Fundamental but Crucial Legal Issues in Franchising

Franchising is an attractive business model that has fueled rapid growth for many companies worldwide. Asoka Law provides guidance on key legal fundamentals for successfully entering the Vietnamese market through franchising.

In today’s competitive business landscape, launching a startup alone has become increasingly challenging. Franchising, however, offers a proven shortcut to growth - helping new market entrants expand faster and more effectively.

In this article, Asoka Law’s legal experts in intellectual property and franchising summarize the basic legal framework for franchising in Vietnam, updated as of 2025.

1. Legal Framework for Franchising in Vietnam

Vietnam does not have a standalone law specifically dedicated to franchising. Instead, businesses must understand franchising through the lens of multiple legal instruments, including:

• Commercial Law No. 36/2005/QH11 (effective from 01/01/2006): Chapter VIII covers franchising activities in general.
• Intellectual Property Law No. 50/2005/QH11 (latest amended version effective 01/01/2023): Chapter X governs the transfer of industrial property rights.
• Enterprise Law No. 59/2020/QH14 (latest amended version effective 01/01/2025): Provides the legal framework for establishing, operating, restructuring, and dissolving businesses.
• Civil Code No. 91/2015/QH13 (effective from 01/01/2017): Sets out general provisions on contracts, including licensing or assignment of IP rights.
• Competition Law No. 23/2018/QH14 (effective from 01/07/2019): Regulates anti-competitive behavior, unfair competition, and merger control.
• Decree No. 35/2006/NĐ-CP (partially expired): Provides detailed guidance on franchising activities within Vietnam, including provisions for both local and foreign franchisors.

Asoka Law has advised more than 20 franchise clients on legal compliance and contract structuring in Vietnam.

2. Core Legal Elements in a Franchise Relationship

Intellectual Property Assets

According to Article 284 of the Commercial Law:

A franchise is a commercial arrangement whereby the franchisor permits and requires the franchisee to conduct business under the franchisor’s system, which must include the use of trademarks, trade names, business secrets, slogans, logos, or advertisements. The franchisor has the right to supervise and support the franchisee in the business operation.

This definition makes clear: the legal foundation of any franchise lies in intellectual property (IP) ownership. This includes:

• Trademarks;
• Trade names;
• Know-how and business secrets;
• Copyrights over brand assets such as slogans, visual identity, and operational materials.

Franchisees must ensure that the franchisor is the exclusive legal owner of these IP assets. Failing to verify this may lead to disputes over brand ownership and use.

Franchise Agreement

Article 285 of the Commercial Law requires that:

A franchise agreement must be made in writing or another form with equivalent legal validity.

A well-structured franchise agreement should:

• Last long enough to allow return on investment (typically 3–5 years in Vietnam, renewable);
• Include the following minimum terms:

Essential clauses to include:

• Licensed intellectual property assets;
• Initial franchise fee and ongoing royalty terms;
• Scope of the franchise territory, operational conditions;
• Rights and obligations of the franchisor;
• Rights and obligations of the franchisee;
• Terms for sub-franchising (if permitted);
• Penalties for contract breach;
• Term, renewal, early termination, and unilateral exit conditions;
• Dispute resolution mechanism or competent jurisdiction.

Get the Legal Structure Right from the Start

Whether you're a global franchisor entering Vietnam or a domestic business expanding through franchising, legal clarity is non-negotiable. Asoka Law offers a full suite of franchising legal services, including:

• Drafting franchise agreements tailored to your business model;
• Verifying IP ownership and registration;
• Consulting on territory protection and competition law;
• Assisting with franchise registration and compliance with Vietnamese regulations.

This article was prepared by Asoka Law’s IP & Franchising Practice, March 2025.

Contact Asoka Law – Licensed IP Law Firm & Franchise Advisor

Northern Vietnam: +84 96 191 4328 (Zalo/WhatsApp/Telegram)
Southern Vietnam: +84 984 333 629 (Zalo/WhatsApp/Telegram)
Email: ipsupport@asokalaw.vn or consult@asokalaw.vn