Commercial franchise from abroad to Vietnam

Normally, international franchising is understood as franchising activities with foreign elements. Therefore, it can be understood that international franchising includes the following elements: A franchising activity; There is a foreign element, and the foreign element here can be that at least one of the parties is a foreign individual or legal entity, the establishment, change, performance or termination of a franchise contract happen abroad. In this article, LSX legal firm would like to provide you with: “Commercial franchise from abroad to Vietnam”

Legal grounds

• Law on Commercial 2005
• Decree 35/2006/ND-CP
• Circular 09/2006/TT-BTM

Commercial franchising

Article 284 of the Law on Commercial 2005 stipulates:

“Commercial franchise means a commercial activity whereby franchisors permit and require franchisees to undertake by themselves to purchase or sell goods or provide services on the following conditions:

1. The purchase or sale of goods or provision of services shall be conducted in accordance with methods of business organization prescribed by franchisors and associated with the franchisors’ trademarks, trade names, business know-how, business slogans, business logos, and advertisements.
2. Franchisors shall be entitled to supervise and assist franchisees in conducting their business activities.”

Commercial franchising from abroad

Franchising from abroad into Vietnam is a commercial activity whereby the franchisor-foreign trader allows and requires the franchisee to conduct the purchase and sale of goods as well as provide services in Vietnam under the business organization method of the franchisor.
The goods and services provided by the franchisee will be associated with the franchisor’s trademark, trade name, business secret, business slogan, business logo, and advertisement.

Before granting commercial franchises, intended franchisors must register them with the Trade Ministry.
The Government specifies the conditions for conducting business under commercial franchise in Article 8 Decree 08/2018/ND-CP amending Article 5 Decree 35/2006/ND-CP:
“The franchisor shall have the right to franchise a business if it has been operating for at least 1 year.”

Rights and Obligations of franchisors

Under the Law on Commercial 2005, franchisors have the following rights and obligations:

Rights of franchisors

Unless otherwise agreed, franchisors shall have the following rights:

1. To receive franchise sums.
2. To organize advertising for the commercial franchise system and the commercial franchise network.
3. To conduct periodical or extraordinary inspections of activities of franchisees in order to ensure the uniformity of the commercial franchise system and the stability of quality of goods and services.

Obligations of franchisors

Unless otherwise agreed, franchisors shall have the following obligations:

1. To supply documents guiding the commercial franchise system to franchisees;
2. To provide initial training and regular technical assistance to franchisees for managing the latter’s activities in accordance with the commercial franchise system;
3. To design and arrange places of sale of goods or provision of services at the expenses of franchisees;
4. To guarantee the intellectual property rights over objects stated in franchise contracts;
5. To equally treat all franchisees in the commercial franchise system.

Rights and Obligations of franchisees

Under the Law on Commercial 2005, franchisees have the following rights and obligations:

Rights of franchisees

Unless otherwise agreed, franchisees shall have the following rights:

1. To request franchisors to provide full technical assistance related to the commercial franchise system;
2. To request franchisors to equally treat all franchisees in the commercial franchise system.

Obligations of franchisees

Unless otherwise agreed, franchisees shall have the following obligations:

1. To pay franchise sums and other amounts under commercial franchise contracts;
2. To invest adequate material facilities, financial sources, and human resources to take over business rights and know-how transferred by franchisors;
3. To submit to the control, supervision, and instruction of franchisors; to comply with all requirements set forth by franchisors on designing and arrangement of places of sale of goods or provision of services;
4. To keep secret the franchised business know-how even after the expiration or termination of commercial franchise contracts;
5. To stop using trademarks, trade names, business slogans, logos, and other intellectual property rights (if any) or systems of franchisors upon the expiration or termination of commercial franchise contracts;
6. To manage their activities in accordance with the commercial franchise system;
7. Not to sub-franchise without permission of franchisors.

Dossier for registration of commercial franchising

Circular 09/2006/TT-BTM provides for dossiers of registration of commercial franchising as follows:

Dossier of registration of commercial franchising with the Trade Ministry

A dossier of registration of commercial franchising with the Trade Ministry shall comprise:

• Firstly, an application for commercial franchising registration, made according to a set form;
• Secondly, a written description of the commercial franchise, made according to a set form;
• Thirdly, a notarized copy of the business registration certificate or investment certificate, in case of commercial franchises from Vietnam to overseas; a copy of the foreign trader’s business registration certificate or paper of equivalent validity, certified by a competent agency of the place where the foreign trader is set up, in case of commercial franchises from overseas into Vietnam;
• Fourthly, a notarized copy of the industrial property right protection title in Vietnam or a foreign country, in case of licensing industrial property subject matters for which protection titles have been granted;
• Lastly, papers proving the approval of the primary franchisor’s permission of franchise in case the trader registering to franchise is the secondary franchisor;

Dossier of registration of commercial franchising activities with provincial/municipal Trade Services

A dossier of registration of commercial franchising activities with provincial/municipal Trade Services shall comprise:

• Firstly, the application for commercial franchising registration, made according to a set form;
• Secondly, a written description of the commercial franchise, made according to a set form;
• Thirdly, a notarized copy of the business registration certificate or investment certificate;
• Fourthly, a notarized copy of the industrial property right protection title in Vietnam or a foreign country, in case of licensing industrial property subject matters for which protection titles have been granted;
• Lastly, papers proving the approval of the primary franchisor’s permission of franchise in case the trader registering to franchise is the secondary franchisor;

Receipt of dossiers of registration of commercial franchising activities

Upon receiving dossiers of registration of commercial franchising activities, registration agencies shall issue receipts therefor. Such a receipt shall be made in 3 copies according to a set form, one of them shall be given to the trader registering commercial franchising and two others shall be kept at the registration agency;
For incomplete and improper dossiers, within two working days after receiving the dossiers, registration agencies shall send written notices, made according to a set form, to dossier-submitting traders, requesting the supplementation and completion of the dossiers. The time limit for handling dossiers shall count from the time the traders registering commercial franchising complete their dossiers;
Traders registering commercial franchising may request registration agencies to clearly explain the reasons for dossier supplementation and completion. Registration agencies shall have to respond to such requests.

Legal service of LSX Legal Firm

LSX legal firm provides legal services to clients in various legal areas. To make your case convenient, LSX will perform:

• Legal advice related to new regulations;
• Representing in drafting and editing documents;
• We commit the papers to be valid, and legal for use in all cases;
• Represent to submit documents, receive results, and hand them over to customers.

With a team of experienced, reputable, and professional consultants. The firm is always ready to support and work with clients to solve legal difficulties.

Furthermore, using our service, you do not need to do the paperwork yourself. We guarantee to help you prepare documents effectively and legally.

Also, you will not have to waste time preparing the application, submitting application, or receiving results. At those stages, we will help you do it smoothly.

After all, LSX provides the service with the desire that customers can experience it the best way. Additionally, we guarantee the cost to be the most suitable and economical for customers.

Contact LSX

This article contains information about “Commercial franchise from abroad to Vietnam” In recent years, we have supplied effective legal advice to businesses and individuals at reasonable prices and with efficient results. We always update and keep our operations and services in line with the law by adhering to legal principles. If you need any further information from the firm’s solicitors, please contact  LSX Law firm: +84846175333 or Email: [email protected]

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Prestigious franchise registration service in Vietnam

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Frequently asked questions

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