Rights and obligations of the parties to the commercial franchise contracts in Vietnam

Regulations on commercial franchise contracts

Pursuant to Article 285 of the Commercial Law 2005, commercial franchise contracts must be made in writing or in other forms of equivalent legal validity.

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.

Rights and obligations of the parties to the commercial franchise contracts in Vietnam (Internet image)

Rights and obligations of the parties to the commercial franchise contracts

(1) Rights of franchisors

Pursuant to Article 286 of the Commercial Law 2005, unless otherwise agreed, franchisors shall have the following rights:

- To receive franchise sums.

- To organize advertising for the commercial franchise system and the commercial franchise network.

- 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.

(2) Obligations of franchisors

Pursuant to Article 287 of the Commercial Law 2005, unless otherwise agreed, franchisors shall have the 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.

(3) Rights of franchisees

Pursuant to Article 288 of the Commercial Law 2005, unless otherwise agreed, franchisees shall have the following rights:

- To request franchisors to provide fully technical assistance related to the commercial franchise system;

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

(4) Obligations of franchisees

Pursuant to Article 289 of the Commercial Law 2005, unless otherwise agreed, franchisees shall have the following obligations:

- To pay franchise sums and other amounts under commercial franchise contracts;

- To invest adequate material facilities, financial sources and human resources to take over business rights and know-how transferred by franchisors;

- 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;

- To keep secret the franchised business know-how even after the expiration or termination of commercial franchise contracts;

- 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;

- To manage their activities in accordance with the commercial franchise system;

- Not to sub-franchise without permissions of franchisors.

Mai Thanh Loi

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