Franchising with foreign elements in Vietnam. Conditions and procedures for franchising with foreign elements in Vietnam. Documents and implementation time of franchising with foreign elements in Vietnam. Let us learn about this topic with LSX Law firm below:
Legal grounds
– Decree 35/2006/ND-CP
– Circular 09/2006/TT-BTM
– Decision No. 106/2008/QD-BTC dated November 17, 2008, of the Ministry of Finance on stipulating the collection rate, mode of collection, payment, management, and use of franchise registration fee
– Decree 120/2011/ND-CP
– Circular 04/2016/TT-BCT
Franchising with foreign elements in Vietnam
In business, expanding the market through franchising helps save time and costs; as well as ensure stable revenue for the franchisor; along with that, the franchisee may also transfer the business method; and may use the franchisor’s trademark. There are a few points to keep in mind about this activity:
Conditions for franchising with foreign elements in Vietnam
Firstly, For franchisors:
- The business system used for franchising has been in operation for at least 1 year;
- Registered commercial franchising activities;
Secondly, for the franchise:
Traders receiving franchises must have business registration in the same line of business as suitable for the franchisor
Besides, goods and services permitted for commercial franchising:
Specifically, goods and services permitted for commercial franchising are goods and services not on the list of goods and services banned from the business.
In case goods and services are on the list of goods and services restricted from business; List of goods and services subject to conditional business; an enterprise may only do business after granted a business license by the branch management agency; with papers of equivalent value, or has met all business conditions.
Procedures for franchising with foreign elements in Vietnam
Firstly, the prospective franchisor shall send a dossier of application for registration of commercial franchising to the Ministry of Industry and Trade;
Then, Within 05 working days after receiving complete and valid dossiers; the Ministry of Industry and Trade shall register commercial franchising activities in the Franchise Register; and issue a Notice of registration approval franchising activities send traders about such registration. If of refusal of registration, a written notice must be given to the intended franchisor, clearly stating the reasons.
In case the dossier is incomplete or invalid, within 02 working days from the date of receipt of the dossier; the Ministry of Industry and Trade shall issue a written notice to the intended franchisor to supplement and complete the dossier.
Aditionally, the Current method: submit in person or send by post.
Documents for franchising with foreign elements in Vietnam
To register commercial activities from abroad to Vietnam, traders need to prepare 01 sets of documents, including:
Firstly, an application for registration of commercial franchising; made according to form MD-1 in Appendix II issued together with Circular 09/2006/TT-BTM;
Secondly, an introduction to commercial franchising; made according to the form in Appendix III issued together with Circular 09/2006/TT-BTM (requiring consular legalization);
Thirdly, documents certifying:
Moreover, the legal status of the intended franchisor: A copy of the business registration certificate or equivalent document of the foreign trader; certified by the competent authority where the foreign trader is established (need consular legalization);
In addition, a copy from the original book or a certified copy or a copy to be presented with the original for comparison of the industrial property protection title in Vietnam or abroad in case of licensing of the use right. Industrial property objects that have been granted protection titles (need consular legalization);
Furthermore, papers evidencing the consent of the original franchisor to permit re-franchising in case the trader registering for franchising is a secondary franchisor;
Also, an authorization letter from the franchisor for the individual/organization to act on behalf of the intended franchisor to carry out procedures related to franchise registration (needs consular legalization); in case the proposed franchisor Franchisees do not directly carry out these procedures.
Implementation time
Implementation time for franchising with foreign elements in Vietnam:
If the application is incomplete or invalid; Within 02 working days after receiving the dossier, the Ministry of Industry and Trade must send a written notice to the trader to supplement and complete the dossier. In case of receiving complete and valid dossiers, within 05 working days from the date of receipt of dossiers, the Ministry of Industry and Trade shall register commercial franchising activities in the Register; and notify the trader in writing of the registration. If the registration is refused, the Ministry of Industry and Trade must notify the trader in writing and clearly state the reason.
Finally, hope this article is helpful for you!
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Related questions
As franchising is an improved form of licensing, whereby a business owner (the right holder) allows another business (the franchisee) to use an entire business system; in exchange for other offset accounts. Like an authorization, a contractual obligation defines the terms of the relationship.
Franchising is not entirely beneficial but contains unknown risks such as: franchisor is easy to lose control, disputes between business establishments, when franchisees perform poorly. The effect will adversely affect the brand reputation, …
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