Franchising in Vietnam

22 March, 2025 78 Views

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Franchising in Vietnam is experiencing a strong boom, reflecting the country’s rapid economic growth and shifts in consumer habits. With the advantage of a large and expanding market, Vietnam has become an attractive destination for investors in the franchise sector. Notably, the rise of the middle class and the growing preference for international brands have created a favorable environment for major franchise chains to expand their operations. However, along with these opportunities, businesses also face significant challenges, from complying with legal regulations to understanding and adapting to local consumer demands.

What is franchising?

Franchising in Vietnam

According to Article 284 of the 2005 Commercial Law, franchising (franchise) is a commercial activity in which the franchisor allows and requires the franchisee to independently conduct the sale of goods or provide services under specific conditions.

A franchise agreement is a contract that guides businesses on using a product or operational process that constitutes an industrial property object under protection. Franchising involves the transfer of technology, trademarks, or other intellectual property rights.

Conditions for franchising in Vietnam

Franchising in Vietnam

Conditions for the Franchisor

The business system intended for franchising must have been in operation for at least one year.
If a Vietnamese business is a master franchisee receiving rights from a foreign franchisor, it must have operated under the franchise model in Vietnam for at least one year before sub-franchising.
The franchisor must register its franchise operations with the competent authorities (the Ministry of Industry and Trade and the Department of Industry and Trade).
The goods and services involved in the franchise must be legally permitted for business operations. If the goods or services fall under restricted or conditional business categories, the company must obtain the necessary business licenses from regulatory authorities.

Note:
According to Decree 08/2018/NĐ-CP, the regulations on conditions for franchisees and permissible goods and services in franchising have been abolished.

Franchise agreement

Like most other commercial contracts, a franchise agreement must include comprehensive details about the parties involved, including:

Franchisor Information: Business registration certificate, address, contact number, tax code, and details of the legal representative.
Franchisee Information: Full name or legal representative’s name, contact details, and personal identification number.
Definitions of Technical Terms: Clear explanations of franchise-related terms.
Subject of the Contract: The brand or trademark being franchised.
Rights and Obligations of Each Party: Detailed terms based on mutual agreement, ensuring compliance with legal regulations.
Other Provisions: Contract initiation date and location, contract value, payment terms, penalties for breaches.

A well-structured franchise agreement not only protects the rights of both parties but also establishes a strong foundation for a long-term and successful business relationship.

Rights and obligations of parties in a franchise agreement in Vietnam

Franchising in Vietnam

Rights of the Parties

According to Article 286 of the 2005 Commercial Law, unless otherwise agreed, the franchisor has the following rights:

Receive franchise fees.
Conduct advertising for the franchise system and network.
Inspect the franchisee’s operations periodically or unexpectedly to ensure system consistency and quality control.

According to Article 288 of the 2005 Commercial Law, unless otherwise agreed, the franchisee has the following rights:

Request the franchisor to provide technical support related to the franchise system.
Demand equal treatment compared to other franchisees within the system.

Obligations of the Parties

According to Article 287 of the 2005 Commercial Law, unless otherwise agreed, the franchisor has the following obligations:

Provide guidance documents on the franchise system.
Offer initial training and ongoing technical support to franchisees for proper system operation.
Design and arrange sales/service locations at the franchisee’s expense.
Ensure intellectual property rights protection for the franchised elements.
Treat all franchisees equally within the franchise system.

According to Article 289 of the 2005 Commercial Law, unless otherwise agreed, the franchisee has the following obligations:

Pay franchise fees and other payments as stipulated in the contract.
Invest in necessary facilities, finances, and human resources to operate the franchise.
Accept oversight and guidance from the franchisor and comply with design and location arrangement requirements.
Maintain confidentiality regarding franchised business know-how, even after contract termination.
Cease using the franchisor’s trademark, trade name, slogans, business symbols, and intellectual property rights after contract expiration.
Operate in accordance with the franchise system.
Obtain franchisor approval before sub-franchising.

For free legal consultation, contact BKC Law at:

Phone: 0901 3333 41
Email: info@bkclaw.vn

District 1 Office: 9th Floor, Diamond Plaza, 34 Lê Duẩn, District 1, Ho Chi Minh City
Binh Tan Office: 41 Tên Lửa, Binh Tan, Ho Chi Minh City

Related Articles:

Process for Obtaining a Work Permit for Foreign Workers in Vietnam

Legal advisory contract drafting services by Lawyers in Ho Chi Minh cityCopyright Registration Service

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This article is intended to provide general information only and is not intended to provide any architectural solution ideas for any specific case. The legal regulations cited in the article were in effect at the time of posting but may have expired by the time you read it. BKC Law recommends that you consult a professional/lawyer before applying.