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23 Feb 2017
Notice of Default raises serious questions about Six Flags Vietnam development
By Tom Anstey
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All of Six Flags’ deals outside of North America operate under licensing agreements. Six Flags doesn’t pay for the park’s construction, but gains earnings through use of its trademarks
Photo: Cassiohabib / Shutterstock.com
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Six Flags’ proposed Vietnam project has hit troubled waters, after its franchise partner NaVi Entertainment failed to fulfil “contractual obligations”, with the operator serving the company a Notice of Default.
Reporting its Q4 2016 results, Six Flags revealed that growth in guest spending revenues was partially offset by sponsorship and international licensing fees, which were down US$5m (€4.7m, £4m). The operator attributed this to the faltering Vietnam development, blaming “a result of our partner's failure to fulfil their contractual obligations”.
“We're not going to delve to specifics in terms of what has occurred there in terms of our partner going into default on the agreement,” said Six Flags CEO John Duffey, speaking during the earnings call.
“We have the utmost confidence that we'll be able to remedy this situation. We have provided our partner with a Notice of Default and we're currently working with them to remedy that. We believe this is a timing issue. Vietnam continues to be a great market for us and our hope is that we'll get this project back on track. But if we don't, we still view that as a great market and there are other partners that we could aggressively pursue.”
Six Flags announced the Vietnam plans in March last year, with plans to use the Six Flags and Six Flags Hurricane Harbor names under a licensing agreement for a theme park and waterpark near Ho Chi Minh City.
All of Six Flags’ deals outside of North America operate under licensing agreements. Six Flags doesn’t pay for the park’s construction, but gains earnings through use of its trademarks.
In addition to its Vietnam plans, the US-based operator has been aggressive in its international expansion, particularly in China, where this week it signed new deals to bring two more Six Flags-branded parks to the country with existing development partner Riverside Investment Group.
The first Six Flags-branded parks in China – operating under a franchise model outside of the US – are anticipated to open in 2019 and will be located in Haiyan, Zhejiang province, near Shanghai.
In the Middle East, Six Flags has also confirmed plans to bring its first branded theme park to the kingdom of Saudi Arabia and recently broke ground on Six Flags Dubai – the latest addition to the multi-billion dollar Dubai Parks and Resorts development, which opened in December. |
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