Commercial franchising is one of the forms of commercial business. Accordingly, the franchisor authorizes the franchisee to conduct the purchase and sale of goods or services according to the business organization provided by the franchisor in association with trademarks, trade names, and secrets. franchise business, business logo and advertising image.
In order to participate in this franchise activity, both franchisors and franchisees must meet certain conditions. They must carry out procedures to register the franchise operation before signing a franchise contract between the two parties. Foreign investors wishing to carry out franchising activities for Vietnamese traders or receiving franchises from Vietnamese traders must comply with Vietnam’s legal provisions on franchising activities.
Conditions for franchisors
In order to carry out franchising activities, it must ensure that the business system intended to franchise has been operating for 1 year or more. Where goods and services ceded under the subject of franchise contracts must ensure that they are not on the list of goods banned from business. In case of goods and services subject to restricted business, they must be licensed.
Conditions for franchisee
In order to receive the franchisor’s rights to trade in goods and services, it is required to register that service business.
Procedures for franchising registration for foreign traders
Under the current regulations, the franchisor must carry out the procedures for registering the franchise operation before signing a franchise contract. Foreign traders who intend to franchise into Vietnam must register the franchise operation with the Ministry of Industry and Trade first.
Application file for operation registration
- Application for franchise registration
- Certificates of legal status such as business registration certificates, establishment decisions issued by foreign competent authorities
- In case of transfer of the right to use protected industrial property objects such as trademarks, inventions or designs, they must provide protection titles in Vietnam or abroad.
- For papers issued by foreign competent agencies, consular legalization must be conducted.
Dossiers of registration of franchising activities of foreign traders will be submitted in paper form to the Ministry of Industry and Trade. The Ministry of Industry and Trade will review and resolve the application within 5 working days from the date of receipt of the complete and valid application file. If the foreign trader meets the franchisor’s eligibility, the Ministry of Industry and Trade will record the franchise information in the Franchise Register and notify the foreign trader of the approval.
Signing a franchise contract
After completing the franchise registration, foreign traders and Vietnamese traders can sign a franchise contract. Franchise contracts may include some minimum information as follows:
- Information about commercial rights
- Rights and obligations of the franchisor and the franchisee
- Prices, periodic franchise fees and payment methods
- Validity of contract
- Argument settlement
- Schools unilaterally terminate the contract
- Compensation for damages and penalties for breach of contract
- In addition, in cases of transfer of industrial property rights, a separate industrial property transfer contract must be made with a franchise contract.
The above are some legal provisions related to the implementation of commercial franchising activities of foreign traders who want to enter into franchise contracts for Vietnamese traders. You need assistance to consult HNLAW & PARTNERS franchise consulting services
Please contact HNLAW & PARTNERS for more detailed and specific advice on your specific case.