Brewers eye franchise business model

Increasing numbers of Vietnamese businesses will open franchises of popular international brands as the country opens up its market further following its accession to the World Trade Organization four years ago, a senior official said yesterday.

Addressing a seminar entitled Top Franchise Asia 2011-Viet Nam Edition, Le Quoc Trung, deputy director of the Ministry of Industry and Trade’s Southern Representative Office, noted that franchising was a business model that benefited both sides in a transaction.

A franchise offered an entrepreneur a quicker entry into the market at less risk, he said. It offered the advantages of having a recognized brand name, a professional training system and benefiting from technology transfer, he said.

However, both the franchise and the franchisee needed to identify the right time and map out strategies to ensure success in the market, he said. They should pay special attention to environmentally friendly products and corporate social responsibility, he added.

Trung said the franchising model was highly valued all over the world because of its high effectiveness and low business failure.

For instance, 5 per cent of businesses in the franchising sector faced business failures compared to 30-65 per cent with other models, he said.

The country’s rapid economic development, plus its young and dynamic consumers are the main reasons foreign firms seek franchisees in the Vietnamese market.

Bui Le Quan from the Viet Nam Chamber of Commerce and Industry Exhibition Services Ltd Co said according to the International Franchising Association, global franchise revenues reaches more than US$1 trillion per year.

All sectors can be developed under the franchising business model including hotels, bakery, transportation, advertising and property. All companies, from those newly established to multinational firms, can also participate in the model.

Viet Nam now has more than 70 foreign franchises now including KFC, Lotteria, Pizza Hut, Gloria Jean’s Coffee, and Coffee Bean; as well as Vietnamese brands like Pho 24, Trung Nguyen coffee, Sieu Sach sugarcane juice.

Among those knocking at the door are famous Singaporean brands including Country Chicken, Don’s Pie, Empire State, Popeyes, Snackz It!, Auito Saver, Kooshi, Mondo and Pazzion, KinderGolf and FMDS.

The director of Singapore’s Astreem Corporation Pte Ltd, Hsien Naidu, said the seminar was a great opportunity for franchisers and franchisees to come together and develop the Vietnamese franchising market further.

Representatives of Vietnamese enterprises at the seminar said that the seminar gave them insights into ways they could expand their business at home as well as in overseas markets.

The seminar was organised by Vietcham Expo (under the Viet Nam Chamber of Industry and Commerce) in collaboration with Astreem Co, a member of the Singapore Franchising & Licensing Association. —VNS

Tags: franchise business model, Vietnam beer market, Vietnam Beverage industry