Vietnam is fertile soil for franchisers
Though franchise activities in Vietnam have been thriving in recent years, Vietnam remains a fledgling market.
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Saigon Co-op has nine Co.op Food shops run under the franchise mode, though the retailer only began running the new model one year ago.
The shops specialize in distributing fresh food, cosmetics and consumer goods.
The institutions and individuals that can satisfy requirements in location and retail premises can join the Co.op Food’s chain under the franchise mode.
They are allowed to fully exploit the Co.op Food brand and receive support from the brand before and after opening shops.
Japanese Miniso brand has been present in Vietnam for only a short time through a franchise contract with Le Bao Minh Group, but it has opened 12 shops in Hanoi and HCMC.
Though more and more franchise contracts have been inked recently, Nguyen Phi Van, chair of Retail & Franchise Asia, a franchise expert, commented that the sector is still fledgling in Vietnam and Vietnamese enterprises still cannot take full advantage of the business model to develop brands.
Some Vietnamese brands have tried franchising, but only in the home market. Many Vietnamese retail chains run their branches themselves, while only few of them have franchised their brands.
Hoang Tung, a branding expert, said franchising still has not developed in Vietnam because they must strictly follow requirements set by franchisers to protect prestige.
However, the Vietnamese franchisees’ compliance to requirements is an issue.
A large retailer in HCMC also said that though franchising is a good solution to expand the market, the retailer is cautious with franchise contracts, because unsuccessful deals will spoil its brand.
A franchise expert predicted that in the immediate time, franchise deals from overseas will be in food, retail, educational & healthcare services and business training.
Meanwhile, franchise deals abroad will be mostly in food.
However, he noted that many franchise deals in the food sector, including pho, bun bo, goi cuon and banh my – famous traditional dishes – are not from Vietnam, but from other countries. For example, Vietnam’s pho (noodle soup served with chicken and beef) is franchised from the Republic of Korea and goi cuon from the US.
According to the International Franchise Association, the total value of franchise deals in the world is on the rise. In 2014, the value was $3.8 trillion, including US$2.4 trillion in the US and US$600 billion in Asia.
