Franchise is the popular business in the present free and modern market economy. It is that commercial activity, wherein the Franchisor and the Franchisee enter into a continuing contractual relationship whereby the Franchisee is allowed to operate under the Franchisor’s trade name and use the Franchisor’s product, trade secret, trade slogan, trade logo and advertising of the Franchisor.
The Franchise is based upon the Agreement between the Franchisor and the Franchisee. The Franchise generally lasts for a fixed period and subject to renewals. The Franchisor shall have the control and also support the Franchisee in managing the business.
In Vietnam, the presence of Franchise business can be clearly seen with the large players like Coffee Bean, KFC, Lotteria, etc. entering the market. Lets explore the procedure to establish a franchise with a local Franchisee by a foreign Franchisor in Vietnam.
1. Conditions for opening a Franchise in Vietnam:
- The Franchisor must be in the operations of the business, in which it intends to start the franchise in Vietnam; at least for one year before sub-franchising;
- The Franchisor should obtain a registered Franchise License from the competent authorities (Ministry and Department of Industry and Trade)
- The Franchise should deal with only those products and services that are not banned in Vietnam. If at all any item that the Franchisor deals with falls under the List of Restricted Products and Services, then the competent authority shall issue Business License only after verifying the business conditions.
2. Legal Service offered by SBLAW
- Consulting upon the legal aspects of the distribution in franchise.
- Advising the legal aspects of domestic franchise, foreign franchise in Vietnam, Vietnamese franchise in foreign countries, especially the commercial, competitive, contractual and intellectual aspects.
Interaction with foreign partners in franchise.
- Providing advice for the business registration of the franchise.
- Handling the process of drafting the Franchise Agreement including the amendments, recommendation and also negotiations between the Parties signing the Agreement.
- Providing support in the system operation
- Handling the registration process of the Franchise
- Providing support in translation, notarization and certification of necessary documents for applying for franchise license in Vietnam.
- Handling the licensing procedure in the Ministry and Department of Industry and Trade on behalf of Client.
- Working with competent authority to amend the license when operating.