Local franchisers have adopted new strategies to expand their networks to avoid oversupply and intense competition in particular areas of business driven by big local and international franchisers.
According to Thai Franchise Association, the number of franchisers in Thailand is about 300, and 20 per cent of them are new, having been in the franchise business for less than five years. The number of local franchisers is anticipated to increase by about 10 per cent this year, compared a 25percent increase in franchisees.
"About 20 franchisers enter the business every year. However, only half of them stay in business for more than five years. Another half have changed their format to other businesses such as dealerships or have opened their own branches," said Somjit Likitsathaporn, the association president.
Apichat Tienpirakul, managing director of Oiso, operator of Yamane Japanese restaurants, said the weakness of local franchisers was their small power in competing with international brands, such as McDonald's and KFC, and acquiring good store locations, which was key to business success.
Apichat opened his first 130squaremetre, 72seat Yamane restaurant outlet at Lumpini Plaza on Sukhumvit Road Soi 21 (Asoke). The store is a role model for franchising other Japanese restaurants.
"My idea is to find good locations for potential franchisees and turn them into franchisers via a subfranchise system. This will allow our franchisees to expand satellite kiosks [of Japanese restaurants] within their own network," said Apichat, who has had a rich experience in franchising for more than 30 years.
Apichat said the company would start franchising its Yamane restaurants next month, with outlets opening initially in five strategic locations in Greater Bangkok: Watcharapol, Ratchadaphisek, Ramkhamhaeng, Bang Yai and Bangkrabue. Each franchised restaurant will be able to open another five to 10 satellite kiosks via subfranchising.
Matthew Brady, founder of the Quality Kids brainskills school, said he would expand his franchise upcountry under a new name, Happy Brain.
"We have seen oversupply of weekend or afterschool learning centres in Bangkok, especially the English language centres. In Central Plaza Pinklao alone, for instance, more than 20 Englishlanguage learning centres have been set up," he said.
Brady said the market for franchised English language learning centres was quite intense and was dominated by big centres such as AUA, British Council, Inlingua, ECC, English Plus, Wall Street, and Boston Bright.
He added that small local schools needed to improve their services or go upcountry to avoid the oversupply problem in Bangkok.
Brady said about 20 Quality Kids centres were operating in Bangkok and 15 of them were franchised outlets. Its first franchised outlet was opened 10 years ago at SCB Park Plaza in Chatuchak district.
"We plan to open similar brainskills schools upcountry under the new name Happy Brain. The first Happy Brain outlet will be opened within the next four months in Chon Buri. Owned by the company, it will be a pilot learning centre for other Happy Brain schools to be opened in the provinces, mostly in shophouses," he said.
He added that the upcountry schools would apply advanced neurological teaching similar to the Bangkok outlets. The school promises to teach quick thinking, concentration, selfesteem, and happiness to students aged between two and 12.
Brady said potential upcountry franchisees were required to invest Bt2.5 million on average to open a Happy Brain learningcentre franchise. He said this was quite cheap compared with Bangkok, where potential franchisees needed to invest about Bt5 million on average to open a Quality Kids school.
"At our schools, we encourage kids to play with educational toys from more than 20 countries, which will provide different benefits to children," said Brady.
He gave the example of educational toys from Germany that promote systematic thinking in children. Meanwhile, educational toys from Italy help children use their imaginations, and those from France aid creative thinking.