7-Eleven to join the growing number of convenience stores
12 Jun 2017
The first 7-Eleven store is about to open in Vietnam, in the coming days, with a store in Ho Chi Minh City, interestingly in the lobby of a commercial office building on the edge of the CBD.
The structure is a master franchise agreement with a Vietnamese franchisee owned, at least in part, by IFB Holdings which currently runs the Pizza Hut Chain and Coffee Bean and Tea Leaf. There are currently two other Japanese convenience stores, operating in Vietnam, the largest being Family Mart and the other Ministop.
7- Eleven plans to have over 100 stores within 3 years and 1000 stores in ten years, serving signature products and unique designed products.
The key challenge for foreign owned convenience stores is the “economic needs test” for majority foreign owned retail outlets, where they open more than one outlet. The ENT does not apply on retail outlets with less than 500 sq m in areas designated for retail activities (i.e. shopping malls or similar designated areas). This accounts in some cases for the use of a franchise model or outlets majority owned by local enterprises or shareholders.
The economic needs test was due to be scrapped under the provisions of the Draft TPP Agreement, within 5 years of coming into effect but it is currently not clear whether Vietnam will follow through with this in the absence of the TPP.