Group 2: Nguyn Th Thanh Ngn on Giang Sn Nguyn Minh Qun Phm Ngc Dim Trn Thun Tn Trn Ngc

Oanh Nguyn ng Ht

Lecturer: Dr. Chris Quach

General information about Franchise

II
II

Franchise in Vietnam
Recommendation for Franchise in VN

outline
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I.General information about Franchise What is a franchise?

A form of business organization in which a firm which already has a successful product or service (the franchisor) enters into a continuing contractual relationship with other businesses (franchisees) operating under the franchisor's trade name and usually with the franchisor's guidance, in exchange for a fee.

Types of franchises
There are THREE basic types 1. Product Franchises: distribute goods and use name & trademark 2. Business Format Franchising: a proven method provided for operating business
3.

Manufacturing Franchise: right to manufacture product and sell to public

Thinking about buying into a franchise system

How Franchising Works

How franchising works
What fees are involved What is expected of you from the franchise company

Buyer: A FRANCHISEE ============== Seller : FRANCHISOR The franchisee must follow certain: - Rules and guidelines already established by the franchisor - Pay an ongoing franchise royalty fee Franchising has become one of the most popular ways of doing business in today's marketplace 5

ADVANTAGES
Franchisor: good opportunity to market products in new markets with considerable cost & licenses fee Franchisee: benefit from brand name and business model that take long time to build up Customers: services and goods brought nearer to them

Franchisor: risk of having reputation ruined by incompetent franchisees Franchisee: in a precarious position in the event of a dispute cause the agreements are highly skewed in favor of the franchisers

RISKS
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CHOOSING A FRANCHISE OPPORTUNITIES

1. 2.

Market Trend Territory Coverage

3.
4. 5.

Company Support
Exit Strategy Franchise Business Plan
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II. Franchise in Vietnam

1. Overview of Franchise in VN

Multinational Companies

Domestic firms

According to the countrys Ministry of Industry and Trade, up to 70 foreign brands have registered their franchising business in Vietnam and franchising growth is up 30%.
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Compared to other Asian nations

Flat but potential for international franchisers due to difficult market conditions

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VIETNAM

>10 00
PHILIPPINE

>26 00
CHINA
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Government support
The 2005 Commercial Law

Government Decree 35 of 2006 Circular 09 of the Ministry of Industry and Trade of 2006 Decision 106 of the Ministry of Finance of 2006.

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SWOT ANALYSIS of FRANCHISE

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STRENGTHS
It is new & potential Vietnamese regulation for franchise effected on 2005 Government open doors for 100% foreign companies Other factors : fast growth, mass young consumers, higher average of income

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WEAKNESSES
Inconsistency and overlapping on regulations of franchise Most of domestic firms are lack of franchising experience or knowledge Some franchising agents are not united (inconsistency in designs, decorations, business concept, taste...)

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OPPORTUNITIES
Domestic demand for food and drinks from foreign increases-> franchising is predicted to
grow 50% on 2014 Potential to broaden franchise in other industries Domestic firms join into franchise market more and more -> Franchise activities get hotter

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THREATS
Domination of foreign companies in franchise network Franchisors can lose their brand if the franchisees follow exactly instruction and obligations of franchisors

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