The methods and requirements needed for franchises to thrive

10:28 | 23/05/2019
Many chain franchise brands have developed in Vietnam, with popular brand names popping up in fast food, catering, education, healthcare, beauty, and entertainment. Sean T. Ngo, founder and CEO of franchising consultancy VF Franchise Consulting, talked with VIR’s Thanh Van about some insight into Vietnam’s franchising market and how it is creating opportunities for major international names.
the methods and requirements needed for franchises to thrive

Vietnam’s food and beverage industry is brimming with opportunities. What is your view on the franchising aspect in the field?

Many international fast food chains see great long-term potential for Vietnam with its nearly 100 million potential consumers who are continually seeking different and better quality of service. We continue to see not only rising interest in fast food chains wishing to enter Vietnam, but also increasing interest from other chains in snacks and deserts, drinks, fast-casual, casual dining, and to a limited extent, fine-dining chains. The fast food industry will also become increasingly dominated by local businesses that also wish to tap into the rapidly rising consumer marketplace. Vietnam’s development will follow similar economic development patterns of its neighbours and has already surpassed them at this stage of economic development for their countries.

Could you elaborate on the potential for overseas franchisors in areas such as education, health and beauty, and retail?

The potential for food and beverages in a vastly-populated country is obvious. However, we have seen strong interest in education and training franchises that cater to young children and adults alike. Beauty and healthcare products, and services for women specifically, continue to grow as demand for such products and services is high.

Increasing interest in retail, especially convenience and discount stores, will continue to explode as brands seek market dominance. Just earlier this year, iconic Swedish retailer IKEA announced that it would be entering the Hanoi market shortly. One of our clients, ACE International, is also keen on entering the country as they see significant opportunities in the home improvement retail market.

Which big brands are looking towards franchise opportunities in this market this year?

We continue to see many new food and beverage brands poised to enter the market, from the likes of the United States, Taiwan, Thailand, Japan, South Korea, Singapore, and further afield. Some of the key brands that are seeking franchisees in Vietnam include American franchises such as Little Caesars, the third-largest pizza chain in the world, and the aforementioned Ace International. Also seeking master franchisees in Vietnam are Mango Chili Thai Café and Mango Tree, both from Thailand.

Taiwanese franchises also continue to dominate the food and beverages scene in Vietnam with brands such as Cha Ji Tang (bubble milk tea), Yan Xiang Ting (dim sum), Bingirl (Taiwanese cafe), and Fidele (American-style seafood). There is also interest from India, where The Belgian Waffle Co. was founded. This brand has grown to over 200 stores in less than three years since its founding, and their stores can now be found in India, Nepal, and Dubai. These are just a few examples of the many franchises that continue to seek qualified franchisees in Vietnam.

What are the key factors that overseas brands need to focus on, in order to ­increase their chance of success here?

Due diligence is often required, and local knowledge of the franchisees and their businesses will be key to a successful and long-term franchise business. With a strong and trustworthy partner, the franchise will likely be able to overcome other key challenging areas, including selecting appropriate real estate for the stores, managing the supply chain efficiently, creating effective local marketing, and most importantly, training and retaining a knowledgeable workforce. This is where our company, VF Franchise Consulting, can best assist international franchisors.

What can Vietnam do to help develop the local franchising market?

Vietnam is the only major country in the ASEAN without a formal franchise association. In comparison, we can see that franchise associations in places like the Philippines, Singapore, and Malaysia are quite developed and instrumental in growing their franchise industries and have been in existence for decades. I believe this is an area where the government and private businesses should collaborate to build an association that will help grow the industry and prepare many Vietnamese franchises to be successful as they seek to expand in and out of the country.

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