Nguyen Phi Van talks about the slow but sure growth of franchising in Vietnam. With a young population and a growing middle class, the country should be an interesting proposition to brands considering expansion in the Far East
Vietnam is considered a seed market where investors must patiently await a future harvestNguyen Phi Van
NPV: Franchising here dates back to 2009 when Circle K entered Vietnam. From 2010 through to 2015, Vietnam saw the entry of several iconic franchises such as Domino’s, Burger King, Starbucks, McDonald’s, and 7 Eleven. As such, franchising is quite new to the market and there is a lot of room for the industry to grow.
NPV: Given that this a very young franchise industry in Vietnam, there has been modest success by international franchisors. With commercial real estate being limited, supply chain a challenge, and an early-stage franchise ecosystem development, Vietnam is considered a seed market where investors must patiently await a future harvest.
On the other hand, young, local franchise brands are emerging, learning from the experience of international brands, and are keen to start establishing franchising as a strategic development model.
However, very little success can be seen from the efforts of local franchisors. It is expected that it will take the industry another five years or so to be more understood, and for standards to be observed.
NPV: Mostly global brands such as Circle K, 7-Eleven, Domino’s, Pizza Hut, Burger King, Subway, Starbucks, McDonald’s, etc.
NPV: With the franchise industry being so young, the government is still learning about the model, first to regulate the industry, and then to think about support mechanisms.
Franchising has been used successfully by a few governments in the region, such as Malaysia, Singapore, the Philippines, Taiwan and South Korea, as an effective way to help local brands to go global, and to contribute significantly to the economic development of a country.
The government of Vietnam does recognize this opportunity and is taking this into consideration.
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