Event Recap: Global Franchise Experience by VIETRF - Vietnam International Retailtech & Franchise Show (31.10 - 02.11.2024)

Last week, we attended Day 1 of the “Global Franchise Experience” seminar hosted by VIETRF on November 1, 2024. The event provided valuable insights into the opportunities and challenges Vietnamese brands face in expanding their franchises internationally. Bringing together industry leaders and franchise experts, including representatives from prominent local brands like Phúc Tea and Care With Love, this seminar offered a wealth of information on franchising potential and the strategic steps needed for successful market entry.

Franchising Market Potential: 

Global McDonald's Franchise Royalties: In 2023, royalties from McDonald’s franchises worldwide reached approximately $5.53 billion USD, underscoring franchising's lucrative potential.

Top Franchise Markets in Asia:

• South Korea leads with over 4,800 franchise brands.
• India closely follows with nearly 3,922 franchise systems.
• Taiwan ranks third with over 3,300 franchise brands.
• China stands out as a franchising powerhouse, boasting over 4,000 franchise brands and 500,000 franchise outlets.

Barriers to International Expansion for Vietnamese Brands

Several barriers to international expansion were outlined, focusing on the need for development in brand concept, marketing, and packaging. Here’s a closer look at why many Vietnamese franchises have yet to make a global impact:

• Underdeveloped Brand Concepts: Many Vietnamese franchises struggle with establishing a distinct brand identity that can attract foreign consumers.
• Ineffective Marketing Strategies: Effective marketing is essential for creating a presence abroad, but many Vietnamese brands lack the resources or expertise needed to make an impression in global markets.
• Insufficient Packaging and Presentation: Both product packaging and store presentation must appeal to international customers for brands to succeed.
• Language and Communication Barriers: Limited English proficiency can hinder brand communication and franchise operations, affecting customer engagement and brand consistency abroad.

Key Movements in Franchising: Technology, Wellness, and Authenticity

According to Shark Nguyen Phi Van, there are four major movements shaping the franchise landscape:

• Technology and Automation: Franchises worldwide are increasingly adopting technology, with AI, vending machines, and robotic baristas becoming popular. This trend allows brands to streamline operations, reduce labor costs, and appeal to tech-savvy consumers.
• Health and Wellness: Global demand for vegan and plant-based options has surged, particularly post-COVID, creating opportunities for franchises that emphasize health and wellness. Vietnamese brands incorporating these elements can increase their appeal in international markets.
• Authentic Local Cuisine: Consumers are increasingly favoring franchises that remain true to their origins. Vietnamese brands, with their unique flavors and culinary heritage, are encouraged to emphasize authenticity in their expansion efforts. By focusing on local cuisine and cultural uniqueness, they can attract customers seeking genuine culinary experiences.
• Go Global at All Costs: China, Taiwan, and Korean franchises prioritize market entry “at all costs” to establish a global presence. This strategy, often motivated by domestic market saturation, focuses on expanding internationally by offering competitive royalty fees to local partners. At the same time, these franchises secure revenue streams by supplying materials and equipment for their international franchisees.

Lessons for Vietnamese Brands: A Strategic Blueprint for Success

Speakers shared practical advice for Vietnamese brands aspiring to scale internationally:

• Prioritize Health and Wellness: Incorporating wellness-oriented products or adapting offerings to meet health-conscious demands can make brands more attractive to international consumers and potential investors.
• Embrace Automation: Incorporating technology like vending machines and piloting these models domestically can prepare brands for international franchising, where automation is often expected.
• Adopt a Flexible Franchise Model: Embracing a smaller-scale, agile approach allows brands to test new markets before committing to large-scale expansion.
• Invest in Market Research: Conducting thorough market research before entering a new market enables brands to localize their offerings effectively and establish fruitful partnerships with franchisees.

Investment Considerations for Franchise Growth

From an investment perspective, franchise success often depends on several key factors:

• Domestic Success: Investors are more likely to support a brand that has proven itself in its domestic market first.
• Founder’s Credibility: Investors seek credible and open-minded founders who demonstrate the flexibility needed for international expansion.
• Feasible Financial Model: A clear ROI and transparent financial plan are essential to attract investment, providing confidence in the brand’s ability to scale profitably.

Final Thoughts

This seminar offered a strategic roadmap for Vietnamese brands aiming to franchise internationally, highlighting the importance of understanding franchising movements, practical lessons for scaling, and key considerations for new market entrants. Brands like Phúc Tea, Pho S, and Care With Love, with their curated product offerings and focus on community-driven franchise networks, exemplify effective strategies for international growth.

For foreign SMEs and entrepreneurs interested in expanding to Vietnam through franchising or establishing a subsidiary, SOSP Consulting Group offers tailored market research to support seamless market entry. Our comprehensive insights help bring your brand vision to life and set the foundation for success.

Contact SOSP Consulting Group today to discuss how we can assist in your journey toward successful market entry.