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- 27 / 08 / 2019 -
Franchise explosion in Vietnam

Franchise has facilitated many foreign brands to break into Vietnam. In addition to franchise industry for food, beverage or education, franchising in goods retail industry is expected to popular in the future.

With more than 93 million people, Vietnam is considered as one of three most vibrant retailing markets in Asia – Pacific region (with China and Indonesia), at the yearly growth rate of nearly 12%. As forecasted, revenue in retailing industry of Vietnam may reach nearly USD 180 billion in 2020.

The trend of foreign brands breaking into Vietnam will continue to be increased, mainly by franchising. Until now, there have been hundreds of brands franchised. In 2017, there were 31 foreign companies registering franchising in Vietnam. These companies mainly come from the UK, the US, France, Taiwan, Hong Kong and Japan in fast food (F&B), education, consumers goods industries, etc.

With the open-door policy facilitating investment and business of foreign companies in Vietnam, the country always attracts foreign brands breaking into Vietnamese market. Accordingly, many new forms of business have been appeared in Vietnam, namely garments, children education, footwear and dining restaurants industries, etc.

Besides, investment in convenience stores is attracting investors. This is an opportunity for retailing brands breaking into Vietnamese market. In retailing sector, in addition to currents segments as commercial centers, supermarkets and hypermarkets, segment in convenience store is developing vibrantly with the participation of a number of foreign and domestic big companies. Until now, there are thousands of convenience stores operating within the country, mainly in Hanoi and Ho Chi Minh city.

However, according to Mr. Yun Ju Yong as CEO of Vietnam GS 25, there are no any retailing brands franchised on trend. At the moment, retailing industry is attracting many companies to building up, but there haven’t been any brands franchised. Meanwhile, GS25 is a retailer in South Korea operating about 14,000 convenience stores, 80% of which are franchised models.

As forecasted, franchising of convenience stores will be more vibrant in the future because of low investment costs but positive profits, thanks to investment management focused on only one franchise to attract consumers.

However, according to experts, franchising models in Vietnam are operating mainly by traditional management, rather than by digital application. Therefore, the control and adjustment of management costs will face difficulties. This is the main reason why many franchise models operated ineffectively and then leaved Vietnamese market