* Ms. Mai Ngoc (from Ho Chi Minh City): I have a capital of about 300 million VND, and I’m interested in the tea franchise model. But I’m hesitant. Could you please tell me what I should pay attention to avoid franchise models that are just “scams” to lure and cheat business people out of their money?
Mr. Nguyen Thai Duong, Marketing Director of iPOS.vn: Compared to the past, F&B franchisors nowadays are more professional and well-organized. They no longer offer franchises before even having their own stores, with the excuse that early birds get a cheaper price.
However, F&B franchise buyers must remain vigilant to avoid losing money unnecessarily. After all, it’s your money, so be cautious before investing. Don’t let FOMO (fear of missing out) push you to make hasty decisions just because a particular model is currently popular. It’s essential to set criteria for cutting losses and exiting the market, similar to other investment forms, rather than trying to force your way through losses.
Buyers need to carefully consider before investing – Image: AI
Mr. Hoang Tung, Chairman of F&B Investment & FoodEdu Academy: There are three signs to avoid falling into the trap of a “scam” model for newcomers intending to buy a franchise.
First, don’t just listen to sales pitches about impressive revenue and numerous orders. Instead, go to the actual business locations to verify the data.
Second, many models offer heavy promotions for 1-3 months to attract customers, even creating long queues. As a potential franchise buyer, you should check if the business has been operating for a more extended period, say 1-2 years, and if it consistently maintains a high level of customer traffic.
Third, if many people have bought franchises and successfully operate multiple locations, it serves as solid proof of the brand’s quality.
Lawyer Ho Thanh Thao
From a legal perspective, Lawyer Ho Thanh Thao (Ho Chi Minh City Bar Association), Executive at HT Partners Law&IP, advises F&B franchise buyers to examine the following legal documents:
– Business license of the franchisor to ensure they have been operating for at least one year as required by law and are legally operating.
– Approval for commercial franchise registration (if the franchise is from a foreign brand entering Vietnam) to ensure the franchisor has registered legitimately according to regulations.
– Franchise agreement: Carefully review the terms regarding franchise fees, duration, area of operation, rights and obligations of each party, and conditions for contract termination.
– Brand’s legal dossier: Check the trademark registration certificate to prevent potential intellectual property disputes.
The above are essential legal aspects to verify before considering other factors such as commitments, support, fees, and investments.
Should we believe the commitment about the payback period (e.g., one year)?
According to Lawyer Thao, commitments about recouping investments within a year are often promotional and carry no legal weight unless specified in the contract.
As per legal regulations, the franchisor must provide truthful and complete information. Therefore, you should request that such a commitment be included in the contract. Conduct a detailed financial analysis of the financial reports and revenue of existing branches. Ask about guarantees: if the commitment is not met, will there be compensation or a refund of fees? Avoid relying on verbal promises, and always be cautious and seek expert advice before investing,” advises Lawyer Thao.
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In Singapore, the Chinese brand Luckin Coffee has quickly gained dominance through its franchise model, compact spaces, and affordable prices. Meanwhile, Founder …Ka Coffee – a coffee chain that has opened 5 branches in Hanoi and Ho Chi Minh City – has announced that their franchise stores in Singapore will have spacious premises, despite the high rent costs of 200-300 million VND for 80 square meters spread across two floors.
