Vietnam: To distinguish between Franchise and License in Vietnam
1. What is Franchise? What is License?
Licensing of an industrial property object means permission by the owner of such industrial property object for another organization or individual to use the industrial property object within the scope of the owner's right.
Commercial franchise means a commercial activity whereby franchisors permit and require franchisees to undertake by themselves to purchase or sell goods or provide services on the following conditions:
+ 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.
+ Franchisors shall be entitled to supervise and assist franchisees in conducting their business activities.
2. Distinguish Franchise and License
- Similarities: Franchising and licensing industrial property objects (licensing) are similar in that both have activities of transferring the right to use intellectual property objects. there is a sender and a receiver.
- Differences:
|
Criteria |
Commercial franchise |
License |
|
Đối tượng |
Commercial rights (Purchase activities associated with the franchisor's trademarks, trade names, business secrets, business slogans, business logos and advertisements). |
The right to use industrial property objects. In which, the subjects allowed to perform the license do not include geographical indications, trade names |
|
Scope |
Wider by buying and selling associated with trademarks, trademarks, logos, business secrets |
Narrower because only the right to use industrial property objects can be transferred |
|
Purpose |
Holding and operating the business system. |
Towards the value of trademarks, industrial designs, and useful solutions. |
|
Types of contracts |
- Franchising contract. - Secondary franchising contract means a franchising contract signed between the secondary franchisor and the secondary franchisee regarding common commercial rights. - Commercial right development contract means a franchising contract whereby the franchisor grants the franchisee the right to set up more than one establishment to do business by mode of franchising in a specified geographical area. |
- Exclusive contract. - Non-exclusive contract. - Secondary contract. |
|
Restrictions |
- For the franchisee: Only transfer the rights to a third party with the consent of the franchisor. - For franchisors: There are no restrictions on franchisors. |
Restrictions on licensors (in an exclusive contract): the licensor may not transfer the rights to a third party for the duration of the transfer of the rights to the franchisor. |
|
Support |
Support initial training and provide regular technical assistance to franchisees to operate the franchise system properly. |
There is an agreement between the two parties on the support. However, technical support is only in the form of providing documents, data, and professional knowledge to the licensee. |
|
Right to control |
The franchisor has the right to periodically or irregularly inspect the operations of the franchisee to ensure the consistency of the franchise system and the stability of the quality of goods and services. |
The licensor of industrial property rights has no or only control rights when necessary and within a narrow scope limited by law. |
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