The franchise business in Thailand is expected to grow by 17% this year to a value of 160 billion baht as more people look to earn more income by opening their own businesses.
The number of franchised outlets is likely to rise beyond 40,000 this year and employment to exceed 200,000 jobs, said Peerapong Kitiveshpokawat, director of the International Retail and Franchise Business R&D Center at Sripatum University.
A survey by the centre in 2010 found a total of 514 franchise operators in the country, 480 of which were Thai businesses, running a total of 26,922 outlets. Around 40-45% of the operators were in the food and beverage industry and approximately half of the business value came from convenience stores.
The average time in existence for a franchiser was more than five years, which indicated the strength of operators in the industry, in line with the declining rate of failure which stood at 12%, down from 20% in the past.
Collections of franchise fees _ entrance and royalty fees _ were around 870 million baht in 2010 and were estimated to have exceeded one billion baht in 2011.
Mr Peerapong said the franchise business this year could receive a boost in the aftermath of the severe floods of late 2011. Businesses that may rise are service-oriented franchises such as home building and renovation, cleaning, termite control and automobile service centres, as changes in society have reduced the amount of time many people have to handle some jobs themselves.
The expansion of food and beverage franchises to other provinces will spread a new consumption culture among people who have been waiting for more choices in their areas. Education franchises expanded substantially in the provinces years ago but the pace has slowed because of the shortage of qualified personnel to run the businesses.
Mr Peerapong said one rising trend is the purchase of rights to characters of internationally renowned films or comics to use in Thai businesses.
The use of licensed characters boomed earlier but was limited to clothing and fashion products. Now licensed characters are showing up in a greater variety of products.
"This 'inter-localisation' is likely to become a new trend in the franchise business in the future," he said. "For instance, using a cartoon character with a coffee chain will help change the look and perception of the business as one that is being upgraded to tap upper-end market."
Mr Peerapong forecast there would be 850 Thai franchise operators in the country in the next three years. He said the business would continue to gain support from the government because franchising helps establish standards for business operation, reducing the failure risk when compared with small businesses that entrepreneurs operate on their own.
The arrival of Asean Economic Community (AEC) in 2015 will also open a wider opportunity for Thai franchisers to explore a regional market with a population of 600 million. "The bad news is the question of whether Thai franchise operators would have the ability to compete in these countries as franchisers from Malaysia, Singapore and South Korea are also targeting the same market," said Mr Peerapong.
He classified the AEC market into two groups _ the Chinese-speaking market in Singapore, Malaysia, Indonesia and Vietnam; and the Buddhist market in Laos, Cambodia and Myanmar. The latter should be the target of Thai entrepreneurs.
