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Broader Global Franchise Trends Drive Brands to Focus on Southeast Asia

18 Oct 2018 - As the ASEAN is shaped by broader global trends in franchising, it continues to be a prime market for brands seeking international development.

A few of these global trends include:

  1. The move towards specialization in franchising
  2. The growth of the fast-casual franchise segment
  3. The growth of child related franchises
  4. The increased focus on non-food franchises including specialized fitness brands
  5. The emergence of the mobile franchise in both the F&B and services segment of the industry.

While these global franchise trends took root in developed franchise markets such as the USA, UK and Australia the same trends are starting to emerge in Southeast Asia driven by the socio-economic factors detailed in my blog titled, 10 Regional Factors Why International Franchise Brands Are Focusing on Development in Southeast Asia. In addition, these trends are fueled by the continued emergence of an affluent, educated and informed middle class across the region.

The franchise sectors that have been identified as having the biggest potential in Southeast Asia include Food & Beverage, Education & Training, Business Services and Retail.

North American F&B Brands such as Little Caesars, the third largest pizza chain in the world with its unique operating platform called Hot-N-Ready, is prioritizing Southeast Asia for development in 2018. Additionally, the Earl Enterprises Group that owns Planet Hollywood, Buca di Beppo and Earl of Sandwich, opened its first Buca di Beppo outlet in the Philippines in 2018. It has plans to open Planet Hollywood and Earl of Sandwich in Manila this year and is looking to develop all 3 of their brands across the region over the next 3 years.

North American service brands are also prioritizing Southeast Asia for development including fitness brands Snap Fitness, 9Round and Cyclebar -- all of whom are leaders in their respective segments of the US fitness industry, and Hollywood-based Millennium Dance Complex, the world's most famous dance studio. Snap Fitness identified a Master Franchisee for Indonesia in 2018, and 9Round will be entering Malaysia this year. Dallas-based FastSigns, the world leader in visual business communications, is also actively seeking franchisees across ASEAN.

Given the proximity of Australia and New Zealand, Southeast Asia is often considered as a first port of call for brands from these countries as they look at international expansion; and there are several Australian F&B Brands currently looking for partners in the region. These include FUNK Coffee from Adelaide, Sydney based Mad Mex, which was ranked as one of Australia's top 10 franchises by Business Review Australia in 2016, and Cuban themed café Coco Cubano also from Sydney. Craveable brands, the largest QSR chicken operator in Australia with a stable of 3 iconic brands including Red Rooster, Oporto and Chicken Treat, is also prioritizing Southeast Asia. Also, from Australia comes Begin Bright, Australia's leading School Readiness and Primary Tutoring franchise seeking franchisees across the region.

Catering to the fast-growing healthy options segment of the F&B industry there is Habitual Fix from Auckland, New Zealand which has developed a model that delivers on their promise of offering good food fast. Both these brands are looking to expand across ASEAN through franchising in 2018.

There has been a proliferation of Japanese and Korean F&B brands entering Southeast Asia over the past 5 years; and established brands from East Asia and the Indian Sub-Continent are also starting to look at ASEAN as an attractive market for international expansion. Examples of Indian brands looking to expand in this region include Panchavati Gaurav, which is India's largest chain of pure vegetarian Thali restaurants, Jetking, India's leading digital skills training institute, a 70-year-old company with almost 100 learning centers that has trained more than 700,000 students, and Dr. Batra's the World's largest chain of homeopathy clinics with 225 clinics in 115 cities and 4 countries.

Stay tuned as next month I will discuss the growth of the Food & Beverage segment in the GCC and Middle East.
World Franchise Associates Ltd