Thai franchise not ready to go abroad

Analysts are warning the trouble-plagued Thai franchise industry is still not prepared for international competition once regional economic integration kicks off late next year.

"Our franchises are actually less prepared today for international competition and trade liberalisation, as they remain weak in several areas such as law, accounting and professional business administration," said Sawad Mitaree, chairman of the Franchise & License Association.

Thai franchises have been active over the past 10 years and now comprise 11 key business sectors including food, spas, education and other services.

Food-related businesses account for half the country's 40-billion-baht franchise industry.

The industry's value is expected to remain unchanged this year, as the economy has yet to recover fully and farm prices are continuing to decrease.

The Asean Framework Agreement on Services stipulates franchises are one of the businesses that Asean members are committed to liberalising.

Thai franchise categories with international potential include restaurants and beverages, construction, home decor and construction businesses as well as bakeries, spas and educational institutes.

Mr Sawad said many Asean franchises were now expanding into Thailand, particularly from Singapore, Malaysia, Indonesia and the Philippines, but only 20 Thai franchisers were found to be ready for an international push.

However, Chaiyapron Prasirtjalernsuk, general manager of Numooyraimaijon Co, maker of Raimaijon pasteurised sugar-cane juice, believes the outlook for Thai franchises looks promising.

Thais now have a better understanding of the franchise industry, and this will facilitate expansion, he said.

Raimaijon pasteurised sugar-cane juice has more than 100 franchisees nationwide, with combined annual sales growth of 10%.

The company has contracted with 200 sugar-cane farmers covering an area of more than 1,000 rai to help grow and supply organic sugar cane.

Pongpun Gearaviriyapun, director-general of the Business Development Department, said Thailand had 1,514 franchise operators — 1,204 registered as juristic persons and 310 individuals.

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