Currently, franchising helps brands get closer to consumers, which is a potential option considered by many investors. Based on the provisions of Vietnamese law, HTLaw would like to summarize the most basic and important information about Franchising in Vietnam.
- I. Conditions for the franchisor
- II. Conditions for the franchisee
- III. Goods and services permitted for franchising business
- IV. Contents of the franchising contract
- V. Language of the franchising contract
- VI. Valid term of the franchising contract
- VII. Registration of franchising
- VIII. Decentralization of responsibility to register franchising
- IX. Dossiers of application for registration of franchising
- X. Procedures for registering to franchise
I. Conditions for the franchisor
A businessman shall be permitted to grant commercial rights when fully satisfying the following conditions:
1. The business system intended to be used for franchising has been in operation for at least 1 year. In case a Vietnamese trader is a primary franchisee from a foreign franchisor, that Vietnamese trader must do business under the franchising method for at least 1 year in Vietnam before re-granting a franchise.
2. Such a trader has registered franchising with a competent agency.
3. Business goods and services subject to commercial rights do not violate regulations.
II. Conditions for the franchisee
A trader shall be permitted to receive commercial rights when having the registration of business lines subject to commercial rights.
III. Goods and services permitted for franchising business
1. Goods and services permitted for franchising businesses are those not on the list of goods and services banned from the business.
2. Enterprises shall be permitted to deal in goods and/or services on the list of goods and services restricted from business or those on the list of goods and services subject to conditional business only after being granted business licenses or papers of equivalent value by the branch-managing agencies or fully satisfying business conditions.
IV. Contents of the franchising contract
Where the parties choose to apply Vietnamese law, a franchising contract may have the following principal contents:
1. Content of franchised commercial right.
2. Rights and obligations of the franchisor.
3. Rights and obligations of the franchisee.
4. Price, periodical franchise fee, and mode of payment.
5. Valid term of the contract.
6. Renewal and termination of the contract, and settlement of disputes.
V. Language of the franchising contract
The franchise contract must be made in Vietnamese. In case of franchising from Vietnam to abroad, the language of the franchise contract shall be agreed upon by the parties.
VI. Valid term of the franchising contract
The valid term of a franchising contract shall be agreed upon by the involved parties.
VII. Registration of franchising
1. Before conducting franchising activities, Vietnamese traders or foreign traders that intend to franchise must register franchising with competent agencies.
2. The agency competent to register commercial franchising activities shall register the trader’s commercial franchising activities in the commercial franchising register and notify the trader in writing of the registration.
VIII. Decentralization of responsibility to register franchising
1. The Ministry of Trade shall register the following franchising activities:
a) Franchising from overseas into Vietnam, including franchising from export processing zones, non-tariff areas, or separate customs areas specified by Vietnamese law into the Vietnamese territory;
b) Franchising from Vietnam to overseas, including franchising from the Vietnamese territory into export processing zones, non-tariff areas, or separate customs areas specified by Vietnamese law.
2. Trade Services and Trade-Tourism Services of provinces or centrally-run cities where traders that intend to franchise make business registration shall register franchising at home, except for franchising across boundaries of export processing zones, non-tariff areas, or separate customs areas specified by Vietnamese law.
IX. Dossiers of application for registration of franchising
A dossier of applications for registration of franchising comprises:
1. An application for registration of franchising, made according to the form guided by the Ministry of Trade.
2. A written introduction to franchising, made according to the form set by the Ministry of Trade.
3. Written certifications of:
a) The legal status of the intended franchisor;
b) Industrial property rights protection titles in Vietnam or a foreign country in case of licensing industrial property subject matters for which protection titles have been granted.
4. Where papers specified in Clauses 2 and 3 of this Article are written in foreign languages, they must be translated into Vietnamese and notarized by domestic notaries public or Vietnam’s foreign-based diplomatic missions and consular legalized according to the provisions of Vietnamese law.
X. Procedures for registering to franchise
1. An intended franchisor shall register franchising according to the following procedures:
a) Sending a dossier of application for registration of franchising to the competent state agency defined in Article 18 of this Decree;
b) Within 5 working days after receiving a complete and valid dossier, the competent state agency shall register franchising in the franchising register and notify in writing the traders of such registration.
c) Where the dossier is incomplete or invalid, the competent state agency shall, within 2 working days after receiving such dossier, notify such in writing to the intended franchisor for supplementation and completion of its dossier;
d) The time limits specified in this Clause shall not include the time for the intended franchisor to amend and supplement its dossier of application for registration of franchising;
e) Past the time limits specified in this Clause, if the competent state agency refuses to effect the registration, it must notify such in writing to the intended franchisor, clearly stating the reasons for refusal.
2. Procedures for registering contracts on licensing of industrial property subject matters shall comply with the provisions of the law on industrial property.
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