Be proactive about franchising to take advantage of opportunities

Over the past time, franchising in Vietnam has been quite active. However, besides the positive side, in your opinion, what are the main shortcomings that should be noted in this activity?

In the Vietnamese market, it is important to assert that franchising is very active, but it focuses on a number of commodity groups, popular products, typically food products. Over the past few years, new franchises have been expanded into other categories such as education, accounting services, logistics, some retail models ... franchise activities are taken place less in other sectors. Meanwhile, Vietnam is in desperate need of franchising in areas that require more intelligence, providing better products.

In addition, there are many problems needing to be discussed in the issue of management with franchising. At present, Vietnam has Decree 35/2006 / ND-CP dated March 31, 2006 detailing the Commercial Law on Franchising and a guiding circular issued by the Ministry of Industry and Trade on commercial franchise. However, the status of franchise development is sometimes out of control. Even though there are franchise systems, there are businesses providing poor quality products. It seems that the control of franchise systems has not been implemented well. This should be better implemented to avoid abuses by franchises implementing programs that affect the interests of consumers, such as the sale of non-quality products, unclear origin.

Many views consider that it is the lack of understanding of franchise activities as being one of the key reasons that domestic companies have not deployed this business model effectively. What is your opinion?

In fact, the domestic companies have no real knowledge about franchising to organize a franchise business, enterprises often rely on trusted individuals and organizations. For example, companies rely on law firms. Many companies do not understand the nature of the franchise so they conduct mass franchise activities, lack of control, affecting the prestige of a brand.

In general, some domestic companies go too easily into franchising so the system may lose control, reducing a brand’s prestige. At the same time, it must be said that the franchisees themselves do not have sufficient knowledge. When franchised, the franchisee does not comply with the provisions of the contract, improperly follows the process, standards, manner, business model as well as communication culture ... Even when a unit has got the business rights, they then falsify, make low quality products with cheaper prices. Many franchise stores have not been able to keep up. This damages both the franchisor and franchisee as well as the economy.

While the understanding of franchising by domestic enterprises is quite limited, the foreign business franchise’s knowledge is the opposite. Foreigners in Vietnam have very strict franchise requirements with the franchisee, from the business space, distance from the franchise location, geographical characteristics, geographic location to the preparation of facilities. ... when foreign companies decide to come to Vietnam to franchise they have systems with rich experience and experts to carefully consider and control the risks.

In franchising, Vietnamese enterprises are mainly franchisees. What are the real sustainability benefits that franchisees can gain when joining franchisees from foreign franchise companies?

With franchise activities, the franchisor imposes franchisees to do business in accordance with the model. Therefore, the franchisor must always train the franchisee, passing on certain secrets. If the franchisee is aware of the problem, the franchisee will have more knowledge and business skills after the franchise.

The most important thing for the franchisee is to go through the franchise process to learn management skills, to learn the secrets, and secrets of doing business with the commodity groups and develop their own system. In fact, the government also wants to advance management skills through franchise activities so that Vietnamese businessmen have more skills and business knowledge.

Up to now, many Vietnamese franchisees have done well in franchising, such as BBQ, KFC, Lotteria, etc. The typical example of the secret learning story and the development of the franchisee system is Sumo BBQ restaurant system. After receiving the rights from foreign enterprises, learning the experience, enterprises have separated to build their own systems successfully, then franchise to other units. However, there are not many franchise units that can do that in Vietnam.

In case the franchisee could not learn to develop his own system, without investment, his life will have developed the brand for others.

Vietnam is increasingly involved in many Free Trade Agreements (FTAs), especially with newer and more advanced FTAs. In your opinion, how will this impact on franchising in Vietnam in the future?

The extensive economic integration, especially the participation of many FTAs will certainly make the franchise business in Vietnam more exciting. FTAs are all about opening the market. The most important feature of new generation FTAs that is discussed is about the rights of business. Commitments in FTAs allow foreign traders to come to Vietnam more easily and do business more conveniently. Even foreign companies can bring their human resources from their country to Vietnam.

Importantly, the Vietnamese market is still lacking in many things, especially the modern business model, lacking in many well-known brands in the world market. For example, in the training field, many upcoming franchise models may emerge in Vietnam such as high quality training, hands-on training. Foreign enterprises can bring a complete model of training from abroad to Vietnam through the available facilities to develop the training model from pre-school to university and post-graduate. In addition to education, franchise models related to food, food, medical care or commerce, retail ... will also flourish in Vietnam.

Please tell us, what is the feasible solution to help Vietnamese companies make better use of opportunities from franchise activities in the future?

The first need is to make the Vietnamese businessmen understand more about franchising. Doing that, state management agencies should provide more information. Relevant regulations and legal documents should be improved in the propaganda and dissemination through training, seminars and forums.

Not all branches are interested in franchising and not every franchise industry is feasible. However, from the point of view of associations, branches, besides the voice of state management agencies, associations also need to step up the dissemination of information and provide information to member companies to help businesses understand more about franchising.

However, above all, the most important factor is the initiative of enterprises. Enterprises themselves have to learn to master franchising, thus taking advantage of the opportunities.

Thank you Sir!