Franchising forecast to be popular for business development in Viet Nam

Following Trung Nguyen, various businesses in the country have also pursued this strategy with success. Experts forecast that with an estimated annual growth of 15-20 percent over recent years, franchising would be a fast-growing form of business in Viet Nam when the country officially joins the World Trade Organisation.
As almost all Vietnamese enterprises are not strong enough to expand their outlets abroad, franchising is considered to be an appropriate way to help them compete with foreign businesses in the domestic market and indirectly penetrate into larger markets at lowest costs while being able to protect trademarks, experts said.

"Franchising has helped Trung Nguyen trademark be popular not only in the country but also in the US, Russia, Japan, China, Cambodia, Singapore and Thailand," according to the company's Marketing Director Nguyen Tran Quang. He stressed that his business planned further expansion into big markets such as China, Japan and Russia.

Kinh Do and Pho 24 are also well-known trademarks engaging in franchising.

Pho 24 had, by the end of 2006, developed 46 pho ( rice noodle) restaurants throughout the country as well as in Indonesia and the Philippines. It is expected to promote its trademark in Australia, the Republic of Korea and Japan in the next three months.

Kinh Do, a confectionary and bakery, now boasts a network of 150 distributors and 30,000 retailed stores throughout the country.

Owner of a chain of Carings home electric appliance supermarkets, the Ben Thanh Trade and Marketing Co. Ltd., recently signed a contract to franchise the Best Denki group of Japan. Ben Thanh's General Director Le Hong Xuan said with the contract, his business and the Japanese company will join hands in expanding the system of Carings supermarket in five cities, namely Ha Noi, Hai Phong, Ho Chi Minh City, Da Nang and Can Tho. Carings supermarkets are currently faring well, targeting an annual revenue of 2 trillion VND in the next 5-6 years.

Trade expert predicted that in the future, franchising will develop not only in the area of culinary service but also in fashion and artcraft trading and particularly, in healthcare and education.

However, they warned of various risks facing enterprises engaging in this form of business, citing dispute, particularly revenue dispute, and the fact that franchisers may have their prestige reduced if franchises do not observe committed regulations.

According to Truong Quang Hoai Nam, Director of the Legal Department of the Trade Ministry, regulations on franchising in the Law on Trade are insufficient and fail to meet real requirements.

"This is the right time to enact a specific law on this form of business," Nam said.

Source: vietfranchise.com