VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS Bui Thi Thanh Tam DEVELOPING A FRANCHISE BUSINESS IN VIETNAM THE CASE OF PHO 24 MASTER OF BUSINESS ADMINISTRATION THESIS Hanoi – 2010 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS Bui Thi Thanh Tam DEVELOPING A FRANCHISE BUSINESS IN VIETNAM THE CASE OF PHO 24 Major: Business Administration Code: 60 34 05 MASTER OF BUSINESS ADMINISTRATION THESIS Supervisor: Dr. Hoang Anh Tuan MBA, Ha Nguyen Hanoi – 2010 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com TABLE OF CONTENTS ACKNOWLEDGMENTS .iv TABLE OF CONTENTS ……………….vi LIST OF ABBREVIATIONS ………….……ix LIST OF FIGURES AND TABLES ……………. The thesis title …………………………………………………………………. The thesis necessity ……………………………………………………………….
The thesis structure …………………………. Suggestion for future research ……………………………………………………. 4 CHAPTER 1: LITERATURE REVIEW……………………………. Overview of Franchise………….
The concept and definition. History and Evolution of Franchise……………………………………. Basic factors for developing a Franchise system ………………………8 1. The Process of Franchising ……………………………………………12 1.
Control franchising system……………………………………………. Classification of Franchise models………………. Full business format franchise ………………. Non- business format franchise …………….17 vi LUAN VAN CHAT LUONG download : add luanvanchat@agmail.
Method for developing Franchise system ………………………………………. Single – Unit franchise. Area development franchise……. Signification for Franchise Business……….
25 CHAPTER 2: AN OVERVIEW OF THE FRANCHISING BUSINESS IN VIETNAM ……. Legal Framework Franchise in Vietnamese ……………………. The Business in Vietnam ………………………………………. Factors that influence of franchise activities …………….
Tendency and challenge of developing in form of Franchising at Vietnam business. Tendency of developing in form of Franchising at Vietnam business. Risk and Challenge of developing in form of Franchising at Vietnam business.41 CHAPTER 3: THE CASE OF PHO 24 ……. Basic factors for developing a Franchise system ………………….5 An operation manual of Business and Instruction material business action …………………………………….
Achievements and challenge of Pho 24 ……………………. Achievements of Pho 24………………………. Challenges of Pho 24……………………………. Action plan of Pho 24………………………….4 Advice for Pho 24……………………………….64 vii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.4 Solutions for Developing a Franchise Business in Vietnam and Recommendation to the Government ………………………………………….
73 Appendix A: Franchise Statistics – Why does people buy franchise …………….73 Appendix B: Ranking of motivational incentives to enter franchising ……………. 75 Appendix C: Co-Founder and CEO’s Pho 24………. 76 Appendix D: Development process …………. 78 Appendix E: Pho 24’s Restaurants ……………………………………….
80 viii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF ABBREVIATIONS WTO World Trade Organization UFO Unit Franchise Organization LIST OF FIGURES AND TABLES Figure 1.2 Single – Unit Franchise.3 Area Development Franchise ……………….1 Choosing factors affect Pho 24…………………….2 Factors for Pho 24………………………………………. 56 ix LUAN VAN CHAT LUONG download : add luanvanchat@agmail. The thesis title DEVELOPING A FRANCHISE BUSINESS IN VIETNAM THE CASE OF PHO 24 2. The thesis necessity Franchise, one of the methods to develop businesses, is very popular but still new in Vietnam.
The global integration creates new opportunities and challenges to the Vietnamese. Foreign companies will have more opportunities to penetrate Vietnamese market and Vietnamese enterprises also have opportunities for development abroad as well. Therefore, popular model business in the world will have opportunities to develop in Vietnam, and also business development in form of franchise is not an exception case. Franchising is considered to have many advantages for both sides in run franchising.
After joining WTO, Vietnam has become a potential market for franchise. In fact, Franchising business in Vietnam has developed rapidly in recent years and information about franchise is more and more popular. Moreover, the knowledge of franchise still limited to the Goverment, business and consumer sector. A research on how franchise business work effectively is therefore useful for companies, as a consideration to expand their operation.
This thesis is to build appropriate franchise business For Pho 24 Restaurant’s development. The research has also added value to the method franchise that useful for business development, by giving recommendations and proposing an action plan, which can be applied in franchising business in Vietnam. For this reason I choose thesis topic: “Developing a Franchise Business in Vietnam - The case of Pho 24” 1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail. Objectives The objective of the thesis is given the theoretical basis of the franchise, analyze the reality franchise in Vietnam recent year; Using the tools and knowledge gathered to analyze evaluate, the case of Pho 24.
In addition to propose a solution and action plan to help enterprises successfully applied the strategy of choice, thesis offers some recommendations to the State in planning and management to sustainable development the reality franchise in Vietnam. Methodology This thesis applies the case study to franchisor Pho 24 Restaurant. The research has been prepared mainly through desk research, not analyze financial norm, only reviews of available literature and data through fourth basic steps: First step is to review theories of franchise. The study focuses on the literature view of existing approaches to franchise definition and some basic factors that effect to franchise business.
Second step is based on the research of franchisor in Vietnam and finds out specific factors that influent the business success. Third the case study of Pho 24 is analyzed, show the advantage and disadvantage in franchise business development. This analysis allows giving some basic solution and recommendation for business development in form of franchise in Vietnam. Data sources The theoretical review and collection of secondary data has been performed by research of books, reports, newspapers.
The primary data was collected through internet and interviews with Pho 24’s managers in many newspapers in recent years. 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail. Significance By reviewing the theory of Franchise and understanding the impacts of business environment, the thesis benefits Pho 24 Restaurants Franchise. This theoretical approach can be applied or choosing good points in cases of other companies using franchise method to develop business.
Expected results The result of this thesis is to give basic solutions for franchisor’s Pho 24 Business and for further business development in form of franchisor in Vietnam Business. The methodology is expected to be effectively applied in the case study of other companies in franchising 8. Limitations The study is limited in the sense that just a small business with the wide field in market and this thesis only research on desk study, not analyzed about financial norm of company so the applying this on other business will be limited. The thesis structure The thesis is started with the introduction part, following by three chapters and the conclusion part.
Chapter 1: Literature Review – This chapter provides a fundamental review of franchising Chapter 2: An Overview of Franchising Business in Vietnam – This part analyses the reality for Business development in form of franchise in Vietnam. Chapter 3: The Case of Pho 24 – The chapter presents the case of Pho 24 Restaurant and analyzes its environment to give some advises to develop Pho 24. The chapter also suggests sollution and recommendations to the Government on developing a franchise business in Vietnam. 3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.
Suggestion for future research The rapid change of basic factors, competitive tends, like technological advances, law, and customer’s lifestyle, creates both opportunities and challenges to the franchise field and Pho 24 Company. Therefore, it could be interesting if further research with larger sample size could be undertaken to confirm fully the finding of this study. 4 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com CHAPTER 1 LITERATURE REVIEW 1.1 Overview of Franchise 1.1 The concept and definition. The word "franchise" is derived from the Anglo-French word meaning “liberty.” In Middle French, it is “franchir”– to free.
In Old French, it is “franc,” signifying free. The French term “francis” means granting rights or power to a peasant or serf. The English term “enfranchise” is defined as empowering those who have no rights. The term “Royal Tithes” is the predecessor of royalties, and originated as the practice of certain English men (referred to as “freemen”) receiving a percentage of the land fees paid by serfs to nobility 1.
Throughout history, franchising has promoted economic liberation, synergy, and opportunity, and has been true to its etymological roots – “freeing” commerce from many of the traditional chains that had bound it. Naisbitt’s 2 famous comments in Megatrends is no exaggeration – “Franchising is the single most successful marketing concept ever.” Franchising is one of the only means available to access venture investment capital without the need to give up control of the operation of the chain in the process. After the brand and formula are carefully designed and properly executed, franchisors are able to sell franchises and expand rapidly across countries and continents using the capital and resources of their franchisees, and can earn profits commensurate with their contribution to those societies while greatly reducing the risk and expense that would be inherent in conventional chain operations. So the franchisor3 owns the overall rights and trademarks of the company and allows its franchisees to use these rights and trademarks to do business., The Franchise Fraud (1994), at p.
January 15, 1929 in Salt Lake City, Utah) is an American author and public speaker in the area of futures studies. His first book Megatrends was published in 1982 3 http://franchises.com/od/franchiseglossary 5 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com franchisor usually charges the franchisee an upfront franchise fee for the rights to do business under the franchise name. In addition, the franchisor usually collects an ongoing franchise royalty fee from the franchisee. Franchisee is the person or the entity which has acquired the rights of conducting the business from the franchisor or licensor.
This part provides a brief timeline of developments franchising, the basic factors for building a franchise system, classification of franchise models and finally, signification for franchisor businesses. The Vietnam Commercial law No 36/2005/QH11 passed in June, 16 2005 said: “Franchising is a commercial action; in there franchisor allows and requests franchisee trade goods, support services according to some conditions: 9 Trading goods and support services was made available by franchisor that was fixed and it is stick on trade mark, brand name, logo, slogan and business key, advertising of franchisor. 9 Franchisor has power to control and help franchisee in running business.” 4 So natural of franchise is one business transfer business model in order to distribute goods, services for partners but they still keep basic norms of model and satisfy right of both side. When they joint in franchise, they have agreement together and make transfer contract with simple terms about responsibility and authority of each side.2 History and Evolution of Franchise Franchising dates back to the 1850s; Isaac Singer, who made improvement to an existing model of a sewing machine, wanted to increase the distribution of his sewing machines.
His effort, though unsuccessful in the long run, was among the first franchising efforts in the United States. A later example of franchising was 4 Vietnam Commercial law No 36/2005/QH11,. pp 72 6 LUAN VAN CHAT LUONG download : add luanvanchat@agmail. Pemberton's successful franchising of Coca-Cola.
Early American examples include the telegraph system, which was operated by various railroad companies but controlled by Western Union, and exclusive agreements between automobile manufacturers and operators of local dealerships. 5 Modern franchising came to prominence with the rise of franchise-based food service establishments. This trend started before 1933 with quick service restaurants such as A&W Root Beer. In 1935, Howard Deering Johnson teamed up with Reginald Sprague to establish the first modern restaurant franchise.
The idea was to let independent operators use the same name, food, supplies, logo and even building design in exchange for a fee. The growth in franchises picked up steam in the 1930s when such chains as Howard Johnson's started franchising motels. The 1950s saw a boom of franchise chains in conjunction with the development of the U. interstate highway system.
Fast food restaurants, diners and motel chains exploded.