Franchise industry expands

Cambodia's growing economy and hunger for new brands, particularly among young people, contribute to making Cambodia a profitable market for the franchise business, industry insiders said at the Franchising Forum in Phnom Penh last week.

“Cambodia in the last 10 years has been on a very steady track,” Rami Sharaf, CEO of RMA Group in Cambodia said. 

“We can see a rising socio economic middle class looking for lifestyle, looking for quality.”

He said Cambodia is an emerging market and the right destination for franchise businesses. “Cambodia is now like a dry sponge. Whatever we bring in this sponge will absorb, while in other countries, this sponge is overloaded.”

According to Steven Sim, group CEO and managing director of lifestyle café chain Secret Recipe, which just expanded to Cambodia, countries such as Malaysia, Singapore or Indonesia are a bit more matured in terms of franchising than Cambodia.

But “in Cambodia there is a hunger of new brands, people are waiting for new brands to come in”, he said. 

“There are a lot of young people who have traveled abroad, who have seen in the internet what’s new, what’s coming up.”

Steven Sim said young people want to associate themselves with lifestyle and with something that is new and trendy.

Cambodia’s economy grew at almost 10 per cent annually between 1998 and 2008, according to the World Bank. The country’s GDP is projected to grow at 6.2 per cent in 2012, data by the Economic Institute of Cambodia show.

According to Laurent Notin, general manager of Indochina Research, economic growth contributes to the growth of the franchise business. He also said there is a growing middle class in Cambodia, especially in Phnom Penh.

In 2005, Express Food Group (EFG) Co Ltd, a sister company of RMA Cambodia, brought the Thailand-based Pizza Company to Cambodia. Until that year there were no franchise restaurants in Cambodia but the market consisted only of local restaurants, according to Rami Sharaf. 

EFG also introduced US originated Swensen’s ice-cream and Dairy Queen as well as South Korea’s BBQ Chicken to Cambodia.

According to Rami Sharaf, every position among the total 650 employees of all outlets under RMA and EFG are staffed with Cambodian personnel.

“It is a great example of what the youth of this country can do when they are trained well, when they are qualified and how they can take this responsibility of leading brands and franchises,” he said.

The expansion of franchise restaurants can affect some of the local restaurants. 

Khan Sreyrot works as a waitress in a local restaurant in Phnom Penh, which has been operating for around 10 years. 

She said before 2005, the modern and young customers used to come to that place. Nowadays, they prefer new and modern places such as fast food restaurants, causing her to lose customers and make less profit.