Many foreigners are interested in whether they can franchise to Vietnamese traders or from Vietnamese traders, they become franchisees? LSX Lawfirm will give you an article about: “Commercial franchise that foreigners should know in Vietnam”, as follows:
Legal grounds
Law on commercial 2005
What means of commercial franchise that foreigners should know in Vietnam
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:
Firstly, 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 knows-how, business slogans, business logos and advertisements.
Secondly, franchisors shall be entitled to supervise and assist franchisees in conducting their business activities.
Commercial franchise that foreigners should know in Vietnam
The subject of a franchise relationship includes the franchisor and the franchisee.
These entities can be individuals or legal entities, domestic citizens or foreigners.
In reality, the majority of franchisees are traders. There may be two or more parties involved in a franchise relationship. The franchisor and the franchisee have independent legal status from each other and are solely responsible for the risks in their business activities.
The subject matter of a franchise is a commercial right.
The content of the franchise depends on the type of franchise and the agreement between the parties. It may include the right to use intellectual property such as trade names, trademarks of goods/services, trade secrets, etc. and business rights according to the franchisor’s model, management, training and marketing methods. It related to Commercial franchise that foreigners should know in Vietnam.
Rights and obligations of the parties in commercial franchise
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.
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Obligations of franchisors
Unless otherwise agreed, franchisors shall have the following obligations:
1. Firstly, 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.
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Rights of franchisees
Unless otherwise agreed, franchisees shall have the following rights:
- To request franchisors to provide fully technical assistance related to the commercial franchise system;
- To request franchisors to equally treat all franchisees in the commercial franchise system.
Related article: Procedures for franchising from abroad to Vietnam
Obligations of franchisees
Unless otherwise agreed, franchisees shall have the following obligations:
- Pay franchise sums and other amounts under commercial franchise contracts
- Then, invest adequate material facilities, financial sources and human resources to take over business rights and know-how transferred by franchisors
- Submit to the control, supervision and instruction by franchisors; to comply with all requirements set forth by franchisors on designing and arrangement of places of sale of goods or provision of services
- Then, keep secret the franchised business know-how even after the expiration or termination of commercial franchise contracts
- 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
- Manage their activities in accordance with the commercial franchise system
- Finally, not to sub-franchise without permissions of franchisors.
Related questions about Commercial franchise that foreigners should know in Vietnam
A franchisee shall be entitled to sub-franchise to a third party (referred to as sub-franchisee) if it is so consented by the franchisor.
Sub-franchisees shall have the rights and obligations of franchisees provided for in Articles 288 and 289 of Vietnam Commercial Law 2005.
Before granting commercial franchises, intended franchisors must register them with the Trade Ministry.The Government shall specify the conditions for conducting business under commercial franchise and the order and procedures for registering commercial franchises.
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