PAMANTASAN NG LUNGSOD NG MAYNILA

(University of the City of Manila)

Intramuros, Manila

BAYAD CENTER

BERNALES, Jamaica B.

MILLARE, Danna Ashley A.

RAMIREZ, Samantha Ahlecs G.

 TABLE OF CONTENTS

Introduction 2

Cost Analysis 4

Financing 7

Ownership 8

Location 9

Market Study 10

Franchisors 12

Exit Strategy 12

Conclusion 14

References 15

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 INTRODUCTION

As CEO and President, Lawrence joins CIS Bayad Center with the responsibility of
accelerating the organization's entire transformation from the largest and most comprehensive
multi-channel payment platform in the nation into a full-service Fintech business.

Lawrence, or LYF, as he is affectionately known in the office, is a genuine game-changer

and a subject matter expert on innovation and digitalization. He has more than 20 years of honed
expertise in business development and brand management in the domains of telecoms, fintech, and
banking.

Lawrence replaces Manuel L. Tuason who has retired after 15 years of being at the helm
of Bayad Center, growing the company’s network of stores, strategic partners, franchise business
and digital presence.

His support of the Smart Electronic Load - "Eload" Service, which provided prepaid load
credits and micro top-ups, has been acknowledged. The service became more well-known when
mobile phones were first introduced in the nation since it offered ease, accessibility, and
affordability to the general public. Nowadays, you can find a retailer offering an e loading service
almost anywhere in the Philippines.

Bayad Center History

A part of Corporate Information Solutions, Inc. (CIS), which was founded in May 1997,
was a subsidiary of the BAYAD CENTER at the time it was first known as the Payment Collection
Service. In 2006, CIS split off from BAYAD CENTER to become CIS BAYAD CENTER, INC
(CBCI), which is now a separate company. The next year, CBCI changed its status to a franchising
company in order to fulfill its goal of being present in every community in the nation.

As a subsidiary of Manila Electric Company (Meralco), the biggest power distribution

company in the country, Bayad has developed from providing an over-the-counter payment
collection service to enabling a full range of financial goods and solutions made available to both
consumers and businesses.

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Growth record

At the 2019 Franchise Excellence Awards, Bayad Center's Tatak-Sigurado campaign won
the Best Franchise Marketing Program Award - Service Category.

The Outstanding Filipino Franchise Award was won by Bayad Center for the third
consecutive year, and this is a further achievement for the organization, which was entered into
the Franchise Excellence Awards Hall of Fame roster in 2017. The biggest and most
comprehensive multi-channel payment platform firm in the nation has won multiple awards over
the years, but this is the first marketing campaign honor for the company.

The latest that they released is in August ,Online payments have grown 130% year over
year as of August 2020 when compared to the same time last year. Almost 34% of the 10 million
transactions made each month are digital, up from 17% prior to the lockdown period. In the midst
of pandemic they had also struggle in their business but the company said that In the "new normal,"
where moving operations online offers a stronger feeling of security and continuity as well as a
road to economic recovery, the business claimed that this is consistent with its projections that
digital transactions in the nation would continue to expand. By 2023, e-payments are expected to
account for 50% of all financial transactions in the country, according to the Bangko Sentral ng
Pilipinas (BSP). This trend is consistent with that goal, according to the Bayad Center. According
to Bayad Center, it keeps enhancing its onsite-to-online (O2O) infrastructure to provide clients
more choices when doing financial transactions.

Outlets that Bayad Center have

Bayad Center is recognized as the country’s best one-stop payment center. According to
research, Bayad Center has over 900 outlets nationwide. The franchise was successful because
first, It kept innovating by giving every Filipino the choice to pay their bills conveniently, as well
as a dependable alternative for bill collection for its business partners. The abundance of Bayad
Center locations in busy regions makes it simple and convenient for Filipinos to complete their
transactions. To perform effective and dependable payments, each branch has a combination of a
completely automated system, cutting-edge Computer infrastructure, and highly trained staff.
Users of the CIMB Bank PH app may deposit and withdraw money for FREE at the Bayad Center.

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The company's service portfolio includes loan disbursement, domestic and international transfer,
insurance sales, medical reimbursement, ATM cash withdrawal, and more in addition to bill
payment services. It is all in one.

II. Why we chose this franchise

We chose Bayad Center as our franchise because we understood that, as more and more
transactions move online, customers will be searching for more convenient ways to fulfill their
bill-paying requirements. The fact that one business can pay all of our expenses is more practical
for us. The business conducts online payments and offers a quicker service to make things easier
for us. The current generation can be relied upon to go with what is "in" on the market, so after
giving it a chance, they began using a tool—a gadget—for paying their bills. Thus, we decided to
buy this franchise since we believe it has a good chance of succeeding.

III. Why does this opportunity fit our lifestyle, financial goal

It fits our lifestyle as we belong in this generation, of the innovation of Bayad center using
online payment. It seems like it is less hassle and convenient at the same time. By franchising an
existing company, we may help ourselves reach our financial independence and freedom from
financial restraint goals. While it is true that starting a business is difficult and requires a lot of
work, we feel that by pursuing our own objectives, we will continue on the path to success in both
our professional and personal lives.

COST ANALYSIS

A. Franchise Fee

The Bayad Center franchise fee is a one-time payment of P 350,000 pesos for a 5-
year contract. Additionally, a 12% value-added tax (VAT) is applied to the franchise fee.
To calculate the total cost of the franchise fee, you can multiply the franchise fee by 1.12
(to include the VAT) which would equal P 392,000 pesos.

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 The fee covers training, continuous feedback, and marketing support from the
franchisor. However, the fee does not cover the costs of equipment, site renovation, and
cash bond requirements.

B. Other Fees

● Equipment Cost: This refers to the cost of purchasing or leasing equipment, such
as computers, printers, scanners, barcode scanners, internet connection, and
furniture and fixtures, necessary to operate the franchise. It is estimated to be
around 120,000 pesos, this would be an upfront cost to consider.
● Site Renovation Cost: This refers to the cost of renovating or remodeling the chosen
site to meet the franchisor's standards. It is estimated to be around 130,000 pesos,
this would also be an upfront cost to consider.
● Cash Bond: This is a security deposit required by the franchisor to ensure that the
franchisee adheres to the terms of the franchise agreement. The minimum cash bond
you mentioned is around 600,000 pesos.

C. Initial Cash Investment

The initial cash investment for a Bayad Center franchise would be:

● Franchise fee: 350,000 pesos + 12% VAT = 392,000 pesos

● Equipment cost: 120,000 pesos
● Site renovation cost: 130,000 pesos
● Floor Space Cost: 30,000
● Minimum cash bond: 600,000 pesos
● Total initial cash investment: 1,272,000 pesos

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 D. Real Estate Cost

The real estate cost for a Bayad Center franchise may include several expenses
related to leasing or renting a commercial space. Here are some of the potential costs that
may be covered in the real estate cost for a Bayad Center franchise, along with estimated
costs:

● Rent: This is the cost of leasing the commercial space where the franchise will be
located. The rental rate can vary depending on the location, size, and type of space.
In the Philippines, commercial rental rates can range from around 350 pesos to
1,200 pesos per square meter per month, depending on the location.
● Security deposit: This is a deposit required by the landlord to secure the lease of
the commercial space. The security deposit is usually refundable at the end of the
lease, provided that the franchisee has complied with the lease agreement. The
security deposit can range from one to three months' rent, depending on the
landlord.
● Utility bills: The franchisee will be responsible for paying utility bills such as
electricity, water, and internet service. The cost of utilities will depend on usage,
location, and rates.

Based on the above estimates and the minimum required floor space of 15 sqm for
a Bayad Center franchise, the real estate cost may range from around 8,550 pesos to 18,000
pesos per month. It's important to note that these are only estimates, and the actual cost
may vary depending on the location, size, and other factors.

E. Other Costs

In addition to the initial investment and real estate costs, there may be other costs
associated with owning and operating a Bayad Center franchise. Here are some potential
costs to consider:

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 ● Royalty fees: Bayad Center franchisees are typically required to pay a
monthly royalty fee to the franchisor. The royalty fee is usually a percentage
of the franchisee's gross sales and can range from 2% to 5% or more.
● Staffing and payroll costs: Franchisees will need to hire staff to operate the
Bayad Center franchise, which may include salaries, benefits, and other
payroll costs.
● Insurance costs: Franchisees may be required to purchase insurance
coverage for the franchise business, including liability insurance, property
insurance, and workers' compensation insurance.

FINANCING

To finance a Bayad Center franchise, we would consider several options:

● Personal savings: One option is to use our personal savings to finance the franchise.
This could involve liquidating investments or using cash reserves that we have built
up over time.
● Bank loans: we could also apply for a business loan from a bank or financial
institution. This would involve presenting a business plan and financial projections
to the lender to demonstrate the viability of the franchise.
● Franchisor financing: Some franchisors offer financing options for franchisees.
This may include loans or other financing arrangements with favorable terms for
franchisees.

Ultimately, the best financing option will depend on our personal financial situation, the
terms and conditions of the available financing options, and the overall cost and potential
profitability of the Bayad Center franchise. It's important to carefully consider all of these factors
before making a decision on how to finance the business.

If we were to finance the Bayad Center franchise with 20% cash and 80% borrowed money,
our initial cash contribution would be 254,400 pesos (20% of 1,272,000 pesos). To fund our cash
contribution, we would consider several options. One possibility is to use personal savings.

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Another option is to get a personal loan from a bank or other financial institution. We could also
consider borrowing from family or friends.

Assuming we borrow the remaining 80% of the total investment amount, which is
1,017,600 pesos, for five years at 6% interest, our monthly loan payments would be around 19,604
pesos. Over the course of five years, we would pay a total of around 1,176,240 pesos, including
interest. It's important to note that the actual interest rate and loan terms may vary depending on
the lender and other factors.

To ensure that we can comfortably make the loan payments, we would conduct a thorough
financial analysis to determine if the Bayad Center franchise can generate enough revenue to cover
expenses and make a profit. We would also consider potential risks and challenges that could
impact the franchise's financial performance and develop contingency plans to mitigate these risks.
Overall, financing a Bayad Center franchise requires careful planning and analysis to ensure that
the investment is viable and sustainable in the long term.

OWNERSHIP

In order to grow its payment network and give its customers more practical options, Bayad
Center, a well-known provider of payment solutions in the Philippines, has partnered with a
number of companies and institutions. Since its founding in 1997, Bayad Center, a subsidiary of
Manila Electric Company (Meralco), has grown to become a significant payment hub. This study
looks at Bayad Center's major investors, including First Pacific, JG Summit Holdings, DMCI
Holdings, and its partnership with Ayala Corporation, as well as its significant partners in the
banking, payment processing, and merchant industries.

Partnerships with Banks: The Bayad Center works with well-known banks in the Philippines as
BDO, Metrobank, Unionbank, and RCBC. Through these collaborations, the customers of these
banks can effortlessly use Bayad Center's payment options to pay their bills and fees.
Collaboration with Payment Processors: Bayad Center has partnered with payment processors
such as PayMaya, GCash, and Dragonpay. Through these partnerships, Bayad Center is able to

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provide its clients with a greater variety of digital payment methods, improving accessibility and
convenience.
Merchants and Retail Partnerships: Bayad Center has partnered with a variety of businesses,
including well-known places like SM Supermalls, Robinsons Malls, and Ayala Malls, in order to
offer comprehensive payment options. Customers of these retail locations now have access to
Bayad Center's payment services thanks to these partnerships

Investors of Bayad Center

The main shareholder in Bayad Center is Manila Electric Company (Meralco), one of the
country's leading electric utility companies. The founding organization of Bayad Center was
Meralco, which also continues to support its expansion. First Pacific, a Hong Kong-based holding
and investment management company, makes a sizeable investment in Meralco in return.
Furthermore, two Filipino conglomerates with a variety of economic interests, JG Summit
Holdings and DMCI Holdings, indirectly invest in Bayad Center while also holding minorities in
Meralco. Associated with the Ayala Corporation
In order to provide bill payment services through its subsidiary, Ayala Malls, Ayala
Corporation, one of the oldest and largest enterprises in the Philippines, partners with Meralco.
The reach of Bayad Center is increased by this partnership, despite the fact that Ayala Corporation
does not directly own it.
In conclusion, Bayad Center has grown its payment network and offered useful payment
solutions for its clients through strategic collaborations with banks, payment processors, and
merchants as well as the backing of its investors. Bayad Center, a Meralco subsidiary, is a key
player in the Philippine payments sector, providing easy bill payment services around the country.

LOCATION

There are several reasons why padre faura street Ermita Manila is a great place to start a
Bayad Center franchise for our choosing franchise business. First of all, there is a lot of foot traffic
in the region, which is good for a business like Bayad Center that depends on walk-in clients.
Ermita's busy atmosphere provides a constant stream of potential consumers.

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 Second, Ermita is distinguished by its multicultural population, which includes
professionals, students, and locals from various social strata. Bayad Center's consumer base is
diverse as a result of its diversity. People with various financial needs are probably going to use
the convenient bill-paying services offered by Bayad Center. Another benefit is that Ermita is next
to government buildings. Government-related services are provided by Bayad Center, and clients'
accessibility and convenience are increased by its proximity to these offices. They can quickly
carry out important transactions without having to drive far.
Urban areas continue to have a high demand for bill payment services despite possible local
competition. Being a trusted and well-known brand, Bayad Center is well-positioned to take
advantage of this demand and maybe win a sizable portion of the market. Customers who value
dependability and honesty in their bill payment services are drawn to Bayad Center by its well-
established reputation.
In conclusion, it makes sense to establish a Bayad Center franchise in Padre Faura Ermita
Manila neighborhood. The location is favorable because of the area's strong foot traffic, diverse
population, closeness to governmental buildings, and potential for market acquisition. Bayad
Center can prosper in Ermita and offer practical bill-paying services to a variety of clients.

MARKET STUDY

This market study aims to provide a comprehensive analysis of the Bayad Center franchise,
supported by references.

1. Market Size and Growth

a. The Philippines has a large and growing market for financial services and digital
payments. According to the Bangko Sentral ng Pilipinas (BSP), the total volume of
electronic fund transfers reached 4.27 billion transactions in 2021.
b. Bayad Center operates in a highly competitive landscape, with various competitor
in the financial technology sector, including banks, mobile wallets, and other
payment platforms.
2. Brand Recognition and Customer Base

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 a. Bayad Center has established a strong brand presence in the Philippines due to its
long-standing history and association with Meralco, a trusted and well-known
company in the nation's power distribution sector.
b. The Smart Electronic Load (Eload) Service, supported by Bayad Center, has gained
widespread recognition and popularity among consumers, providing prepaid load
credits and micro top-ups for mobile phones. This service has contributed to Bayad
Center's visibility and customer base.
3. Distribution Network
a. Bayad Center has an extensive distribution network with over 39,000 payment
touchpoints nationwide, including authorized collection partners, retail outlets, and
self-service kiosks. This wide-reaching network ensures convenience and
accessibility for customers seeking payment services.
4. Diversified Financial Solutions
a. In addition to its payment collection services, Bayad Center offers a range of
financial products and solutions to both consumers and businesses. These include
bills payment, remittance services, government fee payments, insurance premiums,
loan repayments, and more. This diversification enhances Bayad Center's value
proposition and attracts a broader customer base.
5. Technological Innovation
a. Bayad Center has demonstrated a commitment to innovation and digitalization,
leveraging technology to provide seamless and efficient payment experiences. It
has embraced various digital channels, such as online platforms and mobile
applications, to cater to the evolving needs of customers.
b. The company's investment in technological infrastructure and partnerships with
digital platforms has enabled it to stay competitive in the rapidly changing Fintech
landscape.

FRANCHISORS

As a franchisee of the Bayad Center, we have long-term commitments and expectations

from the franchisor. As committed professionals who have joined the Bayad Center franchise

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network, we are required to follow the rules and guidelines provided by the franchisor. All Bayad
Center stores will consistently provide high levels of service quality and brand representation
courtesy to these requirements.
Our relationship with Bayad Center is based on professionalism, and the franchisor offers
us assistance and direction in areas like operations, marketing, and training. We are able to provide
exceptional customer service and keep a solid brand reputation due to this support.
As Bayad Center franchisees, it is our responsibility to support the brand's values and goals
by conducting our franchise business with integrity, honesty, and transparency. We actively
promote Bayad Center's offerings and aid in the network's expansion. In return for our dedication,
we have access to a variety of payment systems, the established brand awareness and reputation
of Bayad Center, continued training and support, and the possibility of long-term profitability and
success.
In general, the franchisor-franchisee relationship between Bayad Center and our business
associates, such as our group, is founded on cooperation, common objectives, and a dedication to
provide our clients with high-quality payment services.

EXIT STRATEGY

We were aware that Bayad is the best-known and most recognizable brand when it comes
to paying bills. Within those 20 reliable years in the outsourced payment sector. So, we decided as
a group that we tend to run the business for the 5 years contracts in the franchise agreement that
Bayad Center had.
With the use of a franchise exit strategy, we are still able to make a sizable profit while
minimizing or liquidating our ownership stake in our franchise. Naturally, this only works if the
business continues to be profitable. Our exit strategy outlines how we want to leave our company
or sell it. The exit strategy of a start-up franchise typically involves selling the franchise to a larger
company, investor, or individual. An exit strategy is an important consideration for any business,
including a start-up franchise of a Bayad center. Here are some possible exit strategies for a Bayad
center franchise:

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Acquisition: A typical exit strategy for a start-up franchise is to sell the business to an investor or
larger corporation. This alternative has the potential to offer the franchise owner a substantial
return on their initial investment.
IPO: A prosperous franchise may also choose to launch an initial public offering (IPO), sometimes
known as a public offering of shares. In order to entice investors, this method needs to demonstrate
significant growth and profitability.
Management buyout: The owner of the franchise has the option of selling the firm to the current
management team. This will allow for a seamless transfer and will ensure that operations will
continue uninterrupted.
Sell the franchise: One option is to sell the franchise to another entrepreneur or investor. This
could be done through a broker or by advertising the franchise for sale. The franchise owner could
recoup their initial investment and potentially make a profit on the sale.
Merge with another business: Another option is to merge the Bayad center franchise with another
business. This could be a similar business that is looking to expand, or a larger company that wants
to diversify its services. The franchise owner could negotiate a buyout or partnership agreement
that would allow them to exit the business.
Liquidate the business: If the Bayad center franchise is not profitable or the owner wants to exit
quickly, they could liquidate the business. This would involve selling off the assets and paying off
any debts or obligations. While this option may not result in a profit, it allows the owner to exit
the business and move on to other ventures.
Pass on the business to a family member or employee: If the Bayad center franchise owner has
a family member or trusted employee who is interested in taking over the business, they could pass
it on to them. This could be done through a sale or gift of the business. This option allows the
owner to exit the business while ensuring that it continues to operate under familiar management.
Consequently, our group has collectively decided to operate the business under their
franchise agreement for the initial 5-year term, without intending to renew for another 5-year
contract due to the substantial franchise fees involved.
It is important for franchise owners to consider their exit strategy from the early stages of
their business planning and work with a financial advisor to develop a plan that aligns with their
long-term goals. Ultimately, the exit strategy for a Bayad center franchise will depend on the

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owner's goals, financial situation, and the state of the business. It is important to plan for an exit
strategy from the beginning and to regularly review and adjust it as needed.

CONCLUSION

In conclusion, franchising a Bayad Center involves a large financial risk and big challenges
for a starter entrepreneur. It is a reputable business with a lot of potential for success, according to
our evaluation of the franchise fee and other factors that need to be considered when franchising a
franchise business.
As aspiring entrepreneurship students, We understand how crucial it is to think about how
potential future disasters or risks can affect a business. Even though Bayad Center has proven
resilient in the past, it is nevertheless important to recognize the uncertainty of future events that
could have an impact on the operation of franchise business.
The expensive franchise fee associated with Bayad Center was another important factor we
looked at. It is impractical for inexperienced franchisees or those with tight budgets due to the high
cost. Although it might give an attractive opportunity for investment for those with sufficient
funds, the franchise cost severely restricts its viability for many entrepreneurs.
As a result, based on our extensive study, we have decided not to pursue the franchise
opportunity with Bayad Center at this time. The results of our study have taught us essential
information about the complex dynamics of the franchising sector, encouraging a better
understanding of the broader business environment. With this information in hand, we are now
prepared to act as ambitious entrepreneurs, using our discoveries to successfully navigate
upcoming ventures. And also it was a great experience to learn those things for future purposes, if we
are willing to continue to pursue the Bayad Center franchise. We as entrepreneurial students and our
group are not pursuing it because most of us had future endeavors and different dreams in life.

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 REFERENCE(S)

1. https://www.businessnews.com.ph/business-guide-franchising-bayad-center-20160625/
2. https://www.theceomagazine.com/executive-interviews/finance-banking/lawrence-y-
ferrer-cis-bayad-centre/
3. https://www.philstar.com/business/2021/01/22/2072058/volume-bayad-center-
transactions-normalizing.
4. www.bayadcenter.com
5. Bayad Center Franchise: Costs, Fees and How to Start One ~ iFranchise.ph
6. Bangko Sentral ng Pilipinas (BSP) – Official Website: https://www.bsp.gov.ph/
7. Bayad Center – Official Website: https://www.bayadcenter.com/
8. Meralco – Official Website: https://www.meralco.com.ph/

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