However, while there is about 80% of failed join ventures in the world, rate of success is up 80% in franchise” –Miguel Pardo de Zela, Trade Counselor of US Embassy in Vietnam shows that the franchise is defined as contractual solidarity between franchisor (producers, wholesalers or service organizations) and franchisee (independent contractor). Accordingly, the franchisor shall lend its brand name and business system. The franchisee shall pay fees (normally free of charge for the first time) to carry out business in accordance with brand name and system prescribed by the franchisor. Nguyen Thi Kieu Huong, Commercial Expert, Trade Affair of US General Consulate makes an example:“ McDonald’s can franchise their brand name to a Vietnamese businessman who will be an exclusive agent, specializing in selling McDonald’s products without but they can still franchise their trade name to any Vietnamese businessman and this person becomes exclusive agent, specializing in selling product of McDonald’s”. According to Huong also, if an agreement is successful, the franchisor will support the franchisee in transferring management skills – from decoration to miscellaneous works such as how to use packing paper…

According to International Franchise Association (US), at present franchise expands over 75 different industrial segments. In Asia, franchise appeared in hotel business to fast food outlets… Nowadays, this field brings more 50 billions dollars of annual turnovers in Asian region. In China, franchise field achieved a great success over last 10 years. More than 50 industrial segments have applied the franchising process from food catering to household service supply…

In 3 recent years, consumed goods in the region have increased averagely more than 10% per year. Nearly 50 top leading companies of restaurant business in China applied franchise business and their turnovers are more increased…

Opportunity for Vietnam?

In Vietnam, Trung Nguyen Coffee Company is a domestic vanguard company in the field as a franchisor who is rather successful in chain of Trung Nguyen Franchised Coffee Shops nation wide. Minh Viet International Company Limited is also succeeding in Fuji film brand name; Kentucky Fried Chicken provides series of fried chicken products to Vietnamese consumers through franchise.

Ho Ngoc Anh, Commercial Expert, Trade Affair of US Embassy in Vietnam considers that “franchise will certainly be developed strongly in Thailand, Malaysia, and Vietnam will also be an attractive market”. At this time, Vietnam has no specific law or regulation about franchise yet. However, according to Miguel Pardo de Zela: “A drafting law of franchise in Vietnam can be promulgated in some coming months and I bet on you that series of American companies will come to Vietnam”. According to US Embassy in Vietnam, a base of this judgment is that, firstly, Vietnam will become member of WTO and a timely promulgation of clear franchise law will just be dependent on the time. Secondly, this field is very conformable to Vietnam, a developing country having many small and medium enterprises want to enlarge their operations. ".