IP News from duytho.com

Franchising, a gateway to Vietnamese market of international groups

IP News from duytho.comAccording to the World Franchising Council (WFC), there have been 70 franchising systems in Vietnam. Most of them are foreign trademarks, such as Dilmah, Swatch, Jollibee,KFC ,Lotteria, etc. To wait for Vietnam Joining WTO in front, many great internation

The international groups awaiting

Ms. Do Thi Bich Hue, director of Au Viet company,  applied to get franchise from McDonald’s,  a well-known Fast Food chain  in the world, but failed. At that time, McDonald’s did not really see the need  to enter  the Vietnamese market, so it demanded $1 million per store  plus  the franchisee had to import raw materials from America. Now, everything  has changed. McDonald’s is just waiting for the opportunity when Vietnam officially become a WTO member to penetrate the  market. It awaits the post-WTO time when the Vietnamese franchising legal framework is improved. Pizza Hut, the famous store chain that belongs to Yums Brands group of America,  one out of ten world-leading franchising systems, is at the end of its preparation  stage to get into the Vietnamese market.

Many big chains s  in America and the EU wanted to use Singapore as a base to land Vietnam by means of franchising, said a business-promoting specialist in Ho Chi Minh city.  Among them is Manchester Club, a company practicing in the field of fashion and restaurant that exclusively exploits the image of  the famous English  football club, Manchester United. Meanwhile, franchisors who  are already in Vietnam  are doing their best to increase their market proportion. KFC had 14 stores in 2005, and 17 in the early 2006.  The company disclosed its ambition to reach the number of 100 stores throughout Vietnam  by 2010. Lotteria  are operating 9 stores   and Dilmah has opened a series of tea houses which have  ruled the roost  in Hanoi Deputy director of the  Planning and  Investment department of Ho Chi Minh city, Mr. Luong Van Ly said that day after day he received invitations to join conferences on the internal markets of some countries in the region and the world. Many groups of professional American investors have enquired about conferences  and seminars to study the Vietnamese market. This  reflects the great interest by international groups in  the Vietnamese market.

Domestic enterprises not yet fully aware of  franchising “ Many Vietnamese trademarks are now strong enough to offer franchise,  including Coop Mart supermarket, Nha Xinh interior supermarket, An Phuoc fashion, Hoan My hospital, and so forth”, said  Ly Quoc Trung, director of Pho 24 company, a successful franchisor in Vietnam .“However, domestic enterprises  are still keeping themselves out of the wave  for many reasons.”  Trung commented that  a strong trademark is not enough. To be successful in franchising, a company needs to have good  administrative management . For Trung, this is the most important factor but  the weakest point of Vietnamese enterprises. Thus,  despite knowing that franchising is the most effective way to keep and expand their market proportion, many supermarkets, restaurants, and stores  are not brave enough to adopt it.

Besides, the holding company has to standardize all processes to franchise.  Take Pho 24 for instance. All steps involved, from preparing raw materials, recipe doses, knowingv how to cook, knowing how to carry, to designing interior furniture, lights, lamps, and so on have been standardized by the company for  franchisees to apply without changing. Many domestic  enterprises  are  unable to do that. So,  this remains a big obstacle for Vietnamese enterprises to get over  in order to adopt franchising.

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