FRANCHISING S.N GROUP IN VIET NAM
How do foreign companies want to franchise (franchise) in Vietnam? Aplus Law’s Attorney has advised clients to successfully franchise their own subsidiary in Vietnam.
S.N is a New Zealand company specializing in the production and sale of solar cells. The company established a subsidiary company in Vietnam is S.N. VN. S.N wants to franchise the business model of solar cells with the brand of S.N. Solar cell for its subsidiary in Vietnam is S.N. VN.
S.N has come to ask Attorney to address the following issues:
- Conditions for franchising in Vietnam
- The procedure for conducting registration of the franchise
- Income tax of S.N company franchise activities
Franchising activities of foreign companies into Vietnam are regulated in the Commercial Law and regulations of Decree 120/2011/ND-CP
Article 284. Franchise
Franchise means commercial activity whereby the franchisee permits and requires the franchisee to conduct the purchase and sale of goods or services on its own under the following conditions:
- The purchase and sale of goods or services is carried out in the manner of business organization prescribed by the franchisee and is attached to the trademarks, trade names, business secrets, business slogans, business icons, advertising of the franchisee;
- The franchisee has the right to control and assist the franchisee in the running of the business.
(Commercial Law 2005)
Article 17. Franchise Activity Registration
- Before conducting the franchise operation, Vietnamese traders or foreign traders expected to be franchised must register the franchise activity with competent authorities as prescribed in this Decree.
- The competent authority to register franchise activities is responsible for registering the franchise activity of the trader in the Register of Franchise Activities and notifying the trader in writing about such registration.
Article 5 Consignee Conditions
Traders are allowed to grant commercial rights when they meet the following conditions:
- The business system intended for franchising has been operating for at least 01 year.
In case a Vietnamese trader is a primary franchisee from a foreign franchisee, such Vietnamese trader must do business in the franchise mode for at least 01 year in Vietnam before re-granting the right.
- Having registered the franchise activity with the competent authorities in accordance with Article 18 of this Decree.
- Goods or services that are subject to commercial rights do not violate the provisions of Article 7 of this Decree.
Article 6 Conditions of the franchisees
Traders are allowed to receive commercial rights when there is a business registration in accordance with the subject of commercial rights.
Attorney advised S.N before conducting the franchise in Vietnam, they need to register trademarks in order for the Vietnamese state to protect them in the territory of Vietnam.
Then they will register the franchise with the Ministry of Industry and Trade to officially transfer to the subsidiary company in Vietnam and receive the concessionary remuneration from the subsidiary in a legal way.
Regarding the tax of franchising activities in Vietnam, the franchisee company in Vietnam is responsible for declaring and pay instead the foreign franchisee company