09:16 | 27/08/2018 Trade
(VEN) - Since 2007, the Ministry of Industry and Trade has granted 206 franchise licenses for foreign brands in Vietnam. Of the total, some 10 brands were licensed in the first half of this year. The franchisers span diverse business, such as pharmaceutical production, convenience stores, fashion, education models for children and restaurant chains.
|Pho 24, one of the Vietnamese brands now franchised abroad|
The majority of franchisers were from the US, the UK, France, Australia, the Republic of Korea, Singapore, Thailand, Japan, Canada and the Philippines.
Nguyen Phi Van, chairwoman of the Retail & Franchise Asia, founder and manager of the World Franchise Association, said Vietnam ranked eighth out of the top 12 markets identified by the International Franchise Association as the most valuable markets for international expansion.
At the same time, Vietnamese brands had also started to develop platforms to promote their brands in the world market. Franchising began in the country in the 1990s with the introduction of well-known fast food chains like KFC, Lotteria and Jollibee. More Vietnamese businesses are now exploring new business opportunities via franchising, Van said, adding however, the Vietnamese franchise market was still new, and local businesses did not have much understanding of it. As a new market, experts suggested there are a number of risks that a franchiser should investigate carefully before engaging or expanding businesses in Vietnam.
On the other hand, Vietnamese franchisers needed to be knowledgeable about the franchise business as well as seek consultancy from industry experts to avoid risks, they said.
Dr. Le Dang Doanh, former director of the Central Institute for Economic Management (CIEM), said franchising helps businesses take advantage of partners’ capital and human resources to expand business, increase profits and elevate the brand value.
Suttisak Wilanan, deputy managing director of Reed Tradex, told participants at the Vietnam Retail and Franchise Conference in Ho Chi Minh City, that Vietnam is a growing market for the retail and franchise sector, attracting the interest of major brands in the region and the world.
Lai Tien Manh, director of the Mibrand Company, said franchising of foreign brands in Vietnam would create certain pressure, forcing domestic businesses to focus on investing in advanced technologies and enhancing product quality in order to compete with rivals.
However, franchising activities by Vietnamese businesses are still limited. According to the Ministry of Industry and Trade, Vietnamese brands that are now franchised abroad are Cafe Bobby Brewers, Pho 24 and T&T. Some other brands are also intending to branch out into franchising abroad like Trung Nguyen Coffee and Highlands Coffee. Nguyen Phi Van said that more Vietnamese businesses are now exploring new business opportunities available via franchising.