Franchising in Vietnam, Part 2: Legal Aspects, Challenges, and Opportunities
Company Added
Company Removed
Apply to Request List

Franchising in Vietnam, Part 2: Legal Aspects, Challenges, and Opportunities

Franchising in Vietnam, Part 2: Legal Aspects, Challenges, and Opportunities

This is part 2 of an article by international franchise expert Bill Edwards. Interested in franchising in Vietnam, one of Asia's hottest growth markets? See part 1 for more.

Legal aspects of franchising in Vietnam

Decree No. 8/2018/ND-CP issued on January 15, 2018, provides the legal basis for franchising operations, outlining key definitions and requirements of franchise agreements, as well as regulations for the administration of franchises (U.S. Commercial Service, Vietnam Country Commercial Guide, 2018).

Before a business system may be franchised in Vietnam: 1) the system must have been operating for at least 1 year (and a Vietnamese master franchisee must have operated the business for at least 1 year before subfranchising); 2) the goods and/or services to be offered must not be on a government-issued list of prohibited goods and services, absent a special business license; and 3) the franchisor must register the franchise with the Ministry of Industry and Trade and file, among other things, a copy of its disclosure document. Vietnam also has a pre-sale disclosure requirement.

At least 15 working days before the execution of the franchise agreement, the franchisor must provide the prospective master/franchisee its disclosure document and the form of franchise agreement. Both the franchise agreement and the disclosure document must be in Vietnamese. Once the franchise is registered, the franchisor must report certain changes to the franchisor's operations to the Ministry within 30 days after the change; file an annual report with the Ministry by January 15; and update franchisees with respect to changes that may have an impact on their franchised business activities (Tao Xu and Philip Zeidman, DLA Piper).

Opportunities and challenges

Market research company Nielsen says Vietnam's young population, higher disposable incomes, rapid urbanization, and better living standards are the economy's main growth drivers. It noted that approximately 60 percent of Vietnamese are under 35. This group is not only familiar with foreign brands, they now have more income to satisfy their aspirational needs and wants -- and are just as likely to purchase high-value products such as Samsung and Apple smartphones as they are to enjoy outside meals together with friends and family at foreign food franchise brands.

Challenges to doing business In Vietnam remain. Finding licensee candidates with established infrastructure, experience running a business, and capital is a problem. Good high-quality food supply chain resources are limited. Tariffs can be a challenge for inbound products needed for international brands. Retail space has become extremely expensive in Ho Chi Minh City and Hanoi. There is sometimes a challenge getting new licensees to follow the established brand processes and systems needed to produce an acceptable unit bottom line.

 William Edwards is CEO of Edwards Global Services (EGS). From initial global market research and country prioritization to developing new international markets and providing operational support around the world, EGS offers a complete international operations and development solution for franchisors based on experience, knowledge, a team on the ground in more than 40 countries, and trademarked processes based on decades of problem-solving. Contact him at bedwards@edwardsglobal.com or +1-949-224-3896. He was assisted in this article by Sean T. Ngo, CEO and co-founder of VF Franchise Consulting in Ho Minh City.

Published: January 9th, 2020

Share this Feature

Atmosphere
SPONSORED CONTENT
Atmosphere
SPONSORED CONTENT
Atmosphere
SPONSORED CONTENT

Recommended Reading:

Comments:

comments powered by Disqus
HomeTowne Studios by Red Roof
ADVERTISE SPONSORED CONTENT

FRANCHISE TOPICS

Multi-U 2.0
ADVERTISE SPONSORED CONTENT
Conferences
Caesar's Forum, Las Vegas
MAR 29-1ST, 2022

Featured Opportunities

Elements Massage
When simplicity is the essence of your business model, clients and owners benefit. Clients want a predictably wonderful experience with every visit....
Capriotti's Sandwich Shop
Capriotti's has mastered the art of sandwich making since 1976, achieving over 250 awards & counting. Our fans & franchise community agree we have...
Celebree School
At Celebree Schools, our child care franchise delivers a safe, nurturing, friendly, state-of-the-art learning environment that fosters a solid...
ZIPS Dry Cleaners
ZIPS, since 1996, began as eight dry cleaners in the Baltimore-Washington, D.C., metro area and is poised to grow with over 250 new store commitments...
The Growth Coach
The Growth Coach is one of the leading business coaching franchise opportunities nationally and internationally. The Growth Coach is a unique...

Share This Page

Subscribe to Our Newsletters