What are the regulations on commercial franchise in Vietnam under the Commercial Law? What are Acts of law violation in franchising in Vietnam?

What are the regulations on commercial franchise in Vietnam under the Commercial Law? What are Acts of law violation in franchising in Vietnam? (Internet image)

Regulations on commercial franchise in Vietnam under the Commercial Law

According to the provisions of the Commercial Law 2005, 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.

Acts of law violation in franchising in Vietnam

Traders involved in franchising that commit the following acts of violation shall, depending on the nature and seriousness of their violations, be administratively sanctioned according to the provisions of law on handling of administrative violations:

- Conducting franchising business without having fully satisfied the specified conditions;

- Granting franchisings for goods or services banned from business;

- Breaching the obligation to supply information in franchising specified in Decree 35/2006/ND-CP;

- Including in written introductions of franchising untruthful information;

- Violating regulations on registration of franchising;

- Violating regulations on notification in franchising;

- Failing to pay tax(es) according to the provisions of law, but not seriously enough for penal liability examination;

- Failing to abide by requests of competent state agencies conducting examinations or inspections;

- Violating other provisions of Decree 35/2006/ND-CP.

Penalties for violations against regulations on provision of commercial franchise in Vietnam

According to Article 75 of Decree 98/2020/ND-CP, violations against regulations on provision of commercial franchise will be handled as follows:

(1) A fine ranging from VND 1.000.000 to VND 3.000.000 shall be imposed for failing to enter into a franchise agreement when carrying out commercial franchise.

(2) A fine ranging from VND 3.000.000 to VND 5.000.000 shall be imposed for committing one of the following violations:

- Providing false or inaccurate information in the application for registration of commercial franchise;

- Entering into a franchise agreement whose language and primary contents are not conformable with regulations of law;

- Failing to provide accurate and adequate required contents in the introduction to commercial franchise;

- Failing to provide information about the commercial franchise as prescribed or providing inadequate or inaccurate information;

- Failing to submit reports and provide documents or submitting reports containing inaccurate or inadequate information about issues concerning the commercial franchise at the request of competent authorities.

(3) A fine ranging from VND 5.000.000 to VND 10.000.000 shall be imposed for committing one of the following violations:

- Failing to carry out registration of commercial franchise as prescribed;

- Failing to fulfill eligibility requirements for carrying out commercial franchise as prescribed;

- Failing to notify competent authorities of changes in commercial franchise as prescribed.

(4) A fine ranging from VND 10.000.000 to VND 30.000.000 shall be imposed for committing one of the following violations:

- Failing to meet conditions or failing to obtain a license when carrying out commercial franchise for goods against which the emergency measure that is conditional sale of goods is implemented or which require a license;

- Continuing to carry out commercial franchise when the franchise agreement has expired.

(5) A fine ranging from VND 30.000.000 to VND 50.000.000 shall be imposed for carrying out the commercial franchise for goods or services which are prohibited or against which the emergency measure that is prohibition or suspension of sale of goods or supply of services is implemented.

Truong Quang Vinh

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