A Guide to Franchise Agreement in Vietnam

Posted 16.12. 2020 by Cekindo

Franchising is a mainstream concept worldwide including Vietnam. Many popular foreign brands are attracted by the business expansion outlook in the country while local Vietnamese investor franchisees are looking forward to operating their businesses under a popular brand well known by the Vietnamese public. Famous international franchise brands in Vietnam, just to name a few, are KFC, Lotteria, Pizza Hut, Burger King, McDonald’s, The Coffee Bean & Tea Leaf, 7-Eleven, and Baskin-Robbins.

Therefore, the Vietnamese government has been working towards creating a friendly franchising environment by easing the franchise regulations and processes, expecting to enhance the franchise growth even more significantly.

A great number of investors opt for the franchise business model as franchisors can benefit from the model’s lower costs and risks and the franchise can enjoy great profits and rewards that a franchise business brings.

How to Start a Franchise Business in Vietnam

In accordance with Decree No. 8/2018/ND-CP, before individuals or organisations can start a franchise business in Vietnam, they must meet the following requirements:

a. The franchise system must have been in operation for a minimum of one year.
b. A master franchisee in Vietnam must also have been operating for at least a year before there is any sub-franchise.
c. Products and services offered by the franchise business must not be on the list of prohibited products and services issued by the Vietnamese government. You can consult Cekindo for the full and detailed lists of goods and services that are prohibited for a franchise in Vietnam.

  • Weapons
  • Toxic minerals
  • Addictive drugs
  • Harmful and dangerous toys to children
  • Wild animals
  • Plants
  • Environment-polluting imported scraps
  • Marriage broker services
  • Organised gambling
  • Adoption broker services

d. Certain franchise products and services must have special business licenses.
e. The franchisor must register its franchise with the Vietnamese Ministry of Industry and Trade and submit required documents such as its disclosure document and franchise agreement, EXCEPT for the cases in which registration of commercial franchising is not required (contact us for details).
f. The franchisor shall also submit an annual report and update of any franchisees’ changes to the Ministry of Industry and Trade.
g. In a nutshell, you must prepare the following required documents to register your franchise business in Vietnam:

  • Franchise agreement (optional – may be required for review)
  • Power of attorney
  • Franchise registration application form
  • Audited reports from the previous year
  • Introduction of the franchisor
  • Business certificate of the franchisor
  • Trademark or copyright certificate
  • Approval or permission document from the primary franchisor

Franchise Agreement in Vietnam

A franchise agreement is a crucial part when starting a franchise in Vietnam. A franchise agreement in Vietnam is a compulsory commercial agreement signed between a franchisor and a franchisee. This franchise agreement must be in the Vietnamese language.

The agreement indicates that the franchisee can buy or sell goods and services on its own as long as the purchase and sale of products and services are performed in accordance to manners specified by the franchisor – i.e. trade names, trademarks, business logos, business slogans, trademarks, and advertising.

In other words, the franchisor has the right to assist the franchisee in or take charge of running the business.

In general, a franchise agreement should cover the commercial rights for franchise, the rights and obligations of both the franchisee and the franchisor, how much the franchise fee is along with the valid period and payment method, period of effectiveness of the agreement, terms and conditions for contract extension or termination, and what to do when conflicts arise.

How Cekindo can Assist

Successful business incorporation and franchise agreement in Vietnam involves understanding local regulations, as well as equipping with skills in drafting clear provisions and negotiating terms and conditions – and this is what Cekindo does best.

Our experts with immense experience will make use of valuable approaches to help you produce effective franchise agreements and incorporate your business in Vietnam without delay.

Our franchise agreement drafting and business incorporation solutions are personalised and affordable to fulfill each investor’s distinctive requirements.

Let Cekindo assist you in making your entrepreneurial idea become reality. Complete the form below.