Commercial franchising is an activity adjusted by Commercial law, whereby
franchisors permit and require franchisees to undertake by themselves to
purchase or sell goods or provide services on the following conditions: i) the
purchase or sale of goods or provision of services shall be conducted in
accordance with methods of business organization prescribed by franchisors and
associated with the franchisors’ trademarks, trade names, business knows-how,
business slogans, business logos and advertisements; ii) franchisors shall be
entitled to supervise and assist franchisees in conducting their business
activities.
Commercial franchise
contracts must be made in writing or in other forms of equivalent legal
validity and registered with Ministry of Industry and Trade excepting some
regulated cases which are not required to register but report to Department of
Industry and Trade which are domestic franchises and the franchises from
Vietnam to overseas.
Firstly, the
franchisors, except having otherwise agreed, have the rights i) to receive
franchise sums; ii) to organize advertising for the commercial franchise system
and the commercial franchise network; iii) to conduct periodical or
extraordinary inspections of activities of franchisees in order to ensure the
uniformity of the commercial franchise system and the stability of quality of
goods and services.
In the meantime, the
franchisors have the obligations i) to supply documents guiding the commercial
franchise system to franchisees; ii) to provide initial training and regular
technical assistance to franchisees for managing the latter’s activities in
accordance with the commercial franchise system; iii) to design and arrange
places of sale of goods or provision of services at the expenses of
franchisees; iv) to guarantee the intellectual property rights over objects
stated in franchise contracts; v) to equally treat all franchisees in the
commercial franchise system.
For the franchisees,
except having otherwise agreed, the franchisees could i) request franchisors to
provide with full technical assistance related to the commercial franchise
system; ii) request franchisors to equally treat all franchisees in the
commercial franchise system.
The franchisees have the
obligations to i) pay franchise sums and other amounts under commercial
franchise contracts; ii) to invest adequate material facilities, financial
sources and human resources to take over business rights and know-how
transferred by franchisors; iii) to submit to the control, supervision and
instruction by franchisors; to comply with all requirements set forth by
franchisors on designing and arrangement of places of sale of goods or
provision of services; iv) to keep secret the franchised business know-how even
after the expiration or termination of commercial franchise contracts; v) to
stop using trademarks, trade names,
business slogans, logos and other Intellectual property rights (if
any) or systems of franchisors upon the expiration or termination of commercial
franchise contracts; vi) to manage their activities in accordance with the
commercial franchise system; vii) not to sub-franchise without permissions of
franchisors.
Besides the above rights
and obligations, the parties may supplement others provisions demed necessary
but not contrary to the provisions of law.
If Client needs more
information or request for legal advice regarding commercial franchise in Vietnam,
please contact with ANT Lawyers to be assisted.
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