Recently, franchising activities have been rapidly developed in Vietnam. Several big brands with multinational presence have successfully conducted franchising in Vietnam. Typically, they are McDonald’s, Baskin Robbins (USA), Pizza Hut, Burger King (Singapore), Lotteria, BBQ Chicken (Korea), Swensen’s (Malaysia), etc. However, for traders (merchants) to be able to conduct legally franchises in Vietnam, the franchise transaction must meet certain conditions.
Through this article, BLawyers Vietnam would like to present the conditions for legal franchise transactions in Vietnam.
1. Conditions to franchise in Vietnam
A franchisor must have a to-be-franchised business system that has been operated for at least 01 year. Currently, there has been no regulation applied to the franchisee.
2. Franchising contract in Vietnam
A franchising contract must be established in writing or other equivalent forms. If the parties in such contract choose Vietnamese law which is the applicable law, the contents of the contract must be in accordance with Vietnamese law. Accordingly, the main contents of a franchising contract cover:
(i) Content of franchised commercial right;
(ii) Rights and obligations of the franchisor;
(iii) Rights and obligations of the franchisee;
(iv) Price, periodical franchise fee, and payment methods;
(v) Valid term of the contract; and
(vi) Renewal and termination of the contract, and settlement of disputes.
In addition, the franchising contract in Vietnam shall be made in Vietnamese.
3. Registration of franchising activities in Vietnam
To perform the franchise in Vietnam, Vietnamese or foreign trader, who intends to franchise, must register their franchising activity with a competent authority.
4. Registration of transfer of the right to use the Industrial Property Rights (“IPRs”) mentioned in the franchising transaction
If a franchising contract states on transfer of the right to use the IPRs, it must be made a separate part. Such transfer of the right to use the IPRs shall be registered with the competent authority.
Of note, a franchising contract is automatically terminated if the franchisor’s copyright is terminated.
For further information, please contact:
Minh Ngo Nhat, Partner, BLawyers