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US franchisors identify Cambodia as ‘next step’ market

Nine US franchisors have participated in a US Embassy virtual expo after identifying Cambodia as a ‘next step’ market highlighting the nation’s rising incomes and its middle-class connection to American culture.

US Ambassador Patrick Murphy opened the event saying the Cambodian market had been rapidly maturing over the last 20 years and reiterated what has become his signature catchphrase US products represented the gold standard for local consumers.

An embassy statement added American brands have been successful and are growing in Cambodia, ranging from Ford automobiles and Facebook to Starbucks coffee and Papa John’s pizza. Cambodians seek out these high-quality products and services, and there is an appetite for more.

The nine franchisors were; The Boiling Crab, Chili’s, Dickey’s BBQPit, Duck Donuts, Long John Silver’s, Mathnasium, Snap Fitness, Tapout Fitness, and Tumbles.

Cambodia Investment Review spoke with two local franchisors involved in the event who said Cambodia was an obvious next step for those already with an Asian growth strategy.

“F&B franchisors have been quick to identify Cambodia as a regional hotspot because of its fast-growing economy, young and educated consumer, connection to US culture, and increased spending power,” Vice President of Dickeys BBQ Pit James Perkins said.

Perkins expressed that it was also important for foreign companies to conduct appropriate due diligence of the local investor, protect brand reputation and any adhere to all legal requirements.

“For most brands, it makes sense that when they are setting up their supply chains that there are many outlets within the region to provide support. I feel confident that we have rolled out our brands to markets, that are more difficult than Cambodia in terms of maintaining standards, so that won’t be a problem here,” said Chief International Officer of Edwards Global Services Robert Jones – who represents Chili’s, Snap Fitness, and The Boiling Crab.

Cambodia has already attracted an increasing number of regional and international franchise brands including well-known names such as Costa Coffee, Dairy Queen, Gloria Jean’s Coffees, KFC, The Pizza Company, Ya Kun Coffee & Toast, and Sarpinos Pizza, to name a few.

Managing Partner of Tilleke & Gibbins (Cambodia) Jay Cohen said despite the high numbers of international franchise businesses now established, Cambodia is yet to enact any comprehensive franchise laws.

“The Ministry of Commerce is developing a Law on Commercial Contracts, which purportedly contains a section on franchise agreements, but there is no clear timeline for the enactment of this law. Therefore, franchising is largely governed by laws of general application that implicate franchise issues,” said Cohen.

US Embassy spokesperson Chad Roedemeier reiterated that despite a lack of laws – that more developed markets may have – overall US companies are interested in doing business in Cambodia as this week’s Franchise Expo underscored.

“Cambodia has taken some steps to improve its intellectual property (IP) legal framework, however, IP enforcement remains a concern of US companies. If Cambodia’s business climate improves, the Kingdom will become a more attractive destination for US investors,” said Roedemeier.

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