Franchise legal advice in Binh Thanh district – Tran & Co. Attorneys

Binh Thanh District is becoming a strategic destination for the wave of international F&B and retail investment (from Korea, Japan, Singapore). Establishing a standard franchise contract in Binh Thanh District is a vital requirement for survival. This document must not only comply with Vietnamese Commercial Law but also be compatible with strict international standards. Tran & Co. Attorneys provides comprehensive franchise legal advice, helping businesses maximize the protection of their rights and intellectual property assets.

1.  What is a commercial franchise contract?

A commercial franchise contract is a legal document recording an agreement in which the franchisor permits and requires the franchisee to undertake the purchase and sale of goods or the provision of services under specific conditions on their own behalf.

1.1 Legal regulations

According to commercial law, a franchise contract must be made in writing or in another form with equivalent legal validity to record the agreement. In this agreement, the franchisor permits and requires the franchisee to conduct business under the following conditions:

• Being allowed to use the trademark, trade name, business know-how, business logos, and advertising of the franchisor.
• The franchisor has the right to control and assist the franchisee in the operation of the business.

1.2 Identifying characteristics

Unlike a licensing contract (granting the right to use a trademark) or a distribution agency contract, a commercial franchise contract from a franchisor will have specific terms unique to the franchisee, including:

• Use of exclusive IP from the franchisor: Including the brand, exclusive formulas, and operational processes.
• Replication of a successful model: Applying a model that has been tested in reality.
• Uniformity: Mandatory compliance with common system standards.
• Fee structure: Includes the Initial fee and the recurring royalty fee.

2. When do you need franchise legal advice in Binh Thanh District?

Determining the timing for establishing a franchise contract not only satisfies the prerequisites under the law but also creates a safe premise, helping investors enter the fiercely competitive market in Binh Thanh. Below are the “golden” moments and factors making the signing of a contract urgent, requiring professional franchise legal advice.

2.1 Practical context of Binh Thanh

Binh Thanh, with key areas such as Landmark 81, Pearl Plaza, or Nguyen Gia Tri (D2) and Dien Bien Phu streets, is the “paradise” of the F&B and service industries. Many international brands choose this location for test sales or “flagship stores” before expanding across Ho Chi Minh City. Consequently, the demand to establish contracts here has skyrocketed to legalize business operations for major brands.

2.2 Localized legal aspects

Binh Thanh is affirming its strategic position, attracting a series of “flagship stores” from franchisors thanks to its diverse customer base. However, the vibrancy of the market can easily lead investors to overlook legalities. Therefore, a franchise contract needs to be established immediately when the following specific factors appear:

• Registration authority: Although the contract is signed in Binh Thanh, the procedure for registering franchise activities (with foreign brands) must be performed at the Ho Chi Minh City Department of Industry and Trade or the Ministry of Industry and Trade depending on the scale of operation.
• Dispute resolution jurisdiction: The contract is the most important legal basis for the People’s Court of Binh Thanh District to accept and resolve conflicts arising between parties headquartered in this area.

3. 10 Mandatory components in a franchise contract

To ensure validity and limit risks, Tran & Co. Attorneys recommends 10 core contents that must be included in a commercial franchise contract based on our consulting experience:

3.1 Legal information of the parties

For international brands or secondary franchisors, organizations must specifically prove their legal status and the operation time of the business system. According to regulations, franchisors must satisfy the condition that the brand has been in stable operation for a minimum of 01 years.

3.2 Scope of franchising rights

Besides satisfying organizational conditions such as operating time and licenses, businesses need to clearly define the type before setting up the first location representing the organization. Suitable forms in a vibrant economic market like Ho Chi Minh City, specifically Binh Thanh District, include: single unit franchise, area developer, or master franchise within the Binh Thanh area or the entire HCMC.

3.3 Intellectual property (IP) portfolio

Security and transfer of technology ownership are key layers of protection for business secrets and brand uniqueness. Before transferring the franchise, the franchisor must list trademarks and industrial designs in detail.

Note: IP must be registered for protection in Vietnam. IP registered only abroad may render the contract invalid in Vietnam.

3.4 Franchise fees & payment mechanism

Clearly define the fees: initial fee, royalty, marketing fund, training fee. Terms regarding payment in foreign currency must comply with the Ordinance on Foreign Exchange.

3.5 Training process & technical support

The contract should specify a complete training roadmap covering pre-opening preparation, soft-opening support, and ongoing field supervision. These commitments ensure the franchisee can operate the business model consistently and in accordance with brand standards.

3.6 Quality control terms

Quality control provisions must define operational KPIs, material standards, and audit requirements to maintain uniformity across the franchise system. The franchisor may conduct periodic or ad-hoc audits to ensure continuous compliance.

3.7 Transfer of know-how – SOP training

Regulations on handing over the Standard Operating Procedures (SOP). It is necessary to describe the level of transfer to distinguish it clearly from merely licensing the use of brand images.

3.8 Confidentiality and non-compete regulations

Business secrets, formulas, operational documents, and internal training are indispensable parts of creating the unique spirit of the franchisor’s brand. Ensuring the franchise contract has strict terms on confidentiality and non-competition is a key factor in preserving the trademark:

• Non-disclosure: Protect business secrets for a lifetime or a specific term.
• Non-compete: Prohibit the franchisee from opening a similar model within a certain radius and time after contract liquidation.

3.9 Contract termination and consequence handling

Termination provisions should outline the obligations to return documents, remove brand signage, and cease using all intellectual property. The parties must also agree on clear procedures for handling remaining inventory, financial obligations, and outstanding debts to ensure an orderly transition.

3.10 Dispute resolution clause

Selection of jurisdictional body: The People’s court of Binh Thanh District or the Vietnam International Arbitration Centre (VIAC). Lawyers will advise on the pros/cons of each option based on the client’s position.

4. 6 Important notes when drafting and signing contracts

Drafting and signing a franchise contract is not just an administrative procedure but legal evidence recording the agreement and long-term economic benefits of the parties. To avoid potential risks, ensure contract tightness and enforceability when signing a commercial franchise contract in Binh Thanh District, parties need to pay special attention to the following 06 important points:

• Do not use online templates: International templates (US, UK, Korea) often reference local laws, which are incompatible with Vietnam’s commercial law, leading to the risk of invalidity.
• Sync with FDD: Contract content must be consistent with the Franchise disclosure document (FDD) registered with the authorities.
• Verify exclusivity scope: Avoid “paper exclusivity” where the franchisor effectively still licenses a 3rd party within the same business radius in Binh Thanh.
• Supply chain feasibility: Especially for F&B, alternative plans are needed if imported ingredients (Korea/Japan) are interrupted, to avoid violating quality commitments.
• Compliance with foreign exchange regulations: All transactions and price listings within the territory of Vietnam must be in VND (except for special cases). Exchange rate conversion needs a clear mechanism in the contract.
• Dispute risk forecast: Anticipate situations & franchisee voluntarily ceases operations, maintenance fee disputes, or violations of the exclusive zone.

5. Consultation – Contract drafting process at Tran & Co.

With in-depth experience in commercial consulting and international franchising, Tran & Co. Attorneys understand the complexity and potential risks of cross-border transactions. To ensure every contract is built on a solid legal foundation, complying with Vietnamese commercial law and international practices, we apply the following standard 4-step process to accompany clients from strategy definition to signing:

• Phase 1: Legal assessment of the business model and determination of the desired franchise scope.
• Phase 2: Drafting the bilingual contract draft (Vietnamese – English/Korean/Japanese) adhering closely to Vietnamese Law and international practices.
• Phase 3: Reviewing and counter-arguing disadvantageous terms, optimizing commercial benefits, and preventing risks.
• Phase 4: Supporting negotiation, signing, and handing over the contract implementation checklist.

6. Conclusion

Signing a loose franchise contract in Binh Thanh District is the leading cause of business chain failures. In a fiercely competitive and hot-growth market like Binh Thanh, this legal document is the “backbone” for sustainable cooperation. To receive in-depth franchise legal advice, review, or draft standard franchise contracts, please contact the team of lawyers 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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