VN has huge potential in franchising

June 02, 2017 - 09:00

Dozens of franchises are being established in Việt Nam and more new brands are expected to enter the market in the near future, according to experts.

A booth at the Việt Nam International Retail and Franchise Show, which opened on Thursday, at the Saigon Exhibition and Convention Centre. — VNS Photo
Viet Nam News

HCM CITY — Dozens of franchises are being established in Việt Nam and more new brands are expected to enter the market in the near future, according to experts.

Figures from the Ministry of Industry and Trade show that 172 brands have registered as foreign franchises to Việt Nam, with over 50 per cent in the food and beverage sector.

The majority of franchisors are from the US, Australia, South Korea, Singapore, Thailand, Japan, Hong Kong, Canada and the Philippines.

Sean T.Ngo, CEO of VF Franchise Consulting, Asia’s leading franchising and licensing consulting company, said that, with the country’s high economic growth rate, its population of 90 million and high spending power, Việt Nam has become an increasingly attractive destination for international franchising businesses.

In the Philippines, for instance, there are over 1,500 franchises, and more than 600 in Singapore, a country of only five million people.

“So you can imagine the potential growth for a country like Việt Nam,” he said.

Nguyễn Phi Vân, chairwoman of Retail and Franchise Asia, said Việt Nam ranked eighth of the top 12 markets identified by International Franchise Association as the most valuable markets for international expansion.

The sectors with the most franchising potential are food and beverage, education, health and nutrition, business services, hospitality, fashion, beauty and skincare, entertainment, children’s services, and convenience stores, she said.

Besides giant brands like KFC, Starbucks, McDonald’s, Baskin Robbins and Domino’s Pizza, which are present in Việt Nam, many other large foreign brands participating in the Việt Nam International Retail and Franchise Show that opened in HCM City on Thursday are seeking franchisees in Việt Nam.

They include Little Caesars, the largest carryout-only pizza chain in the world; Element Fresh, a leading casual dining brand in Shanghai; Presotea from Taiwan; the US’s The Boiling Crab restaurant; and The Edge, a Hong Kong-based learning centre designed to help students get into the top universities in the US, UK and Canada.

As Việt Nam continues to open up and develop, The Edge foresees a huge market potential for education franchises as well, and is currently seeking qualified franchisees to enter the market.

“We would like to find a partner that can develop both North and/or South Việt Nam for us with an initial number of one to two centres for each territory. We foresee that market demand would give rise to an additional one to three centres by 2022,” said Philipp Steinke, a representative of The Edge.

South Korea’s Lock&Lock is also seeking franchisees to expand its new convenience product brand P&Q (Price & Quality) in Việt Nam, according to Jay Jeoung, overseas sales general manager of Lock&Lock Co Ltd.

P&Q made its debut in Việt Nam last month with the opening of its first store at the Nowzone Trading Centre in District 1.

Sean said to develop a sustainable franchise business, the first step is finding the right business partner and making sure the franchise fits Việt Nam. Even if it is a good fit, local adaptation is required.

“Secondly, supply chains are very important, especially in the food and beverage industry where you have to import your materials. For example, in the bubble tea market you have to import Taiwanese tea in addition to other ingredients. So you can start to see that if you can control the costs, you can import it at affordable prices.”

“We all know that Việt Nam, like many other Asian countries, is very price-sensitive. Every little increase in the price will affect the demand for products,” he said.

Vân from Retail and Franchise Asia said the Vietnamese franchise market was still young, and businesses do not have much understanding and experience in the franchising business.

It would take patience and proper training for Vietnamese partners to adapt and become aligned with international standard business practices, she said.

Retail-franchise expo

The ninth Việt Nam International Retail and Franchise Show at the Saigon Exhibition and Convention Centre until June 3 features 309 booths of 265 companies from 14 countries and territories. It expects to attract 40,000 buyers from Việt Nam and neighbouring countries.

The event also includes the 2017 Go Global Start-Up Competition, seminars and business matching programmes. — VNS