Franchising in Vietnam

Economy

Vietnam is the world's 57th largest economy based on GDP figures. After joining the World Trade Organisation, franchising is on the rise and the number of franchises in Vietnam is predicted to increase.

Legislation

The Decree No. 35 and Circular No. 9 in 2006 established the foundations for franchising in Vietnam. Other regulations impact upon franchising in Vietnam, these include; the Commercial Law No. 36/2005/QH11; Decree No. 35/2006/ND-CP (detailing implementation of Commercial Law No.35/2005); Decision No. 106/2008/QD-BTC (of the Ministry of Finance providing regulation for payments, collections of payment) and the Circular No. 09/2006/TT-BTM (of Ministry of Trade 2006, providing guidelines on procedures for registration of franchising activities).

Franchise Market

The current franchise market in Vietnam is still fairly small however it is predicted to grow quickly over the next decade due to the steady economic growth and a young population of over eighty (80) million people.

The most popular franchising sectors in Vietnam are retail with twenty five (25) percent, beverages with twenty (20) percent and restaurant services with sixteen (16) of the franchise market.

Franchise Legislation

• Foreign franchisors must have been in business for at least one (1) year prior to offering a franchise in Vietnam. Similarly a Vietnamese primary franchisee must have operated as a franchisee under the foreign franchisor for at least one (1) year prior to sub-franchising.
• A foreign franchisor must register its activity with the Ministry of Industry and Trade, whereas local franchisors register with local Department of Industry and Trade.
• Theoretically the registration process is relatively quick and can be completed within a working week; in practice completion of the registration process can take up to three (3) months.
• The franchisor must disclose the franchise agreement to the franchisee and allow the franchisee at least fifteen (15) days to review the franchise agreement.

Conclusion

There are specific regulations governing franchising and franchise agreements, in light of this, prospective franchisors considering entering the Vietnamese franchise market should seek specialist legal advice to ensure effective compliance, protection and enforceability of their agreements.