Franchisers flock to Vietnam to establish foreign brands

With many foreign global brands becoming popular with young people in Vietnam, other franchises are sitting up and taking notice-Photo: Le Toan

After recently targeting broader market coverage in the Philippines and Malaysia, Edwin Ng, managing director of Singapore-based food brand Munch, came to Vietnam to explore franchising opportunities here.

Established over a decade ago, Munch operates a network of nine outlets in Singapore, which sell salads and sandwiches, hot appetisers, nutritional drinks, and light healthy snacks. Committed to providing customers with preservative-free products, Ng hopes that Munch can team up with experienced Vietnamese investors. Such investors must have goodwill and, crucially, at least $1 million in investment capital.

Meanwhile, Duc Luu, CEO of Hong Kong-based education brand Edge, is in Vietnam scouting for brand franchising investors with a knowledge and interest in the field of education. Edge currently operates three English-language centres in Hong Kong, mainly to help trainees enter universities in the US and the UK with a complete grasp of the English language.

The above examples are just two out of a multitude of foreign brands that have made their presence felt in Hanoi recently, searching for exclusive franchising partners in Vietnam. To date, the fields of food and beverages, fashion, healthcare, education, and retail have attracted the most global franchise brands to Vietnam.

Activities have been particularly noticeable in the food and drink sector, with a raft of big global brands making forays to Vietnam, such as McDonald’s, Starbucks, KFC, Pizza Hut, Lotteria, The Coffee Bean & Tea Leaf, Cirkle K, Burger King, and Domino’s Pizza. Many foreign brands have become popular with younger consumers and the middle-class market segment.

Industry experts forecast organic food usage will soon lead the food market in Vietnam. According to consulting firm VF Franchise Consulting managing director Hoang Kim Phuong, amid current information on alarming food quality, the brands related to the production and processing of organic food products will become the top choice for consumers.

Aside from the food and drink industry, which has enjoyed the hottest growth in franchising so far, the field of education has also proven to be fertile ground for franchising business in Vietnam. According to franchising experts, after sowing the initial seeds in previous years, franchising in Vietnam has now reached a stage of more progressive growth.

As of January 2016, the Ministry of Industry and Trade’s Domestic Market Department had welcomed 144 global brands which have registered for franchising deals in Vietnam. Conversely, only five Vietnamese brands have registered for brand promotion abroad. These businesses operate in the fields of coffee, fashion, and food.

With the penetration of top global brands, particularly those from the ASEAN region, the Vietnamese franchising market is expected to maintain its upward trajectory of 25 per cent growth per year for the next few years.