Making Money From Rubish
FranchiseTalk:
When people sign franchise contracts to start their own businesses, hardly anyone thinks of the business of selling waste. Yet Wongpanit Garbage Recycle Separation Plant insists that if you want to become an entrepreneur, you should consider producing litter _ for recycling purposes. ‘Wouldn’t it be nice if all litter was properly managed and reused? Wouldn’t our world be cleaner?’ asks Pranita Suitthimeathegorn, foreign marketing manager of Wongpanit.
Based in Phitsanulok, her 32-year-old company has been franchising the business for years, and now has more than 160 franchisees, 2 of which are in Laos. The relationship between Wongpanit’s plant and its franchisees is totally different from those in other franchise systems, says Mr Somthai.
Recently, the company was selected by Kenan Institute Asia (KIAsia) as one of 25 local franchise operators to take part in the Thai Franchises to Global Franchises programme. The programme is operated by KIAsia with the funding from the Commerce Ministry’s Business Development Department. It will help the 25 participants promote their franchises in neighbouring countries and in the Middle East. Wongpanit is focusing its expansion in Laos, Vietnam,and Singapore. It is now negotiating with prospective franchisees in Singapore and Vietnam.
To become a Wongpanit franchisee, Ms Pranita said a franchisee did not need to pay the usual franchise fee. Instead, a deposit would be required, which would be confiscated if the franchisee does anything that results in damage to the Wongpanit brand. The deposit varies with the business size but the minimum charge is 10,000 baht. Each franchisee is expected to recoup their investment within 3 to 5 years, said Ms Pranita. Somthai Wongcharoen, the plant’s owner, said the deposit would be returned to the franchisees who had been proved trustworthy.
Wongpanit’s business starts with purchasing recyclable waste from small suppliers to be sorted by its 140 employees and turning it into recycled raw materials for industrial factories, ranging from plastic, paper and metal to glass. ‘Reusable metal, especially copper and brass, is very much in high demand among industrial manufacturers,’ said Mr Somthai. The relationship between his plant and its franchisees was totally different from those in other franchise systems. While other franchisors sell products and technical support to their franchisees, Wongpanit buys litter from its franchisees. ‘We benefit from them indirectly. What we get is a larger supply that gives us more power to price our products,’ he explained.
Located on a 6.5-rai compound in Phitsanulok, the Wongpanit plant has the capacity to produce 75 million tonnes of recycled materials annually. Among its customers are Seagate Technology (Thailand), Hitachi Global Storage Technology (Thailand) and Pan Asia Paper (Thailand). Mr Somthai said he believed his company was the only one in Thailand that systematically traded and processed waste into recycled products.
The company was recently appointed by Bangkok’s Lat Krabang district as the district’s litter recycling facility. Unlike small-scale litter traders, Wongpanit gets its waste directly from large organisations, such as schools, hotels, factories or office buildings. Over its 32 years in business, Wongpanit’s revenue has grown at a rate of between 5% and 8% a year. The same pace of expansion was expected for the businesses of its franchisees.
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