A YEAR IN REVIEW – AND OUR FRANCHISE CRYSTAL BALL FOR 2022!

To say 2021 was challenging may be the understatement of the year! However, we at VF Franchise Consulting prefer to look at the glass as half-full.

So, what was good in 2021? Well, to start, vaccination rates continued to climb globally and despite the fact that most of Asia was playing catch-up due to the shortage of vaccines. That seems to be changing as we head into 2022 with most Asian nations now reporting they are on their way to vaccinating the vast majority of their citizens with some already achieving this milestone.

Covid-19 was the best Chief Technology Officer (CTO) ever in the history of CTO’s. It expedited the development of online retail sales and delivery to an extent not thought possible only a few years ago. Even learning online, long believed to be impractical for the masses, became a reality as kindergartens, primary, secondary, tertiary, and universities, whether public or private, quickly adapted to online learning to the best of their abilities. As expected, global education brands and franchises performed better than their public peers. We believe these online learning platforms that were expedited over the past two years will continue to form a core part of their franchise business models moving forward. This also applies to businesses in retail, and food and beverage (F&B).

In the franchise industry, we saw franchisors and franchisees perform well in 2021,especially in the F&B, education, retail, and health and fitness sectors. Below are some of the notable highlights:

 

  • Ace Hardware continued to grow and even set record sales and profits in 2020 and 2021 as well as new store openings! The largest home improvement chain was regarded as an essential business and benefited from the being open while reaping significant gains through online sales.

 

 

  • Bricks4Kidz, the world’s largest stem-based children’s franchise, expanded to India with plans to expand by more than 50 locations and growing the brand’s presence and influence in that region and the rest of Asia.

 

  • Mango Tree, part of the 60-year old COCA Group from Thailand, also saw further expansion in 2021 and with the latest expansion to nearby Vietnam.

 

  • Texas Chicken expanded into the Middle East with its first store opened in Qatar in 2021.
  • Fire Fitness expanded not to one country but to two countries. Fans of the contemporary and boutique fitness concept can now enjoy their unique style of fitness in Australia and the United Arab Emirates (UAE) as well as Southeast Asia.
  • Subway announced its largest franchisee partnership and plans to open more than 2,000 new restaurants across India, Sri Lanka and Bangladesh in the next 10 years. They also signed a new master franchise agreement in the Kingdom of Saudi Arabia that will nearly double their footprint there.
  • Long John Silver’s is expanding into Indonesia with 54 restaurants.

In general, Asian consumers continue to favour brands that are in the F&B sector the most. Consumers can delay their purchases of non-essential products during challenging times, what they can’t stop is a hungry stomach!

Trevor MacKenzie, Managing Director of Exquisine Global, the international parent company of iconic Thai brands COCA, Mango Tree, and Mango Chili, added, “Exquisine Global was resilient in 2021 and had a great year considering the worldwide restrictions in different countries. We were able to acquire another brand called Yenly Yours, a brand that fits smaller footprints and still generates as much revenue as some of our existing outlets. Our primary growth came from existing markets and one new franchisee for Mango Tree in the southern part of Vietnam, with a total of ten new openings in Tokyo, Manila, Beijing, Shanghai, Hanoi, and Ho Chi Minh City.”

MacKenzie added, “It was a testament to our brands that have built loyal customers over the last 20 years, great profitability along with partners who maximized opportunities with special rental rates and their commitment to expansion. I see a bright future for Exquisine Global in 2022 in which we are already projecting to open 15 to 17 new outlets across our portfolio of restaurants! I also foresee that the next 2 years in the restaurant industry will present numerous opportunities as landlords look to replace lost tenants, and due to the uncertainty, we will be able to leverage that into great rental contracts that will help make our restaurants even more profitable.”

The year 2022 is upon us, we are more optimistic than ever regarding the economic rebound globally and regionally and the growing ability and acceptance of living with Covid-19 and its variants. Frankly, we are seeing a surge in franchise inquiries throughout Asia, from the UAE to India to Singapore to Korea and the many countries in and between. Companies that have resources in people, infrastructure, and capital, continue to look for the best franchise opportunities with an eye towards future growth and profitability.

Fearless Franchise Crystal Ball for 2022

  • The global economic rebound will be the most significant seen in the 21st century
  • Travel bubbles between many countries become a reality and the norm
  • Global franchise brands will be more appealing to Asian investors as they are seen as the best brands to weather future economic shocks
  • Pent-up investor demand for new franchise and business opportunities
  • Franchises that have successfully incorporated online sales and delivery and offer flexible store and kiosk formats will attract the most investors
  • Markets throughout the Association of Southeast Asian Nations (ASEAN), South Asia, and the Middle East will lead international growth in the Greater Asia region

All in all, the year 2022 is shaping out to be a break-through year as the world learns to live with the challenges posed today and into the future. What’s that old investment saying? You can make money in a bull market, but you can be rich in a bear market. It would seem this applies to business in general and not only to financial markets.

Author:  Sean T. Ngo is the CEO and Co-Founder of one of Asia’s leading franchise consultancy, VF Franchise Consulting (www.vffranchiseconsulting.com). He is Asian American and has been based in Ho Chi Minh City, Vietnam, for over 16 years. You can reach him at sean@vffranchiseconsulting.com or info@vffranchiseconsulting.com

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