions provides convenience to the

franchises about getting funding and financing. Even though franchising has some

disadvantages, buying a franchise has some major drawbacks faced by a franchisor. These

are; The High Cost. The Initial Cost. Ongoing Cost. The Franchisors will encounter these

expenses. Another is the Dependency which means franchisees has own business but

franchisor has their own business independently. The last problem is Strict Rules, it means

franchisees have an own business but it governed by franchisor.

One of the most significant reasons why a person decides to become self-employed

is that they feel they can make good money. Profits are very attractive. If a company is
 13

succeeding in what they do, it means that the business is generating more profit and more

profit can lead to a better lifestyle. When an entrepreneur consider some of the most popular

reasons to start a business, including having a unique business idea, designing a career that

has the flexibility to grow with them, working toward financial independence, and

investing in themselves — it is no wonder that small businesses are everywhere.

The Advantages of startup business are: first the independence, when people work

for an organized business, they are normally working for a boss within a rigid time-

schedule but, as self-employed business owners, they are able to freely dictate the use of

their time. Thus, they can choose when and where they will work, what they think is

beneficial to their business. Second and last, the product and personal satisfaction. Product

itself is another aspect for entrepreneur to be motivated. Individuals whose internal

motivation for entrepreneurial success is driven by the product they create, manufacture,

and sell. In a small business, the maker of product is the boss itself, and can regenerate a

healthy profit, these individuals may have used this motivation of being the boss and

making their own concept of products. The real satisfaction comes from hard work,

success, and the appreciation received from customer for the product they created.

On the other hand, the disadvantages of startup business are: first, the risk of

investment, normally starting up a business requires significant investments. Whether

renting their space, buying equipment or hiring employees, they are spending money.

Starting business means that the owners have to either loan or invest their own money.

Hence, if the company tends to fail, they might end up losing money they invested in that

company. Another disadvantage of startup is the other aspect of independence. Though,

they are free to make their own work hours when they are self-employed, often time the
 14

initial success of the company will require far more working hours than a regular job. It is

quite impossible that they will work up to 12 hours a day when they are getting their feet

of the ground. The enormous amount of time could be very stressful. If they are not

mentally prepared, the pressure of succeeding can exhaust them. Third is the responsibility,

this could be an advantage or disadvantage. Being responsible for a business requires

continuous decision making, constant care, and attention. Thus, the success of their

business is dependent upon them only. Willingness is needed so that they could accept that

responsibility and future consequences of their decisions. Fourth, the income fluctuation,

many hopeful entrepreneurs see themselves making tons of money in a short time, they

only see the success story rather than the reality. It is true that they may become rich by

starting their own business; however, it is important to have a realistic view or expectations

as to how much they believe they could earn plenty of money and also consider the

possibility business loss. Fifth, essential self-evaluation questions, expecting that they

succeed running their own business bring excitement, joy and personal fulfillment.

However, starting a business requires an immense amount of persistence, determination,

patience, and management skills. Although, every businessman with enough capital is

capable of starting, not all of them are cut-out to be successful entrepreneurs.

Statement of the Problem

The researchers aim to identify if there are differences in the profitability and

viability of franchised and startup businesses in Bamban, Tarlac. To help achieve the

purpose, this study will be guided by the following questions:

1. What type of business did the entrepreneur operated?

2. In terms of profit, how much do the entrepreneurs earn in a month?

 15

2.1 Percentage of profit to their income

2.3 Percentage expenses to their income

3. Based from the data, what is the difference in the profitability of franchised and startup

businesses in Bamban, Tarlac?

Hypothesis

Null hypothesis:

The researchers supposed that the financial gain of startup and franchised

businesses has no difference. Both groups share an identical profitability.

Conceptual Framework

This study aims to distinguish if there are differences in the profitability of

franchised and startup businesses in Bamban, Tarlac, to identify which specific type of

business if more practical and profitable to open. As the study requires an input which are

the conditions that exist prior to the group activity, whereas processes are the interactions

among group members. Lastly, an output or the results of the group activity that are valued

by the team (Ilgen, D. R., Hollenbeck, J. R., Johnson, M., & Jundt, D., 2005). Thus, the

IPO Model (input-process-output model) was utilized. This provided a general structure

that serves a guide for the direction of the study. To produce an IPO model of the study

being conducted. The researchers generate the following:

 16

1. What type of
business did the
entrepreneur
operated?

2. In terms of profit,
how much do the
entrepreneurs earn
in a month? Descriptive
Research
(Quantitative Difference in the
2.1 Percentage of Method) profitability of
expenses to their franchised and
Survey startup businesses in
income
Questionnaires in a Bamban, Tarlac.
2.3 Percentage of form of:
profit to their
a.) Checklist
income
b.) Semantic
Differential Scale
3. What are the
difference in the
profitability of
buying a franchise
and startup business
in Bamban, Tarlac?

Figure 1: Conceptual Framework

Scope and Delimitation

The goal of this study is to understand the comparison of buying a franchise and

opening startup business. The target respondents for the research are the small medium

merchandise business owners within Bamban, Tarlac. Therefore, the study was limited to

small sample size, which may be increased in future studies. The respondents who take

part in this research are the entrepreneurs who have been in the business for a year or more,

whether their business was acquired as franchise or new business. There is a certain

constraint because businesses for less than a year cannot be considered as proper

representation of the respondents because the financial stability of a business will be

determined after a long run. Additionally, the researchers only included micro businesses
 17

which are defined as businesses with 1-10 (one to ten) employees. Large businesses such

as macro businesses are not included because they do not share similar factors in terms of

profitability.

Significance of the Study

The findings of this study aim to redound to the advantages of franchising, the

benefits of the franchise system and why would individuals be interested in owning a

franchised business instead of a startup business. On the other hand, this study hopes to

discuss the advantages of startup businesses in terms of profitability—the reasons why

some entrepreneurs prefer startup businesses instead of buying a franchise. The contents

are arranged in such way that beginners will able to easily learn how to operate a franchise

and startup business in the future.

To future entrepreneurs, the results of this study may help them decide in choosing

between buying a franchise and starting up their own business. This will give them some

ideas related to the profitability of a specific type of business that may help them in the

management of their future business.

To current entrepreneurs, this may help them to broadly understand the experiences

of their fellow businessmen such as the strategies in overcoming their challenges in terms

of profitability.

To the researchers, this study will help them to have further knowledge about the

profitability of a specific type of business.

To the future researchers, this may provide references to their future researches.

Also, the recommendations of this research may help them in conducting their future

researches.
 18

Definition of terms

Entrepreneur- A person who organizes and operates a business or businesses, taking on

greater than normal

financial risks in order to do so.

Expenses- the cost required for something; the money spent on something.

Feasibility- the state or degree of being easily or conveniently done.

Franchised Business- a business owned by an entrepreneur or an entrepreneurial group,

offering a product or service labeled by a corporation that provides assistance in every

aspect of the business, in return for a combination of a flat fee, plus fees based on profits

or sales.

Income- money received, especially on a regular basis, for work or through investments.

Macro businesses- large businesses are those in most mining and manufacturing industries

that employ up to 500 individuals.

Micro businesses- generally defined as a small business employing nine people or fewer,

and having a balance sheet or turnover less than a certain amount.

Profit- a financial gain, especially the difference between the amount earned and the

amount spent in buying,

operating, or producing something.

Profitability- the degree to which a business or activity yields profit or financial gain.

Startup business- a business that is free from outside control. It usually means a privately

owned establishment.

Viability- ability to work successfully.

 19

CHAPTER 2

METHODOLOGY

Research Design

This study is in descriptive design in a form of quantitative research approach.

Consequently, the data collection method that the researchers employed, includes surveys

(John W Creswell and J David Creswell, 2017). In descriptive research design, the

researchers are able to describe systematically and accurately the facts and characteristics

of the franchised and startup businesses in Bamban, Tarlac. (Vickie A Lambert and Clinton

E Lambert, 2012). The researchers aim to obtain information concerning the current status

of the phenomena to describe "what exists" with respect to the variables or conditions in a

situation. In this study, the researchers' objective is to describe the situation of business

owners, specifically their financial state without manipulating the environment.

Participants

This study will cover micro to small businesses (1-10 employees) both franchised

and startup in Bamban, Tarlac. In accordance to the list of businesses from the municipal

hall, the researchers found a total of 8 (eight) franchised businesses and a sum of 256 (two

hundred fifty-six) startup businesses which will be the potential participants of the research

being conducted.

Sampling Design

The researchers used Simple Random Sampling method by using “fishbowl”

technique. They want to implement the idea of randomization which implies that the

sample selection is independent of human judgment (Ahonsi and Soyombo, 1996). This

method was utilized to keep the study unbiased, because the population had an equal
 20

probability of inclusion for the sampling unit. While in the "fishbowl draw", each units of

the population is represented by a slip of paper containing a number, the slips of paper are

put in a box and shuffled, and the slips are then pulled out one by one without looking at

them, until the number of slips selected equals the sample size. (Ibid). The researchers

wrote a number on pieces of papers which represent a specific business in Bamban, Tarlac.

One number for each population member, then the papers are rolled up and shuffled in the

bowl. The group of population divided into two based which are the franchised and startup

businesses. Then, the researcher took the rolled papers from the bowl.

Due to the minimum quantity of franchised businesses in Bamban, Tarlac, they are

all automatically included as participants. Considering the huge gap between the number

of the population in franchised and owned businesses, the researchers applied 1:3 ratio for

the number of franchised businesses to the startup businesses. Accordingly, for every

franchised business, the researchers picked 3 from the startups in order to keep the

comparison of both groups, equilibrium and fair.

After the researchers performed the random sampling method in “fishbowl”

technique, they ended up with a result of 8 franchised businesses and 24 startup businesses

as their respondents. Almost 100% (one hundred percent) of the business enterprises in

Bamban, Tarlac possesses similar nature of ownership which is sole proprietorship. As

indicated in Table 1 and 2, regardless of the variety of business type that the respondents

possess, they are all owned by a single proprietor. The number of employees for each

business ranges from 1-5 (one to five) person/s.

 21

Table 1

Profile of Franchised business in Bamban, Tarlac

Nature of ownership
Location Line of Business Number
(Sole proprietorship,
of
Partnership,

Corporation)
employees

Respondent 1 San Nicolas Milk tea shop Sole prop. 4

Respondent 2 San Nicolas Convenience store Sole prop. 5

Respondent 3 Anupul Convenience Store Sole prop. 5

Respondent 4 San Nicolas Meat shop Sole prop. 4

Respondent 5 Anupul Bake shop Sole prop. 5

Respondent 6 Anupul Food chain Sole prop. 2

Respondent 7 Anupul Food chain Sole prop. 2

Respondent 8 San Nicolas Pharmacy Sole prop. 4

Table 2

Profile of startup businesses in Bamban, Tarlac

Location Line of Nature of Number of

business ownership employees

Respondent 1 San Nicolas Bakery Sole prop. 4

 22

Respondent 2 McArthur Restaurant and Sole prop. 4

Highway, coffee shop

Anupul

Respondent 3 Dapdap, San Food Chain Sole prop. 1

Nicolas

Respondent 4 San Nicolas Retail Store Sole prop. 2

Respondent 5 San Nicolas Drug Store Sole prop. 3

Respondent 6 Rolling Hills, Lumber and Sole prop. 3

San Nicolas Hardware

Respondent 7 Pagasa, Mini Grocery Sole prop. 2

Anupul

Respondent 8 Dapdap, Hardware Sole Prop. 3

Lourdes

Respondent 9 San Nicolas Drug Store Sole prop. 2

Respondent 10 Dapdap, Dela Retailing/ Sole prop. 2

Cruz Appliances

Respondent 11 San Nicolas Water Station Sole prop. 4

Respondent 12 San Nicolas Retailing of rice Sole prop. 2

ang poultry

products

Respondent 13 San Nicolas Drug Store Sole prop. 3

 23

Respondent 14 Dapdap, San Bakery Sole Prop. 2

Nicolas

Respondent 15 San Nicolas Water Station Sole prop. 5

Respondent 16 Dapdap, San Retailing of Sole prop. 1

Nicolas Poultry supplies

Respondent 17 San Nicolas Hardware Sole prop. 5

Respondent 18 Anupul Drug store Sole prop 2

Respondent 19 San Nicolas Retailing of Sole prop. 1

School Supplies

Respondent 20 Anupul Retailing/ Sole prop. 3

Convenience

store

Respondent 21 San Roque Hardware Sole prop. 4

Respondent 22 Metro Bamban Water refilling Sole prop. 2

Subd., Anupul station

Respondent 23 Rolling Hills, Water station Sole prop. 3

San Nicolas

Respondent 24 Anupul Food chain Sole prop. 3

Instruments

In order to provide and gather as much information and relative evaluation that will

answer the statement of the problem, the researchers used survey questionnaires in a form
 24

of a checklist and semantic differential scale as data-gathering instrument. Through the

process of survey, the researchers collected data with the use of questionnaires. This

questionnaire serves as an instrument for collecting the primary data only. These were

considered by the researchers and extracted only the needed information. These were

validated by their research advisers and other teachers that are knowledgeable of the said

topic.

Procedure

The research carried out is known as descriptive research. This study intended to

collect information regarding the financial gains and costs of franchised and startuu

businesses to identify its profitableness.

In order to execute the objective of this study, the researchers undergo to a

procedure: First, the researchers identified the problem being addressed which is the

difference in the profitability of a franchised and startup businesses. Second, the

researchers outlined their research plan and defined the procedures in answering the

problem. Third, they constructed a survey about the income and expenses of a specific

business type. Fourth, the researchers have sent letter of permission to the municipal office

of Bamban, Tarlac to formally gather the lists of businesses around the area and requested

for a permit to conduct a survey. Then, the researchers selected an appropriate sampling

method to pick out the participants for the study that is the simple random sampling in

“fishbowl” technique. After the selection of participants, the researchers also sent a consent

letter to the business owners to collect information and gather some data that is necessary

for their research. They oriented the respondents about the research being conducted. Also,

they asked the participants about the schedules for the interview. Finally, the researchers
 25

analyze the data gathered to determine the differences in the profitability of a franchised

and startup business.

Ethical Consideration

Before doing the survey, the researchers asked for the respondents’ consent in

involving them in this study which is “often recommended as an operational principle for

the conduct of research” (Peter Burnham, Karin Gilland Lutz, Wyn Grant, Zig Layton-

Henry, 2008). Considering the information to be nonpublic or confidential which means

the “respondents have the right to control or limit the information about themselves” (Ibid),

the researchers have clarified to the respondents what are the objectives of this research

and why they are involved in the study. The specific information about their business

financial gains are confidentially collected. They have also guaranteed that the information

gathered will be for research purposes only.