Group 5

PHO24 FRANCHISING MODEL

Background information

Founded in 2003 by Dr Ly Qui Trung and his family. A major of the Nam An Group. The first Pho24 store opened in June 2003 By 2009 there were 62 stores in Vietnam and 10 stores overseas in Korea, Cambodia, Philippines, Singapore, Australia and Indonesia.
a

The first largest domestic franchising system developed and grown in Vietnam.

The traditional franchising model

An efficient method of distribution of goods and services due to its reliance on the human capital contributed by franchisee owner manager

Allowed organizations to expand quickly without having to obtain external financial resources or to relinquish control as in other organizational structures.

The Pho24 franchising model

Different from traditional franchising model:

Level of involvement Franchising relationship In Vietnam it is quite sensitive. If you go too much into the relationship then you cannot manage. You cant be good friends or they dont listen to you. Work relationship but not friends; if it becomes like

friends then I cannot work.

The Pho24 franchising model

Company owned stores were more profitable than franchisee operations because franchisees tended to control costs.

The franchisees are owner investors and are not

involved in either hands-on operation or close supervision of the business many risks The franchisor invests in each franchise unit and becomes a part owner to have more control

Conclusions

In order to adapt to the cultural and legal environment, the franchisor has modified the franchising model, which is more of a partnership approach, in order to achieve greater control within the system.