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Franchising spreads across Vietnam
Franchising is no longer a strange type of business to Vietnamese entrepreneurs. It is gradually establishing itself as a legitimate new field of business for those interested in small to medium-sized operations.
Vietnam now has about 70 separate franchising operations, marketing both local and overseas brands.
Trung Nguyen coffee is a Vietnamese pioneer in franchising. It has more than 1,000 franchised coffee shops in Japan, China, Thailand and Singapore.
Other big Vietnamese franchisers include Pho 24, which has outlets in Singapore, China and Japan; Kinh Do Bakery, owned by the large bakery; and Bon Mua (Four Seasons) Food and Drink restaurants, owned by leading Vietnamese retailer Hapro.
However, many smaller enterprises have also joined the franchise system. Com Nieu-Red House restaurant, a small business in central Da Nang City, last year franchised one restaurant in Nha Trang.
And next year, it plans to open another eight restaurants across Vietnam.
This is surprising news for other enterprises because franchises are usually associated with big and well-known brand names.
Golden opportunities
The success of Com Nieu-Red House restaurant has paved a new path for smaller, Vietnam enterprises to jump into franchising. Specialists expect that franchising will become popular in Vietnam in the future.
Foreign investors believe Vietnam is a good potential market for franchises.
Last year, Eastern Media Holding Group signed a franchising agreement with Vietnam's Apex Media to publish Walt Disney printed material. Franchising has allowed many Vietnamese companies to develop their market and improve the value of their names. Both franchisers and franchisees can benefit.
In the United States, 90 per cent of franchised companies are still in business after 10 years. In contrast, 82 per cent of companies that started alone shut their doors in the same period.
Franchisees usually enjoy comparatively low start-up benefits. Com Nieu-Red House restaurant in Nha Trang gained revenue 30 times higher than, their initial payment after being licensed by the Da Nang franchiser.
However, franchising can also expose weaknesses. A poorly decorated shop or bad service will leave an unfavourable impressions on customers.
Some businesses have even lost their own brands because of the actions of franchisees, said Dang Le Nguyen Vu, director of Trung Nguyen coffee.
VNN
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