Franchising: Detailed conditions and procedures

Franchising offers the opportunity to grow your business by leveraging proven brands, operating systems and intellectual property. This model allows franchisees to take advantage of brand reputation and standardized operating procedures to deploy business effectively. The following article by Long Phan will analyze in detail the legal regulations on conditions and franchise registration process.

What is a franchise?

Pursuant to Article 284 of the Law on Commercial 2005, a franchise is a business model in which one party (called the franchisor) allows another party (called the franchisee) to use the brand, products, services, operating systems, and other intellectual property for business purposes. In return, franchisees often pay fees, including initial franchise fees, recurring operating fees, or a percentage of sales.

Conditions for franchising according to current regulations

According to the provisions of Article 284 of the Law on Commercial 2005, commercial franchising activities must meet a number of specific requirements as follows:

1. The purchase and sale of goods and provision of services are conducted according to the business organization method prescribed by the franchisor and are associated with the franchisor’s trademark, trade name, business secrets, business slogan, business symbol, and advertising.
2. The franchisor has the right to control and assist the franchisee in running the business.

Note:

• Previously, according to the provisions of Decree No. 35/2006/ND-CP to implement commercial franchising, the law required the franchisor, franchisee, as well as related goods and services to meet certain specific conditions. However, these regulations have been abolished.
• And currently, based on Article 8 of Decree No. 08/2018/ND-CP, the law only sets out the only condition for traders to be allowed to carry out commercial franchising: the business system intended to be used to the franchise has been in operation for at least a year.

Instructions for franchise registration procedures

Documents need to be prepared

Pursuant to Article 19 of Decree 35/2006/ND-CP stipulating commercial franchise registration documents include:

1. Application for registration of commercial franchising activities according to the form guided by the Ministry of Trade. Refer to the sample here: Application for registration of commercial franchising according to .docx form
2. Introduction to commercial franchising according to the form prescribed by the Ministry of Trade.
3. Documents confirming:

• Legal status of the party intending to franchise;
• Certificate of protection of industrial property rights in Vietnam or abroad in case of transfer of rights to use industrial property objects that have been granted a certificate of protection.

4. The documents specified in Clauses 2 and 3, Article 19 of Decree 35/2006/ND-CP must be consular legalized according to the provisions of Vietnamese law (amended by Clause 4, Article 3 of Decree 120/2011/ND-CP).

Implementation steps

Pursuant to Article 20 of Decree 35/2006/ND-CP stipulating the procedure for registering a commercial franchise as follows, it will include the following specific steps:

Step 1: Submit application

• The party intending to do commercial franchising sends an application for registration of commercial franchising activities to the Ministry of Industry and Trade according to the provisions of Article 18 of Decree 35/2006/ND-CP.

Step 2: Receive and process documents

• Within 05 working days from the date of receiving a complete and valid dossier, the competent state agency shall register the franchising activity in the Franchising Activity Registration Book and notify the trader in writing of such registration.
• In case the dossier is incomplete or invalid, within 02 working days from the date of receipt of the dossier, the competent state agency must notify the proposed franchisor in writing to supplement, complete profile.
• The deadlines mentioned in Clause 1, Article 20 of Decree 35/2006/ND-CP do not include the time the proposed franchisor amends and supplements the dossier requesting registration of commercial franchising activities.

Step 3: Notice and reply about registration

• After the deadline specified in Clause 1, Article 20, if the competent state agency refuses the registration, it must notify the prospective franchisor in writing and state the reasons.
• Procedures for registering contracts for transfer of rights to use industrial property objects are carried out in accordance with the provisions of law on industrial property.

Effective and professional franchise registration and consulting services at Long Phan

With a team of experienced experts, Long Phan provides comprehensive solutions for individuals and organizations who want to implement commercial franchising, ensuring efficiency and professionalism with the following services:

• Consulting on conditions and franchise registration process in accordance with current legal regulations.
• Assist in preparing and drafting complete and accurate franchise registration documents.
• Support customer representatives to carry out registration procedures at state agencies.
• Monitor application processing progress and resolve arising issues quickly.
• Support drafting franchise contracts in accordance with legal requirements and the interests of the parties.
• Consulting on intellectual property rights protection such as registering to protect trademarks, logos, business slogans and related intellectual properties.
• Consulting and support in handling intellectual property rights disputes in franchising.

Franchising is an advanced business model, helping businesses expand markets, enhance brand recognition and develop sustainably. If you need detailed consulting support on franchising, please contact Long Phan immediately via the hotline 0906735386 to receive dedicated advice from Long Phan’s team of experts and provide the most optimal solution for you.