Franchise businesses are growing at a rate faster than any other sector of the economy. And they’re creating jobs at a faster pace too.
In America for the fifth consecutive year, 2015 is expected to see another big expansion – 5.1% according to projections from the International Franchise Association.
In the UK growth from 2003 to 2013, when the most recent comparable data is available, shows that franchising expanded by 42% in terms of its turnover, well ahead of the 11.5% growth in real GDP.
And in Myanmar????? Yes Myanmar – the new lucrative Asian franchise market.
New to the franchise industry it naturally lags behind its Asian neighbours: Indonesia has 486 franchise brands and 39,000 outlets; Malaysia has 666 brands and 5066 outlets; Philippines has 1500 brands and 140,000 outlets; and Singapore has 500 brands and 3000 outlets (PFA). The industry in these countries, as in USA and UK, creates jobs and contributes to GDP. Myanmar aims to follow this and has recently set up their own Franchise Association.
At present the Association has many hurdles to overcome especially as it has limited legal powers and the Government does not fully support the group, but it is early days. For franchisors, Myanmar has been seen as the remaining Asian frontier and is attracting interest from overseas countries, Japanese and Korean food franchises are especially popular. These chains will often keep some of their domestic food taste items to differentiate and attract consumers seeking traditional flavours. Bigger name companies such as KFC and Starbucks are actively researching Myanmar as the low overheads and lack of competition are key drivers of entry.
Myanmar has a population of over 50 million consumers and the SME business thrives, accounting for 97% of all companies. For these smaller companies a more organized franchise system would give them the opportunity to explore franchising as a route for growth. At present there are currently about 50 main franchise brands in the country but as the franchise regulations improve and franchise knowledge becomes more widespread we hope to start a sharp upturn in this number.
Presidential economic adviser, U Aung Tun Thet, stated that the main hurdle is not a lack of specific laws or associations, but just a lack of knowledge of how franchises operate.
There are concrete steps that can be taken to support development of franchises, Myanmar’s franchise association should be recognised and supported by the government an. Hopefully the Government will listen and franchising will be a strong contributor to GDP and an economic driver over the coming years.