Domestic firms remain wary of franchises

10-Aug-2018 Intellasia | The Saigon Times | 6:02 AM Print This Post

Most Vietnamese enterprises that have franchised their brands to other countries have done so only when these opportunities were offered by foreign firms, instead of mapping out specific strategies on their own, Nguyen Phi Van, chairwoman of Retail & Franchise Asia, told local media on August 7.

At the signing ceremony of a cooperation agreement on the development of the franchise sector and solutions for the retail sector between Retail & Franchise Asia and Coex Co., Ltd, the organiser of the Vietnam International Retail and Franchise Show (VIETRF), set to be held in HCM City in November, Van noted that franchises have emerged as a global trend. Many international brands are present in Vietnam through franchises.

However, most local enterprises have little knowledge or experience with this business model amid the lack of policies to support franchisees.

Over the last three years, local brands have not been franchised abroad, Van added.

The number of local enterprises getting involved in franchises is modest. Some of them are even likely to be acquired by foreign firms.

As such, enterprises must develop their own brands and then prepare for a franchise, Van noted.

According to franchise experts, the lack of experience or support from management agencies has prevented Vietnamese enterprises from attempting franchise deals. In addition, Vietnamese firms do not clearly understand international regulations and practices with this model, so they find it difficult to franchise their brands to other countries.

Meanwhile, enterprises in Malaysia, with a similar business scale and model as Vietnamese enterprises, also have little knowledge of franchising, but they receive strong support from their government in terms of training, conducting market surveys and seeking partners. For this reason, they have outpaced their Vietnamese peers, Van said.

VIETRF is considered an ideal opportunity for local firms to promote their brands, but Vietnamese companies participating in the expo account for only 30 percent of the total number of exhibitors.

Van proposed the government strongly support local enterprises that have plans to franchise their brands overseas.

VIETRF, which will take place at the Saigon Exhibition and Convention centre in HCM City’s District 7 from November 1 to 3, is expected to attract 300 firms, with more than 70 percent of exhibitors being foreign ones. The expo will feature the equipment and technologies of the retail sector; furniture; and products of the catering, fashion, healthcare, beauty and education sectors.

The cooperation between Retail & Franchise Asia and Coex Vietnam Co., Ltd, is aimed at boosting the development of the retail and franchise sectors in Vietnam, paving the way for domestic brands to be franchised to other countries and vice versa.


Category: Finance, Vietnam

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