Thai franchises wary of Asean free trade

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Thai franchises wary of Asean free trade 
Bangkok Post: 28 Jan 2010
Afta darkens Thai franchise outlook

Thai franchises face uncertain prospects as trade liberalisation is helping regional franchise businesses - especially from Malaysia and South Korea - to make inroads into Thai markets, warns the newly founded Franchise and Licences Association.
The Asean free trade area agreement, which came into effect this year, will intensify international competition for Thai franchisers, particularly for small and medium-sized enterprises, said Krit Kranchannabatr, co-founder of the association.

Local small-scale franchise operators such as coffee outlets and pushcarts have now fallen in number after flourishing four of five years ago, he said.

Weaker franchise operators - especially in coffee, spas, food and car-care services - are likely to be put out of business by foreign operators coming into Thailand, he said.

"Franchisers from South Korea, Malaysia and even Singapore are now actively expanding into our country, be it Korean restaurants, cosmetics or nail paints," said Mr Krit.

"Secret Recipe, a Malaysian cafe chain, and Thai Express, a chain of restaurants serving Thai cuisine in Singapore, have also established a presence in Thailand."

The association warned that foreign investors will take over weak Thai franchise businesses if local firms fail to adapt and co-operate with each other.

Thailand currently has about 848 franchise and licensing businesses, with 567 Thai and 281 international franchises, according to the ThaiFranchiseCenter website.

Thailand's franchise market was estimated to be worth 135 billion baht in 2009, a rise of 58.8% from 85 billion in 2008. The market's growth is expected to slow to about 5-10% this year because of economic recovery prospects.

Thailand's franchise market has surged over the last nine years from only 6 billion baht in 2001. The rate of expansion accelerated in the last two years as many workers turned to the industry after losing their jobs amid economic and political turmoil.


http://www.bangkokpost.com/business/economics/31884/afta-darkens-thai-franchise-outlook