Vietnam: 04 cases of unilateral termination of the franchising contract of the franchisor

Specifically, according to Article 16 of the Decree No. 35/2006/NĐ-CP of Vietnam’s Government, the franchisor has the right to unilaterally terminate the franchising contract in the following cases:

- The franchisee no longer holds the business license or papers of equivalent value, which the franchisee is required by law to hold for conducting business activities by mode of franchising.

- The franchisee is dissolved or goes bankrupt according to the provisions of Vietnamese law.

- The franchisee commits serious law violations, which may greatly harm the reputation of the franchising system.

- The franchisee fails to remedy its immaterial breaches in the franchising contract within a reasonable time limit, though it has received a written notice from the franchisor requesting the remedying of such breaches.

Besides, the franchisee has the right to unilaterally terminate the franchising contract in cases where the franchisor breaches its following obligations:

- To supply documents guiding the commercial franchise system to franchisees;

- To provide initial training and regular technical assistance to franchisees for managing the latter’s activities in accordance with the commercial franchise system;

- To design and arrange places of sale of goods or provision of services at the expenses of franchisees;

- To guarantee the intellectual property rights over objects stated in franchise contracts;

- To equally treat all franchisees in the commercial franchise system.

View more details at the Decree No. 35/2006/NĐ-CP of Vietnam’s Government, effective from April 26, 2006.

Ty Na

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