Franchises target AEC
Thai franchises are hungering to take a bite of the huge borderless market opening up under the Asean Economic Community (AEC) in early 2016.
At the Business Development Department’s exhibition on “Four Decades of Thai Franchises” yesterday, many local operators were keen to go international by penetrating the Asean market.
They said Asean’s integration would open doors for them to find overseas partners to help serve the massive market of 600 million consumers.
Boonprasert Pupan, managing director of N&B Pizza Crepe Co, said he had plans to start franchise businesses in other Asean countries – mainly Singapore, Malaysia, Myanmar, Laos and Cambodia – in 2016.
“To test Asean customers’ demand, the company has set up branches in border provinces so that we can begin learning the needs of neighbouring countries,” he said.
After starting its franchise business in 2009, N&B now has 105 branches nationwide, including in Nong Khai across from Laos, Hat Yai in Songkhla across from Malaysia, Mae Sot and Tak across from Myanmar, and Sa Kaew across from Cambodia.
The company is also hiring a consulting company to come up with a strategy to dive into other Asean countries.
A partner would be found in each country for each target market to act as the “master franchise” for setting up more branches in the country. For the first full operating year of the AEC in 2016, the firm plans to have about 10 branches in that market.
It projects Bt200 million in sales after branching out to Asean – up from Bt150 million expected this year and Bt100 million realised last year.
For this year, it plans to add 20 outlets in the domestic market. It is negotiating with Central and The Mall department stores, as well as PTT petrol stations, to host its branches.
The firm has formed a research and development team to design products and packaging.
Saward Mitaree, president of the Franchise and License Association, said about 20 per cent of local franchises were efficient enough to penetrate Asean and overseas markets. They are mainly in the food, restaurant, education and service businesses.
Local operators should learn each country’s rules, create outstanding products and secure the right partners to enter other countries, he said.
The government should use the Franchise Business Law to ensure protection and development for local enterprises after Asean integration because other franchise operators in Asean countries will be able to do business in Thailand, Saward said.
Peerapong Kitiveshpokawat, chief executive officer of Business Coach and Consulting, said many Thai franchises had high potential to grow in the Asean market.
Key success factors for franchisers include having a strong brand, leadership ability, experienced training and support team, customer loyalty, a dedicated and strong network of franchisees, and an efficient business model and operating system.
Since 2006, the franchise business has doubled in size and is surging 30 per cent a year.
Pongpun Gearaviriyapun, director-general of the Business Development Department, said Thai franchises were expected to grow by 15-20 per cent a year.
Already about 20 Thai franchises are conducting business in more than 30 countries, mostly in Asean, the Middle East and Europe. Not only large firms can invest abroad, but also franchisers with a clear business model.
In Thailand, the franchise business is worth about Bt250 billion.
