On July 2015, US fast food chain, KFC, opened first outlet on Bogyoke Aung San Road in Yangon. On that day, excited crowd stood in a queue to enjoy fried chicken of KFC, the first US fast food in Myanmar. After two years, there are 16 outlets of KFC in Yangon, two in Mandalay, two in Bago and one in Taunggyi respectively.
Like it or not, global fast food culture has arrived in Myanmar. Other foreignowned fast-food chains have entered Myanmar in recent years. For example, in 2013, South Korea’s Lotteria opened its outlet in Myanmar. Japan’s Freshness Burger in 2014 and Burger King of the U.S. in 2015 embarked their journey in Myanmar. Significant opportunities exist in the range of fast food/drink options from hamburgers to coffee shops to mid-range restaurant franchise chains.
New to the franchise industry Myanmar naturally lags behind its Asian neighbors; Indonesia has 486 franchise brands and 39,000 outlets; Malaysia has 666 brands and 5,066 outlets; Philippines have 1,500 brands and 140,000 outlets; and Singapore has 500 brands and 3000 outlets . The industry in these countries, as in USA and UK, creates jobs and contributes to GDP. Myanmar aims to follow this and has recently set up its own Franchise Association.
Myanmar’s growing urban middle class, supplemented by a significant expatriate community, increasingly frequents restaurant franchises. Franchising in Myanmar remains unregulated, and foreign franchisors are increasingly looking toward Myanmar as a potential business opportunity, with a population of over 51 million and strategically located between China, India and Thailand.
H o w c a n F r a n c h i s i n g S u p p o r t Myanmar Economic Development? Franchising plays a vital role in the nation’s economy, according to a study conducted for the International Franchise Association Educational Foundation by PricewaterhouseCoopers. O n e u n d e n i a b l e c r u c i a l p o i n t is flowing foreign investment into country and boosts the foreign direct investment. Important factors are drives entrepreneurial activity, supports the participation of women, youth and minorities in business ownership, Promotes job opportunities, reduces risk in consumer purchasing and for economies in transition franchising is an ideal method of privatizing parts of large public sector enterprises.
Investment of a foreign company in the local market can provide new technologies, capital, products, o r g a n i z a t i o n a l t e c h n o l o g i e s , management skills and potential cooperation and business opportunities for local businesses. For example, Volkswagen, a European automotive manufacturing company, is building a plant in Tennessee. Its investment needs local small businesses as suppliers — from the construction sector during building, from suppliers of equipment and accessories in the automotive industry and from other businesses, such as cleaning services and plumbers. Myanmar does not have a specific franchise law. Franchise agreements are subject to general Myanmar commercial laws governing commercial contracts and license agreements, including the general provisions of Contract Act, 1872. The franchise agreement in Myanmar does not need to be registered, notarized or legalized before any authority. Normally, like other ASEAN countries, the contract term is five years.
Myanmar is not currently a signatory of the Paris Convention for the Protection of Industrial Property or any other treaty protecting patents. However, in accordance with the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), to which it has acceded, Myanmar is required to implement and comply with Articles 1-12, Article 19 of the Paris Convention and the terms of TRIPS by no later than 1st July 2021. Although the drafts have been ready as early as 2014, Myanmar’s new IP laws have yet to be passed despite earlier forecasts. Now, Myanmar has been drafting IP laws in such as the Patent Law to ensure its IP legislation is more in line with the TRIPS.
It is force for government if they want to keep breast with their ASEAN neighbor countries. Myanmar is the last country to enact IP laws among the ten ASEAN countries. Its neighboring countries have already enacted IP laws decades ago. Currently, action can be taken against fake products under section 186, section 486 and section 18 of the Constitution. There is also the dark side of flowing franchisor business into a country. Investment of a foreign company with its new technologies and products has several disadvantages for local businesses especially food and beverage sector. New products arriving at lower prices create competition and force local businesses to lower their prices and reorganize their operations in terms of costs. Local businesses may lose their customers or even their business relations with other companies as they start cooperating with the new foreign one.
For example, Egypt, as soon as opening up the country and almost all foreign food and beverage brands came to Cairo, capital city of Egypt. You can enjoy Burger King, KFC, and M a c D o n a l d a r o u n d every corner of Cairo but chances to find local Egyptian food around the streets of town are getting less. Franchising can be an angel and at the same time an evil. To counterattack, local entrepreneurs who well-connected with politicians, are trying to penetrate local Egyptian food in market aggressively.
The question to address to government is do we let that happen or do we somehow manage to preserve heritage. Within few years, Myanmar could also face same kind problem. The more you see the international brand of food and beverage, the lesser you can find the local food. This is bad omen of traditional Myanmar food.
Kathleen McDonald, consultant of SME and Franchising, said “the best solution is to develop the local brand to contain local culture. Feel is expanding its brand with Myanmar food in other countries and you can license with three different models; Formal dining room, mid-level dining room and kiosks and they all are under franchising. They are aggressively making that entering market and showing that Myanmar food is definitely part of culinary culture. Myanmar food for thought also another local company acquired international brand. Now they are developing serious concept some of which focus on Myanmar food culinary heritage”.
She added “what happening is as international brand come in, local entrepreneur sees opportunities to learn how the franchising model operate, acquire the expertise and they are using to develop local food in here, home. So they are far more aggressive than what was happened fifteen years ago in Egyptian which as country opened up and let all international food and beverage comes in. Nobody said we should support local culture and not get overwhelmed by international brands at that time.”
Since September 2015, we can found traditional Myanmar delicacy Htan Nyat Ke, or “jaggery” with lovely packaging namely “Tree Food” on super market. Cho Lei Yee, the found of “Tree Food”, offering jaggery in dainty sizes and a variety of flavours. Chic packaging and marketing has led to her ‘art food’ to be a quick success. Cho Lei is on a mission to preserve the heritage of Myanmar food. Jaggery is made from palm and Myanmar is full of palm trees in the tropical zone. Usually, Myanmar people eat a piece of jaggery after meal as it can improve the digestion or sometimes, or we eat with a pot of tea in the afternoon. Now in 2018, she can introduce another line of Myanmar traditional food “Laphet Sauce” under the name of “Tree Food”. Laphet means fermented or pickled tea leaves. Myanmar is one of very few countries where tea is eaten as well as drunk. Its pickled tea is unique in the region, and is not only regarded as the national delicacy but plays a significant role in local society. As the Myanmar old saying goes “Of all the fruit, the Mango’s the best; of all the meat, the Pork’s the Genius coffee, another famous brand exported to foreign countries, started processing and roasting coffee in late 2012. Genius export its product mainly to Hong Kong, Taiwan, Thailand and Singapore, and has plan to open branch offices in Canada in the future to sell specialty coffee there. In 2017, Ngwe Tun, the founder of Genuis Shan Highlands Coffee said to MyanmarNows new agency, Export market demand for said brand has increased from one to six tons in recent years.
International brands coming to a country can boost its economy. But heritage of the traditional food also needs to be conserved. Only history can tell whether Myanmar will follow the path of many other developing countries.