Used to be financial inspector of Boeing America, as a founder who launched the first official flight between Vietnam and the Philippines and as considered the "franchise magnate" of world-renowned brands, Mr. Johnathan Hanh Nguyen has just shared 70% of his secrets to success.

First of all, identify what we want?

"At the moment, my franchise business includes F&B, services, fashion ... but my fast food is taking up 29% of the overall industry." said Johnathan Hanh Nguyen.

According to him, first and foremost there is a need to identify which is the best fast food company out of your 10 competitors in industry. Has it entered in Vietnam yet? Same with fashion, it is important to list out the famous brands, the list can go on more than 20 different top companies, and if the brand has not yet entered to Vietnamese market there is a chance for him to invest in. The most important point is to do proper research for the market and decide which in those 10-20 top brands will be suitable with the Vietnamese. Chloé for instant is located in such favorable location in Vincom tower but still lost because the design does not match the Vietnamese preferences.

Secondly, don't aim for too high

If you are focusing on fashion industry, with outstanding company profile, and high capital then you should directly go to the headquarters and ask for franchising. However, with newcomers to fashion industry who would like to franchise Louis Vuitton and Chanel, it is better to meet the brand’s regional representatives first then follow them, as the condition is given quite easy 50-50. Franchising 92 brands has already been "swallowed up" hundreds of millions of dollars of mine, but not necessarily successful, some of the brands make profit some of them don't so they have to offset each other because the business cannot just depend on one brand to make profit. The corporation needs to possess many businesses to support each other.

In 2012, IPPG successfully brought Burger King to Viet Nam.

Thirdly is negotiation in the contract

This is really important. Reading the contract from the world consultants is really complicated. Even after reading the whole report, I might not be able to get the whole picture of it. So, those who are newcomers will easily be dominated. The first contract that I failed was Burger King, when they demanded to open 60 stores immediately, only then I could gain the commission from franchising. “Observing Burger King in Philippines opened 600 franchise stores, gaining hundreds of millions of dollars, I really wanted it to be like that and try my best to bring to Vietnam. However, I had not researched the Vietnamese breakfast well that there is a variety from bread, noodles, and hundreds of Vietnamese traditional foods. Moreover, Vietnamese people are used to crispy bread while Burger King uses soft bread.  Not to mention Burger King does not want me to own any exclusive rights. So I had to negotiate to get exclusive right. Compensation is the last stage that needs to be careful when the risk occurs; I bet that 70% of this will happen.", said Johnathan Hanh Nguyen.

Fourth, after getting the brand, the most difficult thing to do is maintaining the brand.

After 20 years, we are stable and can force others to follow us, because they need us. Vietnam has an import tax of 30%, and 10% of VAT, which means it is 40% higher than the original price. I cannot control it; therefore, Milano has “low down” their goods price. They will check bills and compare it to the original price. If it is not correct, they will put on pressure, and stop supplying the goods. We have to be tough to remain the prices so that we could survive until now.

Transferring the brand name also include advertising, we need to negotiate in order to get the maximum advertisement. When they ask about the 5 years plan, it is to know whether we can evaluate and understand the market. If it don’t bring any profit, the will not stay with us anymore.

Normally, they will not allow transferring the brand name; they will sell the brand instead. They need us to build up the brand, and give us 3 to 5 years, and they get all of the benefits. We lose our money while they gain money from the brand name. In doing business, fairness is needed and we need to negotiate them to accept out condition that if we earn profit, we have a right to sell it to third party.

Fifth, location

Location is very costly, especially and opening in the center of the city. 25,000 to 30,000 USD is a good price. While 40,000 to 50,000 is too expensive. We have to negotiate the shop space before transferring the brand name.

I always admire Trung Nguyen in doing F&B because he is willing to pay 30% for his store location. I don’t know it is bitter for him or not. My first 4 brands had always been pressured with store location. There are 80 stores, each year there is a new store which cost around 50,000 USD. However, now that my company has growth it is necessary to change the conditions, as I am not willing to pay for franchising. Because once there is a new store opened their stock price will increase. I have to grasp that advantage to negotiate again.

Number 6 is shop design

It sounds simple but it is not the way it is. The kitchen should only be 1/3 of the store itself, but the brand demands the kitchen to be half of the store. Therefore, it is necessary to customize the store in Vietnam. The headquarter forces me to open each store with 300-500 m2, but it is not necessary in Vietnam because investment in one store should be 200,000$ in average.

Number 7,

In the contract, the principle always requires equipment, machinery and ingredient to be imported. For example, using Vietnamese inox is also not appropriate and everything needs to buy genuinely from A-Z. Vietnam is now a member of WTO, there is no need to import equipment of 200,000$ when we can buy 50,000$ in Vietnam. Once the negotiation is approved we can earn a lot of profit because we can cut off of 50% import equipment. I have a company in Cat Lai which specializes in supplying qualified ingredients. We can only survive if importing cost is below 50%. If it above 50% we will lose for sure. The big brands are willing to listen to your opinion, and analysis. Therefore, it is important to balance everything and negotiate by using their stocks prices.

Eighth is manpower

Finding good manpower specializing in fashion and fast food is not simply. I have been in the situation. I trusted one with very high profile to open 20 stores, 8 of them closed already due to bad location and management. Opening and closing any store would damage a lot to our business. However, I am lucky to have 6 of my children who just finished study abroad and they are willing to help me. Therefore, we have to find a trustworthy employees to help us.

Ninth

The goods’ prime cost is very important. It is best if the prime cost is around 25%. If it is more than 50% then the company will be paralyzed due to taxes, raw materials, electricity and water. It is important to control a low cost of goods sold. If the rental fee is from 15-20%, plus prime cost from 25-35% together less than 50% then the company is in a stable condition.

Last is advertisement.

How to let consumer know us? We have to let the consumer know about us through online marketing, changing the menu, discount. Vietnamese people love trends and we have to localize the international brand and adapt it to Vietnamese culture. For example, with Popeyes I had to add in “Chicken” next to the brand name to Popeyes Chicken, the sales have automatically increased up to 25%. I have also added Vietnamese sandwiches & burgers in the menu. Popeyes Chicken was first suffering from a loss, but now it is really stable.

One the newest stores of Popeyes. Currently, Popeyes Vietnam owns over 18 stores in HCMC & Ha Noi

"My wish came true. By the end of 2017, I had the exclusive right to operate the service at the international airport. Airport service has earn 120 billion USD, but I only need to get 0.01%.  However, I have been through a lot of difficulties in order to get the 92 brand names. "the most successful M & A is with Autogrill, a corporation with 30 years of experience serving airport services. "Said Johnathan Hanh Nguyen.

“If the goods has no potential to developed, I will give them up to bigger firms. Because of that the sales has gone up to 10 times instead of $ 5 million to $ 50 million, the airport has brighten up with different brand investment, I’m proud of it, "he said.

Mr. Johnathan Hanh Nguyen added: "I am also proud that I pay full tax, be socialized, no illegal. I just signed a franchise agreement with the most difficult brand Dolce & Gabbana, with the best contract conditions today. Chanel is a favorite product, with prices in Vietnam 40% higher than word wile. Nevertheless, start from 1/2017 this will no longer happen. Chanel agreed to lower the prices so that Vietnam offers a similar price with Singapore, just over 2-3% from Paris, which is an unprecedented victory in Vietnam. All in all, 90% of franchising is a pain, but I have managed all to achieve this victory, Chanel now reached 28 million USD, growth of 280%.

Theo KIM YẾN / http://bizlive.vn