Vietnam Market for Franchising

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Vietnam Market for Franchising
By U.S. Commercial Service – Vietnam March 2011 Overview The franchising model is popular and well-suited to a developing economy like Vietnam. Rising incomes and an emerging middle class are generating growth in consumer-driven sectors. There is considerable demand for lifestyle-oriented products and services, as well as growing interest in western-style food and beverage concepts. Franchising first took hold in Vietnam in the 1990’s with the appearance of well-known foreign fast food chains like KFC, Lotteria, and Jollibee. With the passage of several franchise laws and decrees, franchising businesses have become more widespread in recent years, with a number of foreign and domestic franchise brands operating in the market. And while Vietnam’s entry into the World Trade Organization in 2007 heralded the opening of the retail sector to foreign investment, the slow and bureaucratic approval process for retail licenses has made franchising an attractive alternative to market entry. The market is still relatively small and competition is heating up as more brands enter the market. However, growth prospects are bright as local investors become more familiar with franchising and are increasingly exposed to successful franchise concepts. This is especially true in the urban centers of Hanoi and Ho Chi Minh City, where incomes are significantly higher than the national average. The franchise sector in Vietnam is poised for continued growth not only in traditional sectors of fast food but also in other such sector as retail, education, entertainment, health care, and lifestyle-oriented businesses. Best Prospects The market is open for foreign franchisors in various sectors, such as retail, fast food restaurants, fashion, convenience stores, and education. At present there are approximately 70 international franchising systems operating in Vietnam and consumer awareness of American food and beverage franchise brands is quite strong. Food...
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