Franchise businesses are growing at a faster rate than any other sector of the economy. And they are also creating jobs at a faster rate.
In the United States, for the fifth year in a row, 2015 is expected to see another big expansion: 5.1% according to projections by the International Franchise Association.
In the UK, growth from 2003 to 2013, when the most recent comparable data is available, shows that franchises expanded by 42% in terms of turnover, well ahead of the 11.5% growth in real GDP.
And in Burma????? Yes, Myanmar: the lucrative new Asian franchise market.
New to the franchise industry, it naturally lags behind its Asian neighbors: Indonesia has 486 franchise brands and 39,000 outlets; Malaysia has 666 brands and 5,066 outlets; The Philippines has 1,500 brands and 140,000 points of sale; and Singapore has 500 brands and 3,000 points of sale (POAs). Industry in these countries, like in the US and the UK, creates jobs and contributes to GDP. Myanmar aims to follow this up and has recently established its own Franchise Association.
Currently, the Association has many obstacles to overcome, especially since it has limited legal powers and the Government does not fully support the group, but it is still early days. For franchisors, Myanmar has been seen as the remaining Asian frontier and is attracting interest from foreign countries, with Japanese and Korean food franchises being especially popular. These chains often retain some of their national food flavor items to differentiate themselves and appeal to consumers looking for traditional flavors. Well-known companies like KFC and Starbucks are actively looking into Myanmar, as low overhead and lack of competition are key factors for entry.
Myanmar has a population of over 50 million consumers and SME business is thriving, accounting for 97% of all businesses. For these smaller businesses, a more organized franchise system would give them the opportunity to explore franchising as a growth path. There are currently about 50 major franchise brands in the country, but as franchise regulations improve and awareness of franchising becomes more widespread, we expect to start a strong uptick in this number.
The presidential economic adviser, U Aung Tun Thet, stated that the main obstacle is not the lack of laws or specific associations, but the lack of knowledge about how franchises work.
There are concrete steps that can be taken to support franchise development, the Myanmar franchise association should be recognized and supported by the government and. Let’s hope the government listens and that franchising will be a strong contributor to GDP and an economic engine for years to come.