Legal Framework for International Coffee Franchise in Vietnam
The international coffee franchise model is becoming a strong trend in Vietnam’s F&B market. However, behind the appealing business opportunities lies a complex legal framework that investors must clearly understand to avoid violations and financial losses. So what are the legal regulations governing international coffee franchise operations in Vietnam? How can investors sign franchise agreements legally and safely?
Legal Framework Governing International Coffee Franchise Activities in Vietnam
International coffee franchising, particularly in the F&B sector, has been a popular investment model as global brands like Starbucks, The Coffee Bean, and %Arabica expand their presence in Vietnam. However, this activity is tightly regulated under Vietnamese law to ensure the rights and obligations of both franchisors and franchisees.
Legal Basis for Franchise Operations
Under the 2005 Commercial Law and Decree No. 35/2006/ND-CP (amended by Decree No. 08/2018/ND-CP), franchising is defined as a business activity whereby a franchisor allows another party to conduct business under its model and trademark. Circular No. 09/2006/TT-BTM further guides franchise registration procedures.
International coffee brands must:
Register their franchise activity with the Ministry of Industry and Trade (MOIT).
Have operated for at least one year in their home market.
Prove legal ownership of trademarks, trade secrets, and operating systems.
Failure to comply may result in the franchise being deemed illegal, leading to risks involving contracts, taxation, and intellectual property.
Legal Particularities for Coffee Franchise Models
In the coffee sector, franchising involves more than transferring a business model; it includes beverage recipes, store design, supply chains, and operating procedures. Hence, franchisors must:
Ensure trade secrets are protected and clearly addressed in contracts.
Specify franchise fees, management fees, and technical support obligations.
Franchisees must register tax codes, business licenses, and food safety certificates according to business scale.
Common Legal Risks in International Coffee Franchising
Many Vietnamese investors, attracted by strong global coffee brands, overlook legal due diligence before signing contracts — resulting in disputes, financial losses, or even contract termination.
Contractual Disputes and Intellectual Property Issues
A major risk is disputes over trademark usage rights. In many cases, franchisees in Vietnam have invested heavily but were prohibited from continuing brand use after early termination. Technology transfer and brand registration are also common causes of conflict.
Investors should check:
Whether the brand has been legally registered in Vietnam.
Contract terms on termination and transfer of franchise rights.
Dispute resolution mechanisms — international or VIAC arbitration is recommended for neutrality.
Tax Obligations and Financial Control
Franchise operations entail tax responsibilities for both parties:
Foreign franchisors are subject to withholding tax.
Vietnamese franchisees must declare VAT and corporate income tax (CIT).
Cross-border payments must be made via banks with valid contracts and invoices.
Errors in tax declaration may result in fines, back taxes, or business suspension.
DEDICA Law’s Legal Solutions for International Coffee Franchise Projects
To ensure compliance and legal safety, businesses must prepare thorough documentation, verify brand legality, and draft contracts in line with local regulations. DEDICA Law provides full legal support for international F&B brands entering Vietnam.
DEDICA Law’s Support Process:
Legal evaluation of franchise models and trademarks.
Drafting and reviewing franchise contracts.
Franchise registration with MOIT.
Consulting on taxation, technology transfer, and trademark protection.
With experienced lawyers specializing in foreign investment, commerce, and intellectual property, DEDICA helps clients minimize legal risks and save time and cost.
Key Notes for Investors Before Signing Coffee Franchise Agreements:
Carefully review the franchisor’s legal documentation.
Define territorial exclusivity to avoid conflicts.
Clarify termination and transfer clauses.
Seek advice from a franchise lawyer to ensure compliance.
Partnering with DEDICA Law ensures your business expands confidently and sustainably.
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