With domestic and foreign brand names, services and fast food storming the Viet Nam market, franchising has developed into one of the most successful business models in the country, market experts say.
Franchising is the authorisation given by a company for others to use its name and sell its goods.
According to Viet Nam’s National Department of Intellectual Property (NDIP), in 2005 alone there were 530 foreign and local brand names franchised while 811 others were transferred.
Independent market watchdogs in HCM City said that in spite of being a new style of business, franchising has contributed significantly to changing the traditional retail network in big cities, especially in HCM City.
“Franchising is a dynamic business model that has proven effective in Viet Nam’s market economy,” said Dang Le Nguyen Vu, director of the Trung Nguyen Company, making a killing by selling its brand name to local and foreign franchisees.
Franchising first took hold in Viet Nam in 1990s with the appearance of famous foreign fast food and beverage chains like Kentucky Fried Chicken, Dilmah, Lotteria and Jollibee.
Franchises in Viet Nam are increasing at a rate of about 20 per cent annually, with 70 systems operating under both foreign and Vietnamese brand names, experts said. In 1996 alone, the country’s revenue from franchising activities reached US$1.5 million.
Trung Nguyen Coffee Company is one of the homegrown successes among Vietnamese franchisers.
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