International companies are increasingly focusing on the Vietnamese fashion market, aiming to establish their presence through franchising agreements. Since joining the Vietnamese market in September 2016, Zara Vietnam’s revenue has continuously increased, with an average daily revenue of 2.8 billion Vietnamese dongs,” cited as an example by Ms. Hau.
In reality, to tap into the Vietnamese fashion market, foreign brands have consistently expanded their retail systems. In the last months of 2022, Uniqlo successively opened three new stores in Hanoi. As a result, within just 3 years of its presence in Vietnam, this Japanese brand has established 15 retail stores nationwide.
Similarly, in the final months of 2022, the MLB clothing brand (from South Korea) for the youth market opened three large stores: SC Vivo City, Aeon Mall Binh Tan (Ho Chi Minh City), and Vincom Plaza Ngo Quyen (Da Nang). As of the current moment, this brand has a total of 18 stores across the country, out of which 7 new stores were opened in 2022, including Aeon Mall Ha Dong (Hanoi), Vincom Bien Hoa (Dong Nai), Crescent Mall, and Street shop Nguyen Trai (Ho Chi Minh City).
While not disclosing specific business results in Vietnam, Fredrik Famm, the CEO of H&M Southeast Asia, mentioned that Vietnam is expected to become H&M’s 68th global market.
Recent online surveys conducted by Nielsen have shown that Vietnam ranks third in the world for brand preference, with 56% of Vietnamese people willing to spend money on branded goods, following China (74%) and India (59%) only. This indicates that as the economic conditions continue to develop, Vietnamese people are increasingly interested in clothing, leading to a rise in fashion-related consumption. Foreign fashion businesses have been accelerating their investments to explore the Vietnamese market in recent times.
I. What Is Fashion Brand Franchising? Roles Of The Parties In Fashion Brand Franchising.
1) Definition
Fashion brand franchising is a term used to describe a business arrangement where an individual/individual organization known as the franchisee is granted rights. When participating in this model, the franchisee is allowed to use the fashion brand, and services owned by the franchisor for business purposes within a specified period, and in return, pays a franchise fee.
The concept of brand franchising is relatively common, and nowadays, this business activity has evolved into an integrated operation spanning from Marketing to business and distribution activities.
Businesses choose franchising when and only when the franchisor owns a sufficiently large brand, desires and has the capacity to expand the brand, but lacks the necessary financial resources, and the franchisor’s business model has proven profitability. On the other hand, the franchisee agrees to abide by the franchisor’s brand agreements and aims to bring benefits to both parties.
2) Roles of the franchisor and franchisee
a) For the franchisor:
- Provide comprehensive guidance documents, and operational solutions, and maintain brand assets for the franchisee. Offer various forms of support and exercise control over certain activities of the franchisee when necessary to protect brand assets.
- Take responsibility for costs related to training initial staff and management personnel, as well as marketing expenses for the franchisee.
- Treat the franchisee fairly and with respect.
b) For the franchise:
- Pay franchise fees and royalties to the franchisor in exchange for the right to use fashion brand assets and receive guidance and operational support.
- Physical facilities, premises, manpower, salaries, etc., will be covered by the franchisee’s investment.
- Not allowed to use the brand to open another business establishment create similar fashion products, or engage in any actions that could impact the brand’s reputation.
- Accept the control, guidance, and decisions of the franchisor.
- May propose ideas and methods for improvement to the franchisor
II. Advantages & Disadvantages Of Brand Franchising
1) For the franchisor
a) Advantages
- Utilization of capital from the franchisee: In the brand franchising model, the franchisee invests a sum of money into the business model of the franchisor. As a result, the franchisor doesn’t need to invest extensively to expand the business model.
- Faster business expansion: Business expansion is a crucial concern, but it often faces limitations in terms of finances and workforce. Franchising is one of the best solutions for rapid business expansion.
- Wider brand coverage: With the expansion of the business model, the brand image of the company becomes more widespread, bringing value to both the franchisor and the franchisee.
- Increased profitability: Besides receiving franchise fees and royalties, the franchisor also benefits from the money spent by the franchisee on purchasing products and materials.
b) Disadvantages
- Loss of control in business operations: Participating in the franchise model means the franchisee gains operational control, while the franchisor loses a significant level of control over business operations.
- Likelihood of disputes: In the franchising business model, disputes are almost inevitable when there are disagreements between both parties regarding business agreements. This can lead to financial and time losses for both sides.
- Resource-intensive due to the need for consistent monitoring of the franchisee’s activities. If not properly monitored, this can lead to deviations from the established standards.
- Potential impact on brand reputation: If the franchisor does not regularly monitor, inspect, and ensure effective operations of the franchisee according to the set procedures, it could negatively affect the brand’s reputation.
2. For the franchisee
a) Advantages
- Utilization of pre-established business model: The franchisee will be provided with guidance and existing business model documentation by the franchisor, which can be readily applied for execution.
- Leveraging the brand advantage of the franchisor: Instead of investing significant time in building a new brand to compete with limited resources and finances, and potentially facing numerous risks, joining the franchise model allows the business to utilize the existing brand advantage for investment and operations.
- Optimal utilization of human resources: In addition to benefiting from the brand advantage, the franchisee will also receive support in areas such as promotional strategies, marketing, and operational processes, resulting in efficient time and resource savings by avoiding the need to start from scratch.
- Marketing strategy support: To maintain consistency in brand image across all branches, the franchisor provides marketing strategy support and valuable advice to develop these strategies for effective business outcomes.
- Earning customer trust: Franchise brands usually have an established base of loyal customers. Therefore, when participating in this model, the franchisee does not have to spend excessive time and effort building a customer base.
- Benefiting from discounts on products and materials from the franchisor: This is a privilege that the franchisee gains by participating in the franchise business model.
- Risk limitation: As previously mentioned, when joining the franchise business model of a reputable and established company, the franchisee only needs to follow the established business procedures and execution. This minimizes risks related to product quality, loyal customers, and more.
b) Disadvantages
- Lack of complete brand ownership: Brand ownership rights belong to the franchisor, and the franchisee is only granted permission to operate using the franchisor’s business model.
- Chain reaction risk: If one of the franchised branches encounters issues, the brand reputation and operations of other stores in the chain may also be affected.
- Competition: If the franchise business has too many branches in close proximity, competition will increase.
Limited scope for innovation in business: The franchisee must adhere to the contract signed with the franchisor, limiting the ability to implement changes independently without the franchisor’s consent.
III. International Brands Are Successful With Franchising In Vietnam
Singaporean brand Charles & Keith entered the Vietnamese market through franchise agreements. After six years in the local market, Charles & Keith currently operates seven stores in Vietnam, while Topshop has a single store in Ho Chi Minh City. Another notable example involves IPP Group, under the ownership of Jonathan Hanh Nguyen, which has become a preferred franchise partner for global fashion entities such as Italy’s Bulgari S.p.A., the US’s GPS Strategic Alliances with Gap and Banana Republic, and the UK’s Warehouse. Each of these brands has established three stores in Vietnam
In early September 2016, Zara, a renowned Spanish retailer specializing in clothing and accessories, inaugurated its inaugural store in Vietnam. The store’s debut proved to be a tremendous success, generating approximately VND 5.5 billion (US$251,000) in revenue on its very first day.
IV. 10 Effective Digital Marketing Strategies for Franchise Fashion Businesses
1) Understanding the desires of potential customers
In order to effectively market your franchise brand, you need to understand your target audience and what they are seeking, so you can adjust your marketing strategy accordingly.
You can conduct surveys or focus groups with current franchisees or potential customers. You can also exchange insights with other franchisors about their successes and failures in marketing campaigns.
2) Integrated multichannel approach
Most franchise marketing efforts are executed through an integrated multichannel approach, spanning across social media, search engine optimization (SEO) optimization, and paid advertising. Additionally, brands must maintain a consistent presence across these channels, while franchisees also need to supplement marketing content with locally relevant posts.
However, it’s important to note that if a business operates independent strategies for each channel, a lack of consistency can diminish marketing effectiveness. Hence, overarching marketing activities, whether conducted in-house or through outsourced units, need to be continually monitored and synchronized in terms of campaigns and goals. Businesses should review whether the brand and its messaging, including logos, colors, fonts, and imagery, are consistent across all platforms.
3) Building and developing a website
You cannot create a truly successful Digital Marketing strategy for franchise branding without having a website. The first place people turn to when they’re curious about your brand is your website. Therefore, your website must accurately reflect your brand identity and convey the most important values for your business. A simple, clean, easy-to-navigate design with a fast page loading speed will help you convert visitors into customers.
Furthermore, your website should be optimized for various devices, especially mobile platforms, as the mobile market is rapidly expanding. To stay ahead of your competitors, you need to optimize your website for mobile devices. This will help you increase traffic from these devices.
4) Implement local SEO
According to various surveys, a significant portion of user engagement with fashion-related content comes from content specifically tailored to their relevant geographical area rather than the brand itself. Local SEO is the optimization technique to attract customers within a certain area. Therefore, it’s no surprise that this strategy is key to successful franchise digital marketing.
One of the first things you can do to make your local SEO stand out is to ensure that each of your locations has a verified and optimized Business Profile. Additionally, fashion businesses need to include information about addresses, phone numbers, and suitable hours, make use of local keywords on both the website and landing pages, and build local backlinks
5) Increasing reach with paid advertising
Paid advertising in general can help position you as a leader in the industry by highlighting your brand’s unique services or benefits that differentiate you from competitive rivals. It can also showcase updates, improvements, or distinct value propositions.
When it comes to pay-per-click (PPC) advertising or specifically paid search advertising, the best practices include:
- Utilizing local keywords for campaigns in different areas.
- Creating custom landing pages addressing various search queries and locations.
- Exploring both Google Ads and Microsoft Advertising.
- Conducting A/B testing to determine what works best for each location.
- Consistently monitoring, analyzing, and iterating based on ad performance.
For franchise brands, paid advertising campaigns to work best when tailored to target users in specific regions. Whether managed at the corporate level or by individual franchise units, paid advertising campaigns should focus on consumers in the business areas of each location and deliver customized, localized ads. Any advertising budget spent beyond that scope could go to waste.
6) Creating relevant and engaging content for your franchise
In many areas, certain franchise brand models struggle to compete with more ‘local’ businesses. Therefore, by highlighting your brand’s story, mission, and core company values, you can foster greater empathy. Customers also feel a stronger connection and loyalty to businesses that share their values.
For example, the fashion brand #SIXDO – it’s not just about the beauty of fashion; SIXDO aspires to create humane social values, becoming a way of life to accompany women on their journey to empathize with their own beauty.
7) Managing feedback and cultivating customer relationships
Another way to foster positive customer relationships is to make them feel heard. Paying attention to customer feedback is beneficial not only for your brand’s image but also for tracking perceptions of your overall business while encouraging customers to leave positive reviews.
A great place to gather customer feedback is through the review section on your website. You can also repurpose positive comments or feedback through social media channels.
8) Investing in email marketing campaigns
Email marketing is a digital marketing strategy for fashion franchise branding that can help you reach your customers and build loyalty while nurturing relationships with them.
Through email marketing, you can also provide Vietnamese customers with updates on new products or services. This is a good option for owners who don’t want to invest too heavily in advertising campaigns. However, it’s important to ensure that your emails are neither too lengthy nor too short and should include valuable content for your subscribers.
9) Tracking and measuring for effective optimization
The ultimate goal of any digital marketing strategy is to increase sales. Therefore, make sure that every campaign you run has a measurable return on investment (ROI). Don’t just focus on the number of clicks on ads or visits to your website. Instead, measure how many of those clicks or visits actually convert into customers and the revenue those new customers generate over time.
10) Utilize outsourced expertise for local market insights
Regardless of the method, a digital marketing strategy for franchise branding allows you direct access to potential customers. It can be used to enhance visibility and profits for your franchise business. However, even the most innovative marketing experts can encounter challenges when dealing with it alone.
V. A CASE STUDY OF THE MOST POPULAR FASHION FRANCHISE IN VIETNAM
Founded in 2002, Maison Joint Stock Company (Maison JSC) presently stands as one of the top three premier fashion distributors in Vietnam. It proudly represents a collection of 23 globally acclaimed international brands.
The inaugural brand introduced by Maison JSC was Mango, a renowned Spanish clothing label. The very first Mango outlet made its debut in HCMC in 2002, enjoying immediate triumph. By 2004, Mango received accolades from the Vietnam Economic Times, securing its position as Vietnam’s leading fashion brand. Subsequently, Maison JSC embarked on a dedicated journey to secure franchise rights from various esteemed European brands, such as Versace (Italian), Max Mara (Italian), and Christian Louboutin (French).
| Brand | Country of origin | Year of entering Vietnam | Number of stores |
| Mango | Spain | 2014 | 15 |
| Christian Louboutin | France | 2011 | 2 |
| Max Mara | Italy | 2016 | 2 |
| Max&Co. | Italy | 2015 | 3 |
As stated by Ms. Mai Son Pham, CEO of Maison JSC, the company’s primary focus revolves around introducing both mass-market and high-end brands to the Vietnamese market, while steering clear of luxury brands. To secure franchising rights for a specific brand, she elucidates that potential franchisees are required to meticulously prepare a comprehensive business proposal, encompassing an elaborate market assessment and a three-year blueprint detailing store development and launch. Upon approval of the proposal, the franchisee can be assured of the brand’s prosperous trajectory in Vietnam, as affirmed by Ms. Mai Son Pham.
In the year 2016, Maison JSC attained a revenue of EUR 48.6 million, securing the top spot among Vietnam’s three largest fashion distributors. The company’s strategic outlook involves an ongoing expansion of its brand portfolio, all driven by the mission to invigorate and redefine Vietnam’s fashion landscape.
VI. Summary
Above are the insights from GMA regarding the current popular fashion brand franchising model in Vietnam. Hopefully, through the article, you can gain the most comprehensive overview of the franchising form and learn more about innovative strategies that support effective brand franchising.
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