Vietnam: Franchise Laws Promote Increased Franchising Activity

At present there are approximately 70 franchising systems operating in Vietnam, principally Malaysia’s Parkson, Germany’s Metro Group AG, and the United States’s CBRE, Dilmah, and KFC. Several Vietnamese businesses have joined the trend toward franchising, such as Trung Nguyen Coffee, Pho 24, Kinh Do Bakery, AQ Silk, and Coffee24Seven. As the thirteenth most populous country in the world with a set of recently revised franchise laws, Vietnam is poised for dramatic growth in its franchise sector.

 

Vietnam’s Commercial Law provides the basic legal framework for franchising, while related franchising regulations are contained within certain decrees and the country’s Intellectual Property Law and Technology Transfer Law. Vietnam’s franchise laws apply to franchising activities between Vietnamese parties, to foreign franchisors granting franchise rights within Vietnam, or to Vietnamese franchisors granting franchise rights in a foreign country.

 

Two key features of the new laws relate to registration and disclosure.  Franchisors must register their franchising activity and pay a registration fee with the proper authorities before franchising their businesses. The registration materials must include a standard registration form, a form copy of the franchisor’s disclosure document, a certified copy of the franchisor’s business registration, and copies of any certificates reflecting the franchisor’s intellectual property rights.

 

Vietnam franchise laws also now require the franchisor to provide prospective franchisees with a disclosure document and a copy of the franchise agreement at least fifteen (15) working days prior to execution of the agreement, unless the parties otherwise agree on a longer period.  Click here to read article on Franchise Chat.

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