Vietnam’s retail market continues to flaunt its attractions as 10
more international brands seek Vietnamese franchise partners. Report by
the Vietnam Investment Review (VIR).
Sean T. Ngo, managing
director of Vietnam Franchises (VF), a leading franchising and licensing
consulting company with offices in Vietnam and Singapore revealed to
VIR last week that VF now were in discussions with multiple franchisees
in several countries including Vietnam who were interested in brands
including Ace Hardware, Denny’s, Rocky Mountain Chocolate Factory, The
Vitamin Shoppe, Round Table Pizza, Texas Chicken, Rita’s Italian Ice,
Kenny Roger’s Roasters, and the Manhattan Fish Market.
Denny’s is the number one family restaurant brand in the world and in
the top 10 US franchises according to Entrepreneur magazine. So far, the
brand has over 2,100 branches internationally and attracts about 26
million customers every month.
The Vitamin Shoppe, nutrition food
product retail chain, listed on the New York Stock Exchange has over
500 stores worldwide.
Round Table Pizza, the number one pizza chain in California, has 500 stores in the US, the Middle East and Asia.
Texas chicken, one of the world biggest fast food outlets attracts
more than three million customers every week with 1,700 stores in 45
nations and territories.
Rita’s Italian Ice was voted the leading
trans-fat free speciality ice cream franchise in the US by Entrepreneur
Magazine and in the top 25 franchises by the Wall Street Journal.
Ngo added that the key to acquiring good foreign franchises was having
a successful track record in business and the infrastructure to
leverage into franchising, including talented people, through an
understanding of local market conditions, and good communication skills.
“All of our franchise brands offer only master or area franchise
rights and expect franchisees to develop from 10 to 50 units, depending
on the franchise. This means having financial capital of 1 to 10
million USD,” said Ngo.
Many established foreign brands have
great potential in markets like Vietnam. Foreign brands such as KFC,
Lotteria, Pizza Hut, Coffee Bean & Tea Leaf, and Domino’s Pizza have
done well. This is where careful selection of franchisees is critical
to ensure long-term success.
Ngo said he believed that the most
common reasons why franchises failed was often due to an inefficient
supply chains, the difficulties in finding affordable great locations
and limited unit growth due to under-capitalisation. Many franchisees
have a history of selecting poor locations for their stores and
implement ineffective or insufficient marketing. Attracting and keeping
good people has also been a major problem for many franchisees,
resulting in abnormally high employee turnover, decreased productivity
and morale, and increased training and recruitment costs.
latest figures from the Ministry of Industry and Trade reported that
there were just over 100 foreign franchise systems registered in Vietnam
as of December 2013. These franchise chains mainly originated from the
US, Australia, the Republic of Korea, Singapore, Thailand, Japan, Hong
Kong, Canada and the Philippines.
According to VF, franchising in
Vietnam continues to grow by leaps and bounds when compared to the
region, with 30 percent growth average annual growth in terms of the
number of new brands entering the market. While the franchising market
is still quite small compared to regional markets, for example, the
Philippines has over 1,500 franchise chains, Vietnam continues to be the
fastest growing franchise market in ASEAN.-VNA