The franchise is one of the business forms with high efficiency and profitability because this form helps franchisees make the most of partners’ capital and human resources to expand their business. The franchisors will have a huge income from franchising expenses, improving their brand identity and increasing their value. This article covers a number of obligations of franchisors in commercial franchise transactions in Vietnam.
1. Satisfying the conditions for the franchise
- The franchisors’ business system intended for franchising has been put into operation for at least 1 year.
- Goods and services under the franchised business are not on the list of goods and services banned from the business. Enterprises shall be permitted to deal in goods and/or services in the list of goods and services subject to business restriction or in the list of goods and services subject to conditional business after being granted business licenses or papers of equivalent value by the branch-managing agencies or fully satisfying business conditions.
2. Performing the procedures for franchise registration
According to current regulations, the form of the franchise with foreign franchisors in Vietnam shall not be exempt from registration. Before the commercial franchise, the franchisors must carry out the procedures for registering their franchise with the Ministry of Industry and Trade.
Such a dossier includes:
- An application for registration of commercial franchise, made according to the specified form;
- A written description of the commercial franchise, made according to the specified form;
- Documents certifying the legal status of the intended franchisor:
- A copy of the foreign trader’s business registration certificates or another paper of equivalent legal validity certified by the competent agency where the foreign trader is established in cases of commercial franchise performed by a foreign franchisor in Vietnam;
- A notarized copy of the industrial property right protection title in Vietnam or a foreign country, in cases of licensing industrial property subjects for which protection titles have been granted;
- Papers proving the approval of the primary franchisor’s permission of franchise in case the trader registering the franchise is the secondary franchisor;
3. Responsibility for information provision
- The franchisors shall provide their franchisees with a copy of their franchise contract sample and a written description of their commercial franchise at least 15 working days before entering into the commercial franchise contracts unless otherwise agreed by the parties. The mandatory contents of the written description of the commercial franchise as regulated and disclosed.
- The franchisors shall be responsible for immediately notifying all franchisees of any material changes in the commercial franchise system that affect the franchisees’ business by the method of the commercial franchise.
Disclaimer: This article is for general information only and is not a substitute for legal advice. Apolat Legal is a Vietnamese law firm with experience and capacity to advise on matters related to Franchise Consulting. Please click here to learn more about our services and contact our lawyers in Vietnam for advice via email firstname.lastname@example.org.