Franchising has always been considered one of the business models having high socio-economic value. This activity not only brings enormous benefits to franchising owners, but also provides a way to effectively share a business opportunity with many others, especially in developing countries such as Vietnam, helping individuals and organizations who are insufficient sources to self-build a business from zero.
In addition to the reputation of their service and product’s quality to build a truly effective franchise system, franchisors must also keep in mind legal issues involved in this activity. In fact, franchising covers a wide range of issues such as entering a contract, franchise contract registration, intellectual property, technology transfer, confidential information, raw materials supply, and operating franchise stores… Especially when franchisors want to expand their business worldwide, this activity will be governed by at least two different legal systems.
Therefore, Apolat Legal, with lawyers and associates advised and assisedt in the implementation of many complicated franchise transactions, will help customers orient and understand the legal issues surrounding this operating model thoroughly. Specifically, the scope of our services includes:
- General consulting in relevant legal policies;
- Drafting or reviewing exclusive franchise and sub-franchise agreements;
- Drafting or reviewing other documents and agreements related to the system’s operation to ensure consistency with franchise agreements and regulatory compliance;
- Consulting the compliance with laws and contracts during the franchising term;
- On behalf of the franchisor or the franchisee to negotiate and enter into a franchise agreement;
- Registering the Franchise system to competent authorities;
- Other relevant legal services upon clients’ request;
- On behalf of the franchisor or franchisee resolves disputes related to franchise activities.
Apolat Legal believes that the range of services we provide will fulfil all the requirements of our customers and act as a support link to help clients keep up with the development in the field of franchising.
1/ Ministry of Industry and Trade has just issued Circular No. 21/2020/TT-BCT dated September 09th, 2020 regulating the procedure of granting license for electricity activities
Circular No. 21/2020/TT-BCT regulating the order and procedures for granting of electricity activities license, the duration of electricity activities license in the fields of work design consultancy, power generation, electricity distribution, electricity wholesaling and electricity retail. According to this Circular, the following cases shall be exmepted from electricity activities license:
- The generation of electricity is for the purpose of self-consuming without selling electricity to any other organizations or individuals;
- The generation of electricity with an installed capacity of not exceeding 01 MW to sell to other organizations or individuals;
- Electricity traders in rural, mountainous or island regions purchase electricity with a capacity of not exceeding 50 kVA from electricity distributors for supplying electricity directly to consumers in such rural, mountainous or island regions;
- Electricity activities are performed to serve the national electrical load dispatch and management of electricity market.
For cases requiring electricity activity licenses, the maximum validity in the electricity activity licenses is prescribed as follows:
|1||Electricity consultancy||05 years|
|a)||Power plants that are on the list of large-scale power plants which have special importance in socio-economic, national defense and security aspects approved by the Prime Minister||20 years|
|b)||Power plants that are not on the list of large-scale power plants which have special importance in socio-economic, national defense and security aspects approved by the Prime Minister||10 years|
|3||Electricity transmission||20 years|
|4||Electricity distribution||10 years|
|5||Electricity wholesaling, electricity retailing||10 years|
Power to issue electricity activities license:
- The Ministry of Industry and Trade shall issue the electricity operating license intended for electricity transmission and generation by large-scale power plants on the list of large-scale power plants of critical importance in respect of society, economy, national defense and security approved by the Prime Minister;
- The Electricity Regulatory Authority shall issue the electricity operating license intended for electricity distribution, electricity wholesaling, electricity retail, electrical consulting services and electricity generation by power plants with a capacity of at least 03 MW other than those are issued by the Ministry of Industry and Trade;
- Provincial-level People’s Committee shall issue and revoke or authorize the Department of Industry and Trade of that province to issue electricity licenses in the following sectors:
- Electricity generation by a power plant that has a capacity of less than 03 MW and is located in the province;
- Electricity distribution with a voltage up to 35 kV in the province;
- Electricity retailing with a voltage up to 0.4 kV in the province;
- Electrical consulting services, including: (i) Consulting services provided by an enterprise of which the registration is made at the province on the investment and construction of transmission lines and electrical substations with a voltage up to 35 kV; and (ii) Consulting services provided by an enterprise of which the registration is made at the province on the supervision of construction of transmission lines and electrical substations with a voltage up to 35 kV.
Circular No. 21/2020/TT-BCT comes into effect on October 26th, 2020.
2/ The Government agreed with the proposal of the Ministry of Natural Resources and Environment to resolve difficulties for production and business in the context of the Covid-19 pandemic
Resolution No.129/NQ-NP dated September 11th, 2020, the Government agreed with the proposal of the Ministry of Natural Resources and Environment and the Government Office on solving difficulties for production and business in the context of pandemic Covid-19. The details are as follow:
- To permit extending the time of completion of the installation of automatic and continuous wastewater and gas monitoring systems specified in Clauses 20 and 23, Article 3 of Decree No. 40/2019/ND-CP until December 31st, 2021.
- To permit extending the validity of the License for hazardous waste treatment (issued by the Ministry of Natural Resources and Environment to the enterprise) in the cases specified in Clause 39, Article 3 of Decree No. 40/2019/ND-CP to December 31st, 2021, and at the same time not required to repeat the approved environmental impact assessment (EIA) report if the location is not changed or capacity is not increased in accordance with Article 20 of the Law on Environment Protection 2014.
- To permit extending the validity of the Certification of eligibility for environmental protection in import of scrap for use as raw production materials in the cases specified in Clause 39, Article 3 of Decree No. 40/2019/ND-CP to December 31st, 2021, and at the same time not required to repeat the EIA report if the location is not changed or capacity is not increased in accordance with Article 20 of the Law on Environment Protection 2014.
The Ministry of Natural Resources and Environment is responsible for the implementation.
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[Legal Updates] Updating some new supplements on investment registration regulations under Law on Investment 2020admin
1/ Ministry of Construction has just issued an official letter No. 4308/BXD-HĐXD on management the investment and construction of condotel, officetel, resort villas, shophouse projects
In recent years, to meet the needs of the real estate market, new types of real estate such as accommodation/tourism apartments, offices combined with accommodation, resort/tourism villas, and shophouses have arisen. Along with the management of construction investment in accordance with the current law, new legal regulations are also being completed by ministries to adjust the specific factors of these new real estate types, specifically:
- The Ministry of Culture, Sports and Tourism issued Decision No.3720/QD-BVHTTDL dated October 28, 2019, promulgating the Regulation on management and business of tourist apartments and tourist villas.
- The Ministry of Natural Resources and Environment has issued document No.703/BTNMT-TCQLĐĐ dated February 14, 2020, guiding the land use regime and certification of non-housing ownership.
- The Ministry of Construction has issued document No.276/BXD-QLN dated January 20, 2020, to the People’s Committees of centrally-affiliated cities and provinces on the management of investment, construction, and trading of tourist apartments and villas travel; proposing the implementation of investment and construction management, issuance of a certificate of land use rights, ownership of houses and land-attached assets in accordance with current law, ensuring compliance with the plan, which the state agencies have approved and cautiously consider the conversion of functions and purposes of commercial and service works into housing. In addition, the Ministry of Construction has also issued national technical regulations for each of these types of real estate. Furthermore, the Ministry of Construction has also drafted for the Ministry of Science and Technology to announce national standards to propose general design requirements for these types of constructions.
However, in the process of investing, constructing, and operating the real estate projects mentioned above, there are still several issues that still exist and have not been effectively resolved, for instance: construction planning projects have been identified the function of accommodation but have not been calculated specific population; shortcomings, problems in the operation, management and use of the building with many owners, users, operation and exploitation; granting ownership papers, converting the functions, using purposes.
To improve state management efficiency and overcome outstanding problems, the Ministry of Construction requested the People’s Committees of provinces and centrally-run cities to direct in construction management and implementation of administrative procedures of the above real estate project, which should consider the following contents:
(i) When evaluating and approving the subdivision planning, detailed construction planning, it is necessary to ensure compliance with the current system of standards and technical regulations, clarify the size of the construction floor area, the number of bases, population target.
(ii) When deciding on the investment policy, it is necessary to ensure the consistency of the investment purpose, land use purpose with the function of the work, and the actual situation in the locality.
(iii) Consider the issuance of new legal procedures to permit construction investment (approval of planning, the decision on the policy of investment projects).
(iv) When carrying out project appraisal, construction design, construction licensing, and checking and acceptance; it is necessary to carefully check and review legal bases on construction planning, investment policy, evaluating the compliance with the system of technical standards and regulations, especially newly issued standards and techniques. Contacting local state authorities on construction for population information. Notifying the results of appraisal and inspection of the pre-acceptance test to the state management agencies in charge of local construction for management during project implementation.
2/ Updating some new supplements on investment registration regulations under Law on Investment 2020
(i) At Clause 1 Article 22 Investment Law 2020 stipulates foreign investors are not required to apply for an investment registration certificate in case of establishment of a small and medium-sized innovative startup and investment fund creative industry under the provisions of the law on supporting small and medium-sized enterprises.
The creative startup medium and small enterprises: According to regulation at clause 2 article 3 Law on assistance for small and medium-sized enterprises 2017, The creative startup medium and small enterprises are SMEs that is established to implement its business ideas based on the exploitation of intellectual property, technology and new business models and is able to grow quickly. Accordingly, to become a creative startup medium and small enterprises have to fulfil the conditions:
- Be SMEs. According to regulations at Article 4 law provision of assistance for small and medium-sized enterprises 201, An SME is either a micro-enterprise, small enterprise or medium-sized enterprise having the annual average number of employees who participate in social insurance is not greater than 200 and satisfying one of the following criteria:
- The total capital is not greater than 100 billion dong;
- The enterprise’s revenue of the previous year is not greater than 300 billion dong.
- Enterprises established to express ideas on the basis of exploiting new intellectual property, technology, and business models;
- Capable of rapid growth.
Creative startup fund: According to regulation clause 2 article 2 Decree 38/2018/ND-CP Creative startup fund is funded that established from private investor capital to carry out creative startup investment. The investment in the establishment of a creative startup investment fund can be referred to the provisions of Decree 38/2018 / ND-CP dated March 11, 2018, detailing investment for small and medium-sized enterprises creative startup.
(ii) Making investment by contributing capital, purchasing shares or purchasing capital contributions
Law on Investment 2014 generally stipulates that Investors shall carry out the procedures for registration of capital contribution, share purchasing or capital contributions purchasing when contributing capital, purchasing shares or purchasing capital contributions to economic organizations operating in business line with conditions applied to foreign investors or contributing capital, purchasing shares or purchasing capital contributions leads to foreign investors holding 51% or more of the charter capital of economic organizations.
Law on Investment 2020 stipulates more specifically cases that foreign investors carry out the procedures for registration of capital contribution, share purchasing or capital contributions purchasing when:
- The capital contribution or purchase of shares or stakes increases the ownership ratio by foreign investors in a business entity conducting business in the business lines allowed in the market with conditions applied to foreign investors; or
- The capital contribution or purchase of shares or stakes results in a foreign investor or business entity specified in Points a, b and c Clause 1 Article 23 of this Law holding over 50% of the charter capital of the economic organization in the following cases: The charter capital ownership ratio by the foreign investor is increased from less than or equal to 50% to over 50%; the charter capital ownership by the foreign investor is increased while such foreign investor is holding over 50% of the charter capital of the business entity; or
- The foreign investor that contributes capital, purchases shares or stakes of a business entity has a certificate of rights to use land on an island or in a border or coastal commune; in a coastal commune; in another area that affects national defence and security.
Currently, Law on Investment 2020 is becoming effective soon (January 01, 2021), so, to carry out the procedures for registration of capital contribution, share purchasing or capital contributions purchasing to economic organizations, foreign investors need Decrees with specific guidances and forms.
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[News] Apolat Legal officially became a member of the International Association for the Protection of Intellectual Propertyadmin
In August 2020, Apolat Legal officially became a member of the International Association for the Protection of Intellectual Property (AIPPI).
AIPPI is the world’s leading non-profit association dedicated to the development and improvement of laws for the protection of intellectual property. It is a non-profit organization based in Switzerland with around 9000 members worldwide from more than 125 countries.
In Vietnam, the group has operated under the auspices of the Vietnam Intellectual Property Association in many IP-related activities such as training, consultation and criticism, domestic and international cooperation.
One of the most important activities of AIPPI in Vietnam is to focus on assisting the enterprises in building and developing intellectual property assets which is also an purpose that Apolat Legal aims at.
[Legal Updates] The General Department of Custom has issued the new guidance on import tax for solar energy projectsadmin
1| The General Department of Custom has issued new guidance on import tax for solar energy projects
On August 20th, 2020, The General Department of Vietnam Customs has issued Official Dispatch No.5533/TCHQ-TXNK on import tax of solar energy projects.
Through the process of reviewing import tax administration for renewable energy (solar energy) projects, the General Department of Customs has the following comments:
- Pursuant to Article 16 of the Law on Import and Export Taxes and Article 14 of Decree 134/2016/ND-CP, imported goods to create fixed assets of the beneficiaries of investment incentives include:
Devices; components, details, detachable parts, spare parts for synchronous assembly or synchronous use with machinery or equipment; raw materials and supplies used to manufacture machinery and equipment.
Specialized means of transport in the technological line used directly for the project’s production activities. Criteria for determination comply with the regulations of the Ministry of Science and Technology.
Construction materials cannot be produced domestically. The bases for determination comply with the regulations of the Ministry of Planning and Investment in Circular 01/2018/TT-BKHDT; the criteria for determining special-use means of transport in technological lines which are directly used for production activities of projects shall comply with the Ministry of Science and Technology’s regulations.
- The development of power plants belongs to sectors and trades subject to investment incentives according to Point 3, Section III, Part A, Appendix I, issued together with the Government’s Decree No.118/2015/ND-CP, therefore, shall enjoy the incentives accordingly.
- The item “Photovoltaic panels”, “Photovoltaic panel racking system” and “Photovoltaic panel mounting bracket” are domestically produced products pursuant to Circular No.01/2018/TT-BKHDT dated March 30th, 2018 of the Ministry of Planning and Investment promulgating the list of machinery, equipment, spare parts, specialized means of transport, domestically produced use, raw materials, supplies and semi-finished products, and based on the opinion of the Ministry of Planning and Investment in Official Dispatch No. 2119/BKHDT-KTCN dated April 3rd, 2019 and Official Dispatch No.4456/BKHDT-KTCN dated July 1st, 2019.
From the above facilities, the General Department of Customs requires the Customs Departments of provinces and cities to apply tax policies on goods imported for renewable energy projects (solar power) during the implementation process of import tax exemption.
2| Updating some changes of Intellectual Property Department on handling trademark registration dossiers
At this moment, the National Office of Intellectual Property of Vietnam has some notable changes in the procedure of handling trademark application as follows:
- Before the transfer, the owner of a Protection Title (PT) changed the name/address, but there is no request to record the change on PT.
Previously, during the appraisal, the NOIP did not require the owner of the PT to submit a request for name/address amendment, but only needed the applicant to submit complete legal documents proving that the owner of the trafficking changed the name/address.
However, according to the new decision of the NOIP’s leaders, amending the PT is a procedure specified in Circular 01/2007/TT-BKHCN. The lack of request an applicant to submit a request for PT amendment when the owner has changed the name/address is a shortcut, ignoring an administrative procedure prescribed by law, resulting in a loss of fees/charges submitted to the State. Therefore, when the owner of the PT has a change the name/address, it is imperative to file a request for the PT amendment. The transfer application will be further processed when the request for the PT amendment is recorded.
- The transferor assigns to the recipient more than a PT and in the List of PT transferred, the name/address of the owners of the PT are inconsistent (due to many changes).
According to the old method, during the appraisal, the NOIP requires the owner of the PT to carry out the procedure to change the name/address to consist on the PT or separate the PT with the same name/address into a new application. In the case of separation an application, the separated application only has to pay the fee for publication of the Transfer Decision, while other fees will be transferred from the original application. A photocopy of the original assignment form should be made to show the fees/charges paid has been transferred.
According to the new decision, the NOIP requested the owner of the PT to proceed with the procedure for PT amendment in order to the name/address on the PT are consist, before performing the transfer procedures.
- In case of change the PT’s owner from the establishment, a business household, a private enterprise to an individual who is the representative of the establishment, business household, or owner of a private enterprise, it is required to carry out the transfer procedures of PT because these are two independent actors that cannot perform the PT amendment. If the transferor is the establishment or the business household, there must be additional documents of the members of the establishment or business household agreeing to the representative to sign the transfer contract.
Download Legal Updates as a PDF here.