Figures from the Ministry of Industry and Trade show that since 2007, more than 144 foreign franchises have been licensed in the country.

Market leaders include Lotteria (over 200 restaurants), KFC (over 140), Jollibee (over 40), Pizza Hut (over 40), Baskin Robbins and Domino’s Pizza.

Dinh Thi My Loan, chairwoman of the Vietnam Retailers Association, said that with its high growth rate and a population of 90 million – of whom 60 per cent are young consumers – and modern trade channels accounting for just 25 per cent of retail business, the country is an attractive retail market for foreign investors.

Sean Ngo, director of Vietnam Franchise Consulting, said franchises in Vietnam are forecast to increase substantially given the establishment of the AseanEconomic Community and the free trade agreements the country has signed.

The food and beverage industry has seen franchising develop strongly, especially in the fast food segment, he said.

Food consumption in the country is expected to grow by 61.6 per cent from 2012-17, while nearly half of household expenditure is on food and beverages, he said.

Nguyen Phi Van, founder of Retail and Franchise Asia, said franchising is a common strategy that companies choose when expanding internationally.

In the 10 leading food groups, only two still own more than half of their outlets.

In 2008, Burger King owned 12 per cent of its outlets, but the share fell to 0.4 per cent in 2013, while Subway does not own any outlet, she said.

Franchising has considerable potential in more industries, like education and healthcare.

But to be successful, franchisees need to make sure they have a good business plan and management, she said.

The biggest mistake Vietnamese franchisees make is that they spend a lot of money to buy the franchise but not to build a management team to run it, she said.

Other countries

Van said the franchise market in Vietnam is still in its infancy, and when foreign franchises come to the country, local firms can learn from them how to create their own franchises in the future.

Vietnamese companies could become global franchisers in the food industry, but their poor management prevents them from doing so, she said.

She and the other experts were speaking at the Vietnam International Retail and Franchise show held in Ho Chi Minh City last week.