Commercial franchise is a commercial activity whereby franchisors permit and require franchisees to undertake by themselves to purchase or sell goods or provide services on certain conditions. A commercial franchise contract guides an enterprise about usage of a good or a working process which is a subject matter of industrial property rights and is protected. Commercial franchise involved in technology transfer, trademark of goods or others.
Commercial franchise conditions:
A trader shall be permitted to grant commercial rights when fully satisfying the following conditions:
- The business system intended for franchise has been in operation for at least one year;
If a Vietnamese trader is the primary franchisee of a foreign franchisor, such Vietnamese trader must conduct business my mode of franchising for at least one year in Vietnam before sub-franchising.
- Registered franchising with authorized bodies;
- The in-business goods or services covered by commercial rights do not violate the law.
A trader shell be permitted to receive commercial rights when such trader has registered business sectors subject to commercial rights.
Contents of commercial franchise contract:
In case parties choose the law of Vietnam to govern the contract, the main contents of a commercial franchise contract include:
- Contents of franchised commercial rights;
- Rights and obligations of franchisor;
- Rights and obligation of franchisee;
- Price, periodical franchise fee and payment method;
- Validity of the contract;
- Contract renewal and termination; dispute settlements.
Documents clients need to provide us:
- Notarized copies of the Certificate of Business Registration or the Certificate of Investment Registration in case overseas franchises from Vietnam; copies of the Certificate of Business Registration or equivalent documents, which are confirmed by authorized bodies in foreign countries, of foreign traders in case franchises to Vietnam;
- Notarized copies of Industry Protection Title in Vietnam or overseas in case licensing of protected industrial property rights;
- Documents proving agreement of franchisor allow secondary franchise in case the trader is a primary franchisee;
- Audited financial statements in the nearest year.
ICTLAW Services in Commercial Franchise:
- Check, consult and define the most suitable franchise system with client’s demand;
- Consider and give conclusion about potential exploitation of the chosen franchise system and franchisor’s ability;
- Give legal advice during franchise contract negotiation;
- Draft and check contract terms to protect client’s rights complying with the law of Vietnam and international law;
- Consult about financial problems of commercial franchise contract;
- Conduct procedures of commercial franchise contract and ask for permission of franchise transactions;
- Observe, consult and protect client’s rights during franchise process.