Franchising businesses need to pay attention to the procedures for registering franchise activities as well as the franchise reporting regime.

This article was consulted by Lawyer Nguyen Quang Trung

Legal grounds:

• Decree No. 35/2006/ND-CP;
• Decree No. 120/2011/ND-CP;
• Decree No. 08/2018/ND-CP;
• Circular No. 09/2006/TT-BTM.

We have received the following question:

Hello TLT Legal, I established a coffee restaurant business located in Vietnam, opened a few branches and is doing quite well, so a number of people came to ask for a franchise. I want to ask if there is any need to register for franchising procedures?

Franchising is a form of chain business that is widely applied in the food and beverage industry. According to Vietnamese law, franchising is not a business line, but a way of conducting business.

Pursuant to Article 5 of Decree No. 35/2006/ND-CP, amended by Decree No. 08/2018/ND-CP, Enterprises that want to conduct commercial franchising for other organizations and individuals must ensure The business system intended to be used for franchising has been in operation for at least 1 year.

In addition, based on Article 17a Decree 35/2006/ND-CP, supplemented by Decree 120/2011/ND-CP as follows:

Article 17a. Cases where franchise registration is not required

1. The following cases do not require franchise registration:
   1. Domestic franchising;
   2. Franchising from Vietnam to foreign countries.
2. For cases that do not require franchise registration, reporting to the Department of Industry and Trade must be implemented.

According to the above regulations, before franchising, businesses must carry out franchise registration procedures, except for 2 cases:

• Franchising domestically;
• Franchising from Vietnam to foreign countries.

Thus, in the case of the specific question above, if a coffee restaurant business is established in Vietnam and wants to franchise domestically or even franchise abroad, then:

• Exempt from franchise registration procedures;
• However, franchising enterprises must make reports to the Department of Industry and Trade on an annual basis, no later than January 15. The content of the report is part B, Appendix 3 issued with Circular No. 09/2006/TT-BTM.