Commercial Franchising Activities Involving Foreign Franchisors

(For Franchising from Abroad into Vietnam)

To successfully introduce an international brand into Vietnam, an enterprise must master the current rules. This article systemizes the updated legal regulations, specifically highlighting the changes between old and new documents to prevent errors during the dossier preparation process.

1. Current Legal Document System (Updated 2025)

Currently, Decree 35/2006/ND-CP remains the foundational text, but it has been significantly amended by subsequent documents. Enterprises must apply the law with the mindset of “Original Text + Amending Texts” as follows:

• Laws (Highest Priority):
  • Commercial Law 2005: Section 8 (Articles 284 – 291) stipulates the fundamental principles.
• Decrees (Detailed Regulations):
  • Decree 35/2006/ND-CP: The foundational document on franchising activities.
  • Decree 120/2011/ND-CP: Amended regulations regarding authority and classification (notably exempting domestic franchising from registration).
  • Decree 08/2018/ND-CP (Critical): A breakthrough document that abolished a series of business conditions (Articles 6 and 7 of Decree 35/2006) to open up the market.
• Circulars (Implementation Guidelines):
  • Circular 03/2024/TT-BCT (Latest – Effective March 16, 2024): Amends reporting forms and simplifies administrative procedures (removes the requirement to submit personal identification documents).

2. Minimum Conditions for Franchising

Thanks to Decree 08/2018/ND-CP, legal barriers to entering the Vietnamese market have been lowered to the absolute minimum.

A. For the Franchisor (Foreign Seller)

• The Only Condition: The business system intended for franchising must have been in operation for at least 01 year abroad (Pursuant to Article 5 of Decree 35/2006, which remains in effect).
• Note: The foreign party does not need to establish a legal entity in Vietnam prior to franchising.

B. For the Franchisee (Vietnamese Buyer)

• Previously: Required to have business lines appropriate to the franchise (Old Article 6).
• Currently: Article 6 of Decree 35/2006 has been ABOLISHED by Decree 08/2018. The Vietnamese enterprise only needs a valid Enterprise Registration Certificate (ERC) to be legally eligible to receive the franchise.

C. For Goods/Services

• Previously: Had to fall under the list of permitted goods/services (Old Article 7).
• Currently: Article 7 of Decree 35/2006 has been ABOLISHED by Decree 08/2018.
  • Goods/services must simply not fall under the list of BANNED business lines.
  • Note: If operating in conditional sectors (F&B, Healthcare, Education…), the enterprise must still obtain “Sub-licenses” (Food Safety Certificate, Fire Prevention Certificate…) before operation. However, these are post-licensing procedures, not preconditions for signing the franchise contract.

3. Registration Procedures (Mandatory)

Although domestic franchising is exempt from registration (under Decree 120/2011), capital flows from abroad are still strictly controlled.

REGULATION: Franchising from abroad into Vietnam is MANDATORY to register with the Ministry of Industry and Trade (MOIT).

Standard Dossier (Updated per Circular 03/2024/TT-BCT):

1. Application for Registration: Form MD-1 in Appendix II issued with Circular 03/2024.
2. Franchise Description Document (FDD): Document describing the franchise system.
3. Foreign Business License: A copy that has been Consularly Legalized and translated into Vietnamese with notarization.
4. Intellectual Property Titles: Copies of protection titles in Vietnam or abroad.
5. 2024 Reform: NO LONGER REQUIRES copies of ID cards/Citizen Identity Cards/Passports of the legal representative (as this data is integrated into the National Population Database).

Timeline and Process:

• Authority: Ministry of Industry and Trade (MOIT).
• Statutory Deadline: 05 working days.
• Fees: According to state regulations.

4. Summary: Legal Checklist for Enterprises

To ensure full Compliance, enterprises should review the following three questions:

1. Has the foreign party been in operation for a full 01 year? (Proof via Certificate of Incorporation/Tax confirmation/Old lease agreements…).
2. Has the foreign party completed Consular Legalization for their Business License? (This is the most common error causing dossier rejection).
3. Has the trademark application been filed in Vietnam? (While the law does not strictly require the trademark to be granted before franchising, having at least a Decision on Acceptance of Valid Application is recommended to minimize risk).

📞 CONTACT LEGAL CONSULTANT:

TLA Law is a leading law firm with a team of highly experienced lawyers specializing in criminal, civil, corporate, marriage and family law, and more. We are committed to providing comprehensive legal support and answering all your legal questions. If you have any further questions, please do not hesitate to contact us.

1. Lawyer Vu Thi Phuong Thanh, Ha Noi Bar Association

Email: vtpthanh@tlalaw.vn

2. Lawyer Tran My Le, Ha Noi Bar Association

Email: tmle@tlalaw.vn

Nguyen Hien Mai