What legal aspects should be noted when transferring a cosmetic brand in Vietnam?

In the context of Vietnam’s cosmetic market experiencing rapid growth, the buying, selling, and transferring of brands has become increasingly common. Successful domestic brands are highly valued and become attractive “pieces of the pie” for both domestic and foreign investors. However, behind these business opportunities lie a series of complex legal issues that, if not handled carefully, may expose businesses to serious risks related to intellectual property, taxation, contracts, and post-transaction disputes.

Transferring a cosmetic brand is not merely selling a name

A cosmetic brand transfer involves transferring ownership of a trademark that is legally registered or lawfully used, from the transferor to the transferee. Importantly, a brand in the cosmetics domain is not just a name—it embodies reputation, market value, distribution networks, loyal customers, and even exclusive product formulations. Therefore, transferring a brand must be done through a clear, legally valid contract that protects the rights and interests of the parties throughout the process of transfer.

Important legal considerations when transferring a cosmetic brand

Before signing a brand transfer agreement, businesses must pay special attention to the following legal aspects:

1. Legal status of the trademark
   The brand being transferred must be an intellectual property asset lawfully protected by the Vietnam Intellectual Property Office or the corresponding authority abroad (if it has international registration). Brands that are not yet registered or are under complaint or dispute carry transaction risks.

   Carefully examine the trademark registration certificate, renewal status, protected classes of goods/services, and check whether any other party is using a similar brand in the market that may cause confusion.

2. Clearly define the subject and scope of the transfer
   A common mistake is transferring only the name but excluding related elements such as logo, slogan, packaging design, domain names, or social media accounts. This can lead to disputes if the transferee later realizes they lack the full rights to exploit the brand as intended.

   Therefore, the contract should explicitly describe all assets associated with the brand being transferred, including:

   • Registered trademark and its logo variants

   • Domain names, corporate email addresses

   • Social media handles (Instagram, TikTok, Facebook…)

   • Product formula systems (if transferred)

   • Marketing materials, brand identity assets, advertising visuals

3. Confidentiality and non-compete clauses
   In cosmetics, product formulas and marketing strategies are valuable trade secrets. Therefore, the brand transfer agreement should include confidentiality agreements and restrict the transferor from creating a similar brand or competing in the same segment for a specified duration.

   For example, the transferor may be prohibited from producing cosmetics in the same market segment or using the old brand imagery for 2–3 years after the transaction, to preserve the transferred brand’s integrity.

4. Tax and legal liability commitments post-transaction
   Brand transfer may trigger obligations such as value-added tax (VAT), corporate income tax, or personal income tax, depending on whether the seller is an individual or a legal entity. Failure to declare or mis-declaration may incur tax penalties.

   Additionally, if the brand has previously been involved in disputes, tax arrears, or complaints about product quality, the transferee may face legal problems if due diligence is not thoroughly conducted.

   The solution is to perform comprehensive legal due diligence before contract signing. If risks are identified, parties may adjust the value, renegotiate terms, or include indemnity clauses in the contract to handle potential losses.

5. Procedures to finalize the transfer legally
   After signing the transfer agreement, to give it legal effect, parties must:

   • File a trademark assignment record with the Vietnam Intellectual Property Office

   • Publish transfer information if required by law

   • Change management rights for social media accounts, domain names, and related assets

   If the brand is registered abroad, similar procedures must be carried out in the respective countries.

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