In recent years, Vietnam has become an attractive destination for foreign investors (FDI) in the franchise sector. The strong growth of the middle class, increasingly modern consumer behavior, and a large consumption market have created great potential for this business model. However, investing in a franchise model is a complex legal "game," requiring investors to thoroughly understand relevant legal regulations in order to avoid risks and operate effectively.

Legal Framework Governing Franchise Activities in Vietnam
Before launching operations, FDI investors must understand Vietnam’s legal system regulating franchise activities, especially:

Commercial Law 2005 and Decree No. 35/2006/ND‑CP: These two legal documents are the main legislation governing franchise activities in Vietnam. Under them, franchising is understood as when the franchisor allows and requires the franchisee to conduct the sale of goods or provision of services according to the franchisor’s business model.
Mandatory Registration for Franchise Activities: According to current law, foreign brands seeking to franchise in Vietnam must register with the Ministry of Industry and Trade before commencing operations. This requirement ensures legality and lays the foundation for sustainable development.
Restrictions and Special Conditions for Foreign Investors: Some business sectors are conditional or restricted for foreign investors—such as education, logistics services, healthcare. Identifying the permissible scope of franchising and foreign ownership percentage is crucial for compliance with investment regulations.

Documents to Prepare
These include the franchise agreement, business model, operation manual, legal documents of the franchisor, at least one year of financial statements, and intellectual property protection certificates (e.g., trademark). All must be translated, notarized, and legalized by the consulate if they are foreign documents.

Drafting a Solid Franchise Agreement
A franchise agreement is not only a commercial commitment but also a legal foundation binding responsibilities between both parties. Terms should clearly define scope of rights and obligations, training process, quality control, franchise fees, confidentiality, and dispute resolution.

Brand Protection and Intellectual Property
To avoid conflicts and model copying, investors should register their trademark in Vietnam as early as possible. Other elements, such as trade secrets, operating software, and formulas, should also be protected through appropriate privacy and IP strategies.

Operations Management and Post‑Franchise Supervision
A common mistake by FDI investors is focusing solely on granting rights without monitoring the franchisee’s operations. This can lead to brand infringement, distortion of business standards, or violations of Vietnamese law.

Establishing an Internal Control System
Enterprises need a mechanism for monitoring service quality, conducting periodic inspections, and providing technical support to the franchisee. Terms for inspections and violation handling should also be clearly stated in the agreement.

Training and Ongoing Support Policy
Besides providing the business process, franchisors should create a comprehensive training program ensuring the franchisee understands and operates the model effectively. Continuous support helps maintain brand image and enhance success rates.

Common Legal Issues and Risk Prevention
Franchising in Vietnam—especially for FDI investors—can present many legal risks if not well-prepared. Common issues include:

Violations of trademark and copyright protection
Disputes over product/service quality
Conflict in terminating the franchise agreement
Franchisee’s breach of financial obligations or ethical standards

Investing in FDI through a franchising model is a promising opportunity in Vietnam but also carries legal risks. Thorough preparation in legal aspects, brand strategy, and operations is key to achieving success and sustainable development.

DEDICA is a legal advisory firm that supports many international brands in implementing franchising activities in Vietnam. With a team of experienced lawyers who deeply understand the local legal culture, we are committed to offering comprehensive, effective, and optimal solutions for FDI investors.

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