Franchise business in Vietnam still weak
HANOI – The brand of Vietmac rice burger, a Vietnamese-style fast food made from rice patties, on Wednesday officially opened the first outlet in HCMC under the franchise model.
The outlet located at 207 Nguyen Van Troi in Phu Nhuan District was opened after six others had been operated successfully in Hanoi, said Nguyen Thanh Duong, Vietmac’s managing director. Duong also expects to open some 40 outlets in HCMC in the next two years.
Vietmac late last year announced a franchise worth US$2.25 million with a partner in HCMC, Ton Van Co., a shell button company wanting to expand its business scopes.
The cost of rice burger franchise is not high, but the difficulty lies in ensuring a good taste for rice. To attract consumers in HCMC, the franchisee offers 27 kinds of rice burgers.
According to EuroMonitor International, Vietnam’s fast food market recorded around 19.7 million transactions from outlets having better-known brand names with revenue of some VND869 billion in 2010 and an annual growth of 26%. Experts said the fast food market in Vietnam was still potential for investors if they focused on Vietnamese specific tastes.
* The number of franchises in Vietnam has increased compared to previous year but is still low, according to the Ministry of Industry and Trade.
According to the ministry’s report, the franchise business is quite weak as this model is not very popular in Vietnam. There were around 20 foreign franchise firms licensed last year, mostly coming from developed countries such as the UK, the U.S. and Singapore with famous brand names.
The report showed that most of these franchises were active in the food, beverage and fashion industries.
Meanwhile, foreign firms have complained about difficulties in obtaining distribution and retail licenses. In the White Book 2012 of trade and investment issues, the European Chamber of Commerce said restrictions on the distribution and retail sectors should be removed to lure foreign investors into these sectors.
Currently, Vietnam still applies the Economic Need Test with some special criteria to limit the number of foreign-invested retailers. However, conditions of such criteria are deemed vague.
