Franchising in Vietnam: Overview, Registration and Procedures

The continued growth of Vietnam's franchise sector, supported by favorable demographics and economic conditions, offers significant opportunities for well-prepared franchisors. Understanding and complying with the registration requirements represents the essential first step toward successful franchise operations in this dynamic market. In this article, we will share an overview of the legal framework and registration requirements of franchising activities in Vietnam. 

Franchising in Vietnam – overview of legal framework, registration procedures, and compliance requirements for foreign franchisors.

Legal Framework and Regulatory Structure

The Vietnamese franchising legal framework operates under a hierarchical structure with the general regulations indicated in Commercial Code, under which there are Franchise Decree and Circular serving as the guidance regulatory instrument. The Ministry of Industry and Trade (MOIT) serves as the primary regulatory authority responsible for franchise registration, monitoring, and compliance enforcement.

Franchise Registration Requirements

Mandatory Registration for Foreign Franchisors

• Inbound franchising: Foreign franchisors (including those from export-processing zones or non-tariff areas) must register their franchise with the MOIT before offering or signing agreements in Vietnam.

• Sub-franchisors: A master franchisee granted rights by a foreign franchisor must also register with MOIT before sub-franchising.

Registration Exemption

Domestic franchising (Vietnamese franchisor to Vietnamese franchisee) and outbound franchising (Vietnamese franchisor expanding abroad) do not require MOIT registration. Despite the exemption, it is required to report to MOIT every year for administrative purposes and ensures proper oversight of domestic franchise development.

Pre-Registration Conditions

Foreign franchisors must satisfy specific statutory conditions before registration eligibility. As such, the foreign franchisor needs to satisfy to have been operating for at least one year. This operational history requirement ensures that franchisors possess adequate business experience and proven systems before entering the Vietnamese market and upscaling through franchising.

Registration Procedure and Timeline

Documentation Requirements

The registration application must include comprehensive documentation demonstrating the franchisor's qualifications, business model, and operational framework. Key documents include:

• Franchise agreement template in Vietnamese language

• Franchise Description Document (FDD)

• Evidence of minimum one-year operational history

• Corporate documents and legal standing certificates

• Trademark registration or application documents

• Financial statements and business performance records

Language Requirements

The franchise agreement must be in Vietnamese (in addition to the foreign language version). Documents of franchisors that are issued overseas must be notarized and legalized for submission. 

Processing Timeline and Approval

MOIT typically processes complete registration applications within 15 working days from submission. The registration certificate, once issued, remains valid indefinitely unless circumstances warrant revocation or modification.

Ongoing Compliance and Reporting

Change Notification Requirements

The franchisor must inform the MOIT within 30 days of any modifications to registered information, particularly changes in Part A of the Franchise Introduction (Disclosure Document), such as franchisor details or trademark alterations. This requirement ensures regulatory authorities maintain current information regarding franchise operations.

Periodic Reporting

Franchisors must submit periodic reports detailing their franchise operations, including franchisee numbers, territorial expansion, and operational developments. These reports enable MOIT to monitor market developments and ensure continued regulatory compliance.

Compliance Monitoring

MOIT conducts regular compliance reviews and may require additional documentation or clarification regarding franchise operations. Non-compliance may result in administrative penalties, operational restrictions, or registration revocation.

Strategic Considerations for Franchisors

Market Entry Planning

Prospective franchisors should engage qualified Vietnamese legal counsel early in their market entry planning process. The registration procedure, while streamlined under current regulations, requires careful preparation and documentation to ensure successful completion.

Intellectual Property Protection

Before initiating franchise operations, franchisors must secure appropriate trademark protection in Vietnam. The franchise registration process requires evidence of trademark rights or pending applications for the relevant marks.

Local Partnership Considerations

While not mandatory, many international franchisors benefit from strategic partnerships with local entities familiar with Vietnamese business practices, consumer preferences, and regulatory requirements.

This article provides general information regarding Vietnamese franchising regulations and should not be construed as legal advice. Prospective franchisors should consult with qualified Vietnamese legal counsel to address their specific circumstances and ensure full regulatory compliance.