Vietnam Country Commercial Guide
Learn about the market conditions, opportunities, regulations, and business conditions in vietnam, prepared by at U.S. Embassies worldwide by Commerce Department, State Department and other U.S. agencies’ professionals
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Franchising Industry Sector
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Overview

According to the International Franchise Association, Vietnam is one of the most promising franchise markets in Southeast Asia. With a population exceeding 100 million, Vietnam is the world’s 16th most populous nation and the third largest in the region. Moreover, the market has a growing middle class, with over half of the population under the age of thirty-five. The liberalization of Vietnam’s economy over time has created an ideal environment for foreign companies to approach and expand their market share through franchising.

Franchising began in Vietnam in the 1990s with the introduction of well-known fast-food chains like Jollibee (Philippines, 1996), Lotteria (South Korea, 1997), and KFC (USA, 1997). As of September 2023, the Vietnamese Ministry of Industry and Trade (MOIT) reports that there are more than 310 foreign brands registered as franchising businesses in Vietnam. This includes fast food, bakery, coffee, drinks, and restaurants, accounting for over 50% of total franchise contracts signed. Most franchisors come from the USA, Australia, South Korea, Singapore, Thailand, Japan, Hong Kong, Canada, and the Philippines. 
Increasingly, Vietnamese businesses have been exploring opportunities available through franchising. Some active Vietnamese businesses that operate in a franchise model are Golden Gate Restaurant Group (with 40 food brands, and almost 500 restaurants), Redsun ITI Corporation (with 13 food brands and more than 200 restaurants), Highlands Coffee (with more than 800 stores), Trung Nguyen Coffee (with more than 800 stores), AHA Coffee (with more than 70 stores), Café Cong (with more than 70 stores), Ong Hung (Mr. Hung) Pho (with 30 restaurants), FPT Shop (with more than 600 stores), and FPT Pharma (with 1,900 stores). 

Leading Sub-sectors

Vietnam’s food and beverage (F&B) industry recorded total revenue surpassing $26 billion in 2024, reflecting a 13% increase compared to 2023. According to a 2024 report by iPOS.vn, the number of F&B establishments in Vietnam is estimated at 323,010, representing a 1.8% increase compared to the previous year. Based on a nationwide survey of 4,453 diners, the report indicates that consumer spending is on the rise but shifting toward high-quality services at affordable prices. Restaurant services account for over 68% of the F&B industry’s total revenue. The franchise model in the F&B sector is gaining traction as international brands tap into this growing market.

Vietnamese consumers often associate Western brands with quality, an affluent lifestyle, and product reliability. They are responsive to high-end, well-known, premium brands of products and services. At present, most franchised businesses in Vietnam are focused on fast food and retail, but a significant potential exists for a wide range of companies to enter the Vietnamese market. Franchise opportunities are gradually becoming available across the nation in a growing range of brands and sectors.

In Vietnam, franchise businesses in beverages, especially in lemon and milk tea, are very popular. A recent study shows that Vietnam ranked the third largest market for bubble tea in Southeast Asia with a turnover of $362 million in 2021. Dingtea, TocoToco, Tiger Sugar, The Alley, Phúc Long, and Gong Cha have developed early in Vietnam and have gained a large market share. However, as the beverage industry has a relatively short product life cycle, businesses tend to build chain stores quickly in the early stage. In the fast-food sector, the market is currently competitive with several popular local and foreign brands. With strong consumer awareness of the U.S. food and beverages, U.S. franchise brands including McDonalds, Subway, Starbucks Coffee, Burger King, Carl’s Jr, Pizza Hut, Domino’s Pizza, Popeye’s Chicken, Texas Chicken, Dunkin’ Donuts, Z Pizza, Baskin Robbins, and Coffee Bean and Tea Leaf have become key players in the market. It is also important to consider the increasing popularity of food delivery services in Vietnam.

According to iPOS.vn, the market value of Vietnam’s F&B industry was projected to reach over $27.3 billion in 2024, marking a 10.9% increase from 2023. The F&B industry in Vietnam demonstrated a growth rate of nearly 11.5% in 2023, achieving revenues of over $23.6 billion. Looking ahead, the food service market is projected to grow at an annual compound rate of 9.7%, potentially reaching $36.86 billion by 2027, according to Research and Markets. With strong Vietnamese consumer awareness of American F&B offerings, U.S. fast food franchisors are key players in the market. Besides the fast-food sector, the franchise convenience store model has also gained traction with various brands, such as Circle K, Family Mart, and Seven-Eleven, expanding quickly in large cities. Circle K opened its first store in December 2008 and has expanded to over 400 stores in Vietnam.

Retail, education, entertainment, healthcare, beauty-care, children’s services, and lifestyle-oriented businesses are other growing franchise segments. 

Opportunities and Challenges

There are several factors that have contributed to the growth of the franchise market:

  • 60% of the population is under 40 years of age, and per capita GDP is approximately $4,700 and on the rise. Over the next decade, 36 million more consumers may join Vietnam’s consuming class, defined as consumers who spend at least $11 a day in purchasing power parity (PPP) terms, according to recent McKinsey Global Institute research. American brands have a reputation for quality, especially in southern Vietnam. Best prospects for American franchisors include fast food, business services, health and nutrition, education services, health care, children’s services, cleaning and sanitation, hospitality, fashion, entertainment, and convenience stores.
     
  • According to Franchising.com, finding licensee candidates with established infrastructure, experience running a business, and capital is a problem. In addition, retail space has become extremely expensive in Ho Chi Minh City and Hanoi

Although franchising can be very lucrative in Vietnam, there are significant challenges:

  • Vietnam’s unique street food culture: Vietnam has a rich street food culture with diverse dishes, unique flavors, and healthy ingredients. This culture can create difficult competition for foreign brands. 
  • Convenience: Street vendors are ubiquitous and can be easily found on every corner, particularly in cities.
  • Competitively low cost: The average cost of typical Vietnamese meals is between $2–3, which can be one-third or even one-quarter the cost of foreign franchise meals. Local firms are wary of new concepts that require high investment despite the economic recovery after the COVID-19 pandemic. They are also reluctant to invest in a new brand that does not have a strong track record in the region.
  • Demographics: Young adults have emerged as a key consumer group in Vietnam’s F&B market, characterized by an adventurous nature and willingness to spend on novel dining experiences. This entails prioritization of convenience, driving the growth of medium and small beverage models designed for take-away and delivery with affordable prices. However, low brand loyalty poses a challenge for F&B brands, requiring continuous innovation to retain this dynamic segment.
  • Real Estate Challenges: Finding suitable and affordable locations can be difficult in the face of rapidly emerging modern retail channels and retail development in Ho Chi Minh City and Hanoi.
  • Respect for intellectual property: U.S. franchisors should register their intellectual property, including URLs and websites, and be prepared to take legal action against IP violators. Additionally, it is worth noting that many local franchises may not have a full understanding of brand value/integrity and/or legal regulations relating to franchising. Thus, it is crucial to identify and conduct due diligence with potential partners to determine their suitability and financial capability

Resources

For more information about Vietnam’s franchising sector, please contact:

Ms. Ngan Thai, Commercial Assistant
U.S. Commercial Service - Hanoi, Vietnam
E-mail: Ngan.Thai@trade.gov

Mr. Thao Nguyen, Commercial Specialist
U.S. Consulate General in Ho Chi Minh City
E-mail: Thao.Nguyen@trade.gov

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