Vietnam Market Entry Strategy: Franchising

Franchising as a business expansion method has become increasingly popular in Asia, especially in Vietnam. The country has a healthy economy, which has been growing in the last decade, also has mainly young-population of 94 million, and the most important is people are showing a strong interest in franchising. Not only that, many popular foreign brands are attracted by the business expansion there, meanwhile the local Vietnamese investors are looking for the opportunity to operate business under the well-known brands that Vietnamese are familiar with. Therefore, this article will offer you in-depth information about marketing entry strategy, focusing on franchising business. Let’s read until its end!

READ MORE: Viettonkin Consulting service to help your franchising business expand to Vietnam

Overview of Franchise Business

According to Vietnam's Ministry of Industry and Trade, Vietnam has experienced a 15%-20% growth in terms of new foreign and Vietnamese franchises entering the market for the last five years. Vietnam is expected to grow and recover, and the growth will slow to 8% - 12% in 2020 and revert back to its normal 15% - 20% growth in 2021.

Furthermore, many international franchisors continue seeking an entry in Vietnam as it is one of the most attractive markets in the ASEAN due to rising incomes and a rather young population. Since many businesses plan for long-term growth, reviewing new business opportunities like franchises is a wise thing to do, even in these challenging times since the actual franchise partnership may be months from when the discussion first starts.

There are companies that want to enter Vietnam, including food and beverage, education, services, and even hospitality chains. In addition, companies like Little Caesars Pizza, Delifrance, Mango Tree, Scholastic World of English, Helen Doron Kindergarten, Sureclean, and many others. The hotel chains, such as Marriott, Accor, Hilton, and others continue their search for the right partners.

However, some franchises have begun to adapt to the new environment by shifting their operation into online and accelerating their plans to move at least a part of their business online. In this case, F&B franchises have adapted well by focusing heavily on online deliveries. Then, hotels and catering companies have taken their businesses online to mitigate the impact to their normal business operations.

How To Market Franchise Business in Vietnam?

Creating a successfully target market with high growth potential, the business development team will need to resource properly, in which they must have the allocation of financial and human, marketing talent and senior leadership support. Moving from an opportunistic to a targeted approach for international expansion, it is critical that validating markets exist in each targeted region.

Moreover, the franchisor should select specific markets that are best suited for their brand or product and develop them as future validating markets, but the mistakes might occur as the validating markets are established. However, both failures and successes should be analyzed, and the criteria driving success and failure defined and internalized by the development team.

Therefore, there are some ways to market the franchise business in Vietnam, start from word-of-mouth to good old-fashioned networking. Here are the details information below:

1. Word-of-mouth of existing partner referrals

It is still the most powerful and valuable lead one will have. These candidates are often familiar with your brand and have developed an attraction for your business because of their relationship with a successful existing partner. They prepare better and give more realistic expectations of what it takes to succeed.

2. Events organized by the International Franchise Association

It is also a strong tool to market the franchising business. The focus of these events on the franchising community attracts a more elite group of interested companies, including local and regional franchise groups. If they are considering a portfolio approach to advantage their infrastructure, however these local and regional franchise groups can be their candidates for master franchising.

There are exhibitions that you should stopover at, for example, Franchising and Licensing Vietnam, Vinexad, and Vietrf.

3. The power of networking

You cannot leave out the good old-fashioned networking to market your business. In addition, companies may be surprised by the leads their auditors, ad agencies, outside counsel and suppliers can generate. For instance, existing partner referrals, because this group has the same advantage of having a basic understanding of your business.

4. This following resources should be considered too:

• Brokers and agencies, such as Viettonkin.
• Locally sponsored trade shows.
• Advertisement in select publications
• Internet and websites.

The Franchising Business Opportunity in Vietnam

The COVID-19 outbreak in 2020 has affected in a positive way for this franchise business. It somehow accelerated certain franchise opportunities if compared to those past years. 

One of the businesses is e-commerce, it is capturing a fast-growing online delivery market while at the same time minimizing the risk of other future pandemics. Another interesting fact to add is that the health emergency has pushed companies to implement their digital strategies nearly overnight. 

Modern retail will continue to grow faster as traditional markets are seen as less safe, and the number of supermarkets and convenience stores continue to grow at a faster pace to meet the demand.

These are the best franchising opportunities for foreign brands in the country:

• Food and Beverage, including fast food, fast casual, casual and fine dining, snacks and beverages, and desserts.
• Education and Training (for young children, teenagers and adults), and other vocational training franchises (for hospitality management, tourism, and many more).
• Another education franchises that are popular, such as English Language Learning Centers, and other languages (e.g mandarin), STEAM based learning (Science, Technology, Engineering, Art/Dance/Music, Math), Robotics, Computer Programming or Coding, professional skills development training for adults, Information Technology (IT), and Finance.
• Retail, fashion, and lifestyle based franchise, for example convenience stores, fitness & health, children’s entertainment, health supplements franchises, health and beauty spas.
• The rapid increase in car ownership presents good opportunities for franchises to supply the demand, for instance auto repair and maintenance franchises.

As mentioned above, there are still a lot of opportunities to enter the market in Vietnam through franchise business. After getting hit hard by COVID-19, the franchise businesses still survive and operate well. 

If you have a plan to get into the market through franchise, just keep it in mind that you must have the right market for your business. Not to forget about networking and visiting the exhibitions to strengthen your business. In conclusion, if you are unsure and need help, please contact us below. Viettonkin is always ready to assist you anytime!