Franchise fee in Vietnam: Standard cost analysis – TRAN &CO. Attorneys

Setting an appropriate franchise fee in Vietnam is a critical yet challenging step for global brands entering Ho Chi Minh City’s dynamic market. Without clear insight into local costs, regulations, and business expectations, companies risk budget errors and inefficient models. TRAN &CO. Attorneys provides practical guidance to help brands manage expenses and build sustainable growth in Vietnam.

1. What is a franchise fee?

In international business conventions, commercial franchising is a model wherein the franchisor grants the franchisee the right to utilize specific intellectual property assets. Such as trademarks, proprietary formulas, and operational processes alongside a business system that has been proven successful.

The objective of collecting a franchise fee extends beyond mere profit generation; it encompasses several critical functions:

• Brand & system usage rights: Compensation for the franchisee’s privilege to exploit the intangible assets and brand reputation meticulously built by the franchisor.
• Operational support & training: Coverage for initial and periodic support services, including workforce training and technology transfer.
• Intellectual property (IP) protection: Ensuring the exclusivity and legal protection of the registered systems and processes.

2. Common types of franchise fees

The cost structure within a franchise model typically comprises several distinct components. Each serving a specific strategic purpose, such: 

• Initial franchise fee: This is a one-time, non-refundable payment made upon the signing of the contract. This fee compensates for the transfer of IP, setup costs, initial training, and the granting of operating rights within a specific territory.
• Royalty fee (Recurring/Operating fee): A periodic fee (monthly or quarterly) calculated as a percentage of the franchisee’s net revenue. Its purpose is to fund ongoing support, system updates, and the continued right to use the brand name.
• Marketing fund: Usually, a small percentage of revenue is contributed to a collective fund, enabling the franchisor to execute large-scale advertising campaigns and brand development strategies.
• Training & Model transfer fee: Specific costs dedicated to intensive training programs regarding products, services, and operational protocols.
• Technology/System fee: Costs associated with the utilization of supply chain management systems, POS software, or the franchisor’s proprietary technology.

Note: Evaluating these cost components is the preliminary step in constructing a sustainable international franchise model.

3. Factors influencing franchise costs in Ho Chi Minh City

The determination of a specific franchise fee in Vietnam, particularly within the bustling economic and financial hub of Ho Chi Minh City, is not arbitrary. It is subject to a confluence of market dynamics and operational realities. Investors and franchisors must rigorously evaluate these core variables to ensure the financial viability of the franchised unit while maintaining the integrity and premium positioning of the brand.

3.1 Industry specifics

Sectors such as F&B (Food and Beverage) and Education typically command higher initial fees. This is attributed to the complexity of proprietary formulas, operational workflows, and the stringent requirements for quality control that must be maintained.

3.2 Brand equity

Brands with robust recognition that have been proven successful in international market; especially those originating from Korea, Japan, or Singapore will invariably demand higher fees. This premium is commensurate with the immediate competitive advantage the brand confers upon the franchisee.

3.3 Domestic operational costs

Actual costs incurred in Ho Chi Minh City, such as real estate rental in central districts, salaries for high-level personnel, and logistics, indirectly impact the total investment required and the recurring fee structure.

3.4 Selected franchise model

There is a distinct divergence in costs between Unit Franchising, Area Franchising, and Master Franchise models. This variation exists because the scope of rights, territorial exclusivity, and administrative responsibilities granted differ significantly across these formats.

3.5 Scale of franchisor support

The depth of initial and ongoing assistance provided by the franchisor directly correlates with the cost. Comprehensive support systems that ensure operational excellence will necessitate a higher corresponding fee.

4. Industry benchmarks & Legal basis

Benchmarking against international standards provides enterprises with a preliminary financial framework, thereby optimizing budgetary allocations. This comparative analysis is essential for mitigating the risk of unforeseen expenditures and avoiding unauthorized surcharges that could jeopardize the venture’s profitability.

4.1 The F&B sector 

The Food and Beverage sector typically commands an Initial Fee ranging from 20,000 to 50,000 USD. Furthermore, franchisees should anticipate a recurring Royalty Fee of 4–6% of revenue, alongside a Marketing Fund contribution of approximately 2–4% to sustain brand visibility.

4.2 The education sector

For educational institutions, the system setup costs are substantial due to the requirements for curriculum transfer and academic standards. These fees generally fluctuate between 10,000 and 40,000 USD, contingent upon the scale of the facility and the level of certification provided.

4.3 The retail sector

The cost structure in the retail sector exhibits significant variance, heavily dependent on the brand’s global valuation. It is also inextricably linked to the requirements for exclusive supply chain sourcing and inventory management systems mandated by the franchisor.

4.4 Legal basis in Vietnam

While the figures mentioned above serve as international references, all franchise transactions in Vietnam must strictly adhere to Decree 35/2006/ND-CP (amended in 2025) and its current amendments. Vietnamese law mandates rigorous compliance regarding contract stipulations, particularly the compulsory franchise registration process, to ensure the validity of the agreement.

5. Cost consultation solutions – TRAN &CO. Attorneys

TRAN &CO. Attorneys provides specialized consulting services. Our capabilities designed to assist international brands in establishing an optimal franchise cost structure in Vietnam, such: 

• Franchise fee modelling: We establish a cost calculation model aligned with international standards, ensuring equity for both franchisor and franchisee while maintaining compliance with Vietnamese law.
• Fee policy design: We propose a fee structure tailored to the specific nuances of the industry and the client’s scale-up strategy.
• Financial forecasting & Feasibility: Our team conducts detailed financial analysis to evaluate feasibility and project profitability for the franchisee, facilitating successful transaction closure.
• Contract review & Negotiation: We focus on clauses regarding fees, payment obligations, and adjustment mechanisms to maximize legal protection for our clients.
• Legal & Tax compliance: We provide guidance on tax regulations and legal procedures related to the obligation of collecting and remitting franchise fees under Vietnamese law.

Call to Action: To receive a deep-dive analysis of the franchise fee in Vietnam specific to your industry, please schedule a consultation with our expert team today.

6. Conclusion 

Determining a precise and reasonable franchise fee in Vietnam is essential for effective financial planning and cost control when international brands expand their presence. With extensive experience advising leading companies from Korea, Japan, and Singapore, TRAN &CO. Attorneys support businesses in analyzing, optimizing, and structuring costs tailored to each model. For comprehensive guidance, please contact the team at TRAN &CO. Attorneys.

Contact information:

• Address: 34th Floor, Landmark 81, 720A Dien Bien Phu Street, Ho Chi Minh City, Vietnam.
• Hotline: +84 765 888 168
• Email: info@tranandcolaw.com
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