Franchising

Most cross-border franchises in Vietnam are in the food and beverages industry (as you can see from chains like McDonald's, Starbucks, etc.).

Depending on the business, foreigners can have 100% ownership in LLCs. However, restaurants are trickier and, at least until January 2015, foreigners won't be able to own companies in this business without also being in the hotel business.

Personally, I see huge potential for franchising in Vietnam. There are a bunch of regulatory hurdles that need to be passed but they are not overly burdensome. Sure, there are issues regarding intellectual property, etc. but from personal experience, big franchisors will take a hard stance against infringements once they have a footprint in the country.

For investors with the money, franchises are attractive because they are less risky than opening up a whole new business and thanks to them still being relatively innovative in the country, have return potential. I expect to see much more franchised businesses in Vietnam next year.

Franchises in VN are expensive,Subway was asking 100,000 usd for franchise,training and fit out. That's a lot of sandwiches to recoup your money. One Australian franchise here has already failed and shut down,I would be wary as the laws in VN are very weak and copying is the norm here.

My advice is you should franchise only brands that Vietnamese people are familiar. In this case, many American brands win.
Sadly to say most of Vietnamese people are lazy to explore the world, even just on internet to know how this world is. It will cost you lot of money & time to give them good brand awareness before you can earn money, no matter how good, famous that brand is in its' origin country.

Scarletvn wrote:

My advice is you should franchise only brands that Vietnamese people are familiar. In this case, many American brands win.
Sadly to say most of Vietnamese people are lazy to explore the world, even just on internet to know how this world is. It will cost you lot of money & time to give them good brand awareness before you can earn money, no matter how good, famous that brand is in its' origin country.

Another thing could be that VN's are so used to just opening a business, and calling it anything they like, and selling whatever they can get, from wherever, ( although I do remember seeing it was against the law to use all, or some English words in your business name?, but that doesn't seem to stop anyone ) .

AMWAY was here but they withdrew as profits weren't as great as expected. A VN friend, who is very good at marketing (Western style) had thousands of agents - he lost out big time when they left.

Herbalife is still hanging on but the have regulatory and financial problems in the USA. They are an outfit to avoid as they use pyramid schemes.

These Franchisors are only coming in due to the WTO agreement. If Metro couldn't make it, with or without tax fiddles, the chances are others will fail too.

Some international schools and language joints are linked to franchise outfits, as well.

' Some international schools and language joints are linked to franchise outfits, as well.'
Yes, AMA is one. There is a Global English in QN, ( 300+ students, 3 Native English Teachers, ( real ones ), and another Global English in Da Nang, which has " Visitor  Teachers ",  but they have no relationship  to one another.

Is it possible to bring a 24 hour fitness franchise into District 1 as a foreigner?

LaxFogo wrote:

Is it possible to bring a 24 hour fitness franchise into District 1 as a foreigner?

Would you even need a Franchise to do it? Just have a name very similar, many seem to get away with that.  24hrs might be pushing it with a gym here though?

bluenz wrote:

LaxFogo wrote:

Is it possible to bring a 24 hour fitness franchise into District 1 as a foreigner?

Would you even need a Franchise to do it? Just have a name very similar, many seem to get away with that.  24hrs might be pushing it with a gym here though?

I don't know much about businesses in Vietnam, that I'll admit. But what I don't understand is the insane prices for a gym membership that is up to par with what I'd get in the states.

A 24hrs model will definitely work in Vietnam as it works in the states because HCM is a lively city.

A typical Golds in the state have around 4-5k members, each paying roughly 25$ per month, and thats with tens of thousands of gyms across the US and Vietnam have a denser population.

I'm currently paying $100 a month for my membership at the Gym at saigon pearl, and thats an outrageous amount for such a small facility.

LaxFogo wrote:

bluenz wrote:

LaxFogo wrote:

Is it possible to bring a 24 hour fitness franchise into District 1 as a foreigner?

Would you even need a Franchise to do it? Just have a name very similar, many seem to get away with that.  24hrs might be pushing it with a gym here though?

I don't know much about businesses in Vietnam, that I'll admit. But what I don't understand is the insane prices for a gym membership that is up to par with what I'd get in the states.

A 24hrs model will definitely work in Vietnam as it works in the states because HCM is a lively city.

A typical Golds in the state have around 4-5k members, each paying roughly 25$ per month, and thats with tens of thousands of gyms across the US and Vietnam have a denser population.

I'm currently paying $100 a month for my membership at the Gym at saigon pearl, and thats an outrageous amount for such a small facility.

Sounds good, but VNs are not fitness fanatics.

bluenz wrote:

LaxFogo wrote:

bluenz wrote:

Would you even need a Franchise to do it? Just have a name very similar, many seem to get away with that.  24hrs might be pushing it with a gym here though?

I don't know much about businesses in Vietnam, that I'll admit. But what I don't understand is the insane prices for a gym membership that is up to par with what I'd get in the states.

A 24hrs model will definitely work in Vietnam as it works in the states because HCM is a lively city.

A typical Golds in the state have around 4-5k members, each paying roughly 25$ per month, and thats with tens of thousands of gyms across the US and Vietnam have a denser population.

I'm currently paying $100 a month for my membership at the Gym at saigon pearl, and thats an outrageous amount for such a small facility.

Sounds good, but VNs are not fitness fanatics.

Yeah Americans aren't either, its just the "cool" thing to do right now and I'm sure Vietnam will pick that up soon.

I've done some research and it seems that cost of staffing, renting a venue and etc all are cheaper in Vietnam...yet the gym memberships can be priced at outrageous prices due to low competitions. Surely this is a gold mine, why hasn't any investors picked up on this? Or is it because of the strict laws of the Vietnam.

If you can get even 3k members, and charge 40$...thats 120k gross a month.

bluenz wrote:

Last night a student asked MANY questions re Franchises in VN, I know this month the law was changed regarding Foreign ownership, ( now 100%, does this also mean a LLC can now be solely owned by a Foreigner now? ), ), he wanted to know if buying a Franchise was a good idea in VN, I explained , probably not as good as in Western countries where copyrights, etc , are protected, what are other members views on this?

Difficult to give a simple answer. Regarding franchise opportunities in the F&B sector, I have some opinions.

From what I see or hear (talking to franchise brokers, investors etc..), there seems to be a trend looking for smaller or new F&B brands because you tend to have more freedom VS being tied to control products and required to purchase everything from the napkin and toothpick to ingredients, foods and beverages from designated providers with a nice markup or directly from the franchisor, often resulting with nearly no profit.

I suspect we'll be seeing quite a few new brands from Taiwan and other Asian nations coming into VN (pizza, burger, ice cream, Asian foods, everything you can think of). The same is the case in Cambodia, Laos and also Myanmar!

But in general, I would think it really depends on the agreement terms, the support you'll get or what duties/rights you have and it needs to be judged individually. In the US a franchisor is required to submit a discloser document which lists every detail. I think it is a good thing because a franchise agreement may not point out certain things in detail or leave a lot of room for error. F.e. you may find something like “estimated investment” + “assumption is based on our experience” without having to either explain that “experience” nor being bound to exact figures. In the US you need to disclose this accurate or the franchisor is setting himself up for a lawsuit for “misrepresentation or lack of disclosure” if the franchisee “suddenly” faces higher investments than “assumed”.

However, an F&B Franchise is probably less risky than doing something by yourself. Statistics show/say an F&B business without franchise has a lower survivability rate than a franchised one. None franchised F&B business show: 38% close in the 1st year, 75% closed by the 5th year and 82% by the 10th year VS franchised: 3% in first year, 8% in 5th year and 10% in 10th year.

Other statistic show that under a franchise sales/employee tend to be 30% higher, payroll 5-10% lower and overall sales up to 70% higher.

A franchised business can profit from R&D, professional marketing, brand recognition, established training program  etc, etc, VS finding it all out “the hard way”.

But there is never any guarantee and in all FA's I have ever read it always said, ”we cannot promise or guarantee the success of your business”.

Less not forget one thing,this is Viet Nam not the USA where you are protected. Here anyone can start in opposition using the same branding and products at a much cheaper price.