Despite the current pandemic, Cambodia remains an attractive market for global franchises, with a wave of new ones potentially entering the market as early as next year.
Sean T. Ngo, chief executive officer and co-founder of VF Franchise Consulting of Vietnam, hosted a two-day virtual expo, held on May 27 and 28, aimed at finding master franchisees for 11 brands interested in entering the Kingdom.
His company has had previous successes bringing franchises to Cambodia, including with brands such as Texas Chicken and Yole Ice Cream. The 11 brands the company introduced at the expo are almost all exclusively Asian and include institutions such as QOOCO (an English and Mandarin language digital learning franchise) as well as food and beverage franchises, Mango Tree and Doner Shack.
The VF event was the second major franchise expo in Cambodia this month, with the United States embassy having hosted one on May 12. That event hosted a number of major brands, including the restaurants Chili’s and The Boiling Crab, as well as the fitness chain, Snap Fitness. It is anticipated all of those will begin operations in the Kingdom by 2022.
Ngo explained the uptick in franchise interest in Cambodia, saying, “According to the World Bank, Cambodia has undergone a significant transition from its lower-middle-income status in 2015 and it aspires to become an upper-middle-income country by 2030 – less than a decade from now. The country’s economy had been growing at an average real gross domestic product growth rate of 7.7 percent between 1998 and 2019 – not only one of the fastest-growing economies in Asia but of the world.”
Cambodia currently has around 130 active franchises in the country, including famous brands such as Starbucks and KFC. Notably absent from the array of foreign fast-food restaurants operating in Cambodia is McDonald’s.
The Philippines by comparison has 1,300 active franchise companies, according to the International Trade Federation of the United States. The current Cambodian franchise sector is dominated by Western food and beverage companies which, according to Ngo, represents a huge potential gap in the market.
He noted: “The country’s young, fast-growing population and its rapidly increasing level of income signifies a lot of upside potential in the eyes of many franchising segments, including food and beverage, retail, education and training, health and fitness, services, and more. Asian franchises are also quite popular in the market, especially brands from South Korea, Japan, Taiwan, Hong Kong, China and other parts of ASEAN”.
In Cambodia, franchise agreements fall under the purview of the Ministry of Commerce and are covered by the law concerning Marks, Trade Names and Acts of Unfair Competition, and the ministry’s Department of Intellectual Property.
The Cambodian Business and Franchise Association was formed in 2019 as a non-political and nonprofit association to support the implementation of innovative productivity, the promotion of small and medium enterprises, and entrepreneurship through franchising and matching franchisors to franchisees.