Vol. 8 No. 22 1 - 15 August 2009
PATTAYA STYLISH LIVING
Pattaya Today 25 PATTAYA TODAY PROPERTY 3/25
Franchising in Thailand: An opportunity for the budding entrepreneur By Thomas Schmid (Dukas Agency)
the supplied recipes,” he explains. There is no margin for getting creative in that respect. For the benefit of running a turn-key, branded
Mention the word “franchising” and people primarily think of international fast food chains like McDonalds, Burger King, Pizza Hut and, yes, even Starbucks. Few realize that Thailand has in fact a home-grown franchising industry. While theoretically every service or brand can be franchised from beauty salons to fashion lines to hotels, gyms and 7-11 convenience stores, it is primarily food chains that are deploying the concept in Thailand. Particularly large conglomerates like Charoen Phokphand and Minor Group pioneered franchising in the country a couple of decades ago. Restaurant brands like Sizzler, Chester’s Grill, The Pizza Company, Squeeze (a juice bar chain) and Oishi are not only as well known as their international counterparts, but are also
investment to set up shop. So, what are these mentioned advantages? Firstly, a franchisee obviously will buy into a brand that is already well established. Customers know what type of service to expect in the newly opened outlet. This, in turn, keeps necessary promotion and associated advertising costs down to a minimum, thus saving budget. Secondly, the mother company delivers a full package ranging from staff training to equipment, which makes
entirely Thai, despite their foreign-sounding names. While acquiring franchises of those major brands may be beyond the financial means of most small business entrepreneurs, even they have discovered the advantages of the concept. Street stalls selling pork meatball (luk chin moo) noodle soup under the “Champ” brand are just as ubiquitous in the capital as grilled chicken booths bearing the “5 Star Chicken” logo. These franchises can be had for as little as THB 10,000 per outlet, making them much more affordable than their upscale brethren, for which fees can easily run in the hundreds of thousands of Baht in addition to a considerable further
it fairly easy for franchisees to establish their businesses. Lastly, the need for product development is negated. In the words of Graham Brain, CEO of Tasty Thai Restaurants Co. Ltd.: “We provide the recipe. All the franchisee has to do is the cooking.” The company started out in 2003 with a stand-alone restaurant, but the original owner soon partnered with Brain and embarked on a franchising strategy. To date, the firm has sold master franchise licenses to Stockholm and Melbourne (with 3 restaurants each), as well as London and Hawaii (with 1 outlet per location). While the original outlet in downtown Bangkok is still the only branch of the
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Tasty Thai Restaurants Co. Ltd fast food chain in Thailand, Brain plans to expand the business here, too. For the franchising fee of THB 500,000 the franchisee receives a package that includes in-depth training of lead staff, advice on restaurant and kitchen layout, menu set-up and cooking guidelines, counseling on location selection and, last but not least, the right to operate under the Tasty Thai logo. However, additional investment like kitchen equipment, dining area decoration and location leases all have to be shouldered by the franchisee apart from obvious cost items like staff salaries, purchases of ingredients and utility bills. Contracts typically are for a period of 5 years and can be perpetually renewed. To maintain the company’s established standards and product branding, Brain insists that his franchisees strictly comply with all regulations and guidelines set forth by the mother company. “It is not just the restaurant layout and interior design, but also the way staff treat customers, how the food is presented and, most importantly, that kitchen personnel rigidly stick to