Hair beauty service business: Vietnam’s regulations on building an independent brand and franchising

When starting a business in the hair beauty service sector (also called ‘hairdressing salon’, and below referred to as “Hair Salon”), entrepreneurs often consider two models: an independent brand or a franchise system. Each option comes with its own set of legal requirements, conditions, and procedures, as well as distinct advantages and challenges.

In this article, BLawyers Vietnam presents the key legal regulations that should be considered when deciding whether to develop a Hair Salon brand independently or through a franchising model.

1. Choosing the model of building an independent brand

If opting for an independent brand, Hair Salons should take into account the following issues:

1. Business registration and selection of business entity type: Hair Salons must register under a specific business entity, such as a company or a household business. Key considerations include:
   1. The business name must comply with legal regulations and must not duplicate the names of existing businesses;
   2. The location of Hair Salons must meet legal requirements regarding security, fire prevention and fighting, and environmental regulations;
   3. Hair Salons must register their business activities in accordance with Decision No. 27/2018/QD-TTg on the classification of business sectors.
2. Compliance with labor regulations: Hair Salons must comply with labor regulations, including:
   1. Signing labor contracts with employees in accordance with the Labor Code, including provisions on working hours, wages, and social and health insurance policies;
   2. Ensuring a clean and safe working environment for employees, especially when dealing with chemicals and hairdressing tools.
3. Advertising regulations: Hair Salons must comply with the prevailing Law on Advertising when promoting their brand:
   1. All forms of advertising must be truthful and not misleading regarding the quality of services;
   2. When using KOLs (Key Opinion Leaders) or KOCs (Key Opinion Consumers) for promotional purposes, Hair Salons must clearly agree on the content to be delivered to ensure compliance with consumer protection laws.
4. Promotional programs and consumer protection: Organizing promotional programs to attract customers must comply with commercial laws and consumer protection regulations.
5. Intellectual property protection registration: Hair Salons should pay special attention to protecting the intellectual property rights of their brand and services. Trademark registration helps prevent infringement and ensures long-term protection of Hair Salons’ rights.

2. Choosing the franchising model

Similar to the independent brand model, Hair Salons must comply with general regulations on business registration and labor as mentioned above. However, when choosing the franchising model, Hair Salons should also pay attention to specific legal requirements related to franchise agreements, as follows:

1. Form of the contract: A franchise agreement must be made in writing or in another legally recognized equivalent form.
2. Obligations of the franchisee: Hair Salons, as franchisees, must fulfill the following key obligations:
   1. Paying franchise fees and other payments as agreed to in the franchise contract;
   2. Accepting the supervision, inspection, and guidance of the franchisor; and
   3. Operating the business in accordance with the franchising system.
3. Intellectual property rights and conditions for brand usage: Hair Salons, as franchisees, will provide services using the trade name, trade secrets, business slogans, business symbols, and advertising materials of the franchisor. Upon termination or expiration of the franchise agreement, the Hair Salons must cease using the franchisor’s trademarks, trade names, business slogans, business symbols, and any other intellectual property rights (if applicable), as well as the franchising system.
4. Sub-franchising: As the franchisee, Hair Salons are not allowed to sub-franchise without the franchisor’s prior consent. As the law does not yet provide detailed regulations on the form of such consent, it is advisable for the parties to clearly define this in the franchise agreement to avoid future disputes.
5. Franchise registration: In the case of a foreign franchisor, Hair Salons intending to operate under a franchise must register the franchise with the Ministry of Industry and Trade before commencing business in Vietnam. For domestic franchises, a report must be submitted to the local Department of Industry and Trade.

Choosing the appropriate business model directly affects the long-term development strategy of Hair Salons. Therefore, entrepreneurs should carefully consider legal factors, cost implications, brand development potential, and the commitments involved in joining a franchise system (if any), to make a decision aligned with their strategic vision and goals.

The above is not official advice from BLawyers Vietnam. If you have any questions or suggestions about the above, please contact us at info@blawyersvn.com. BLawyers Vietnam would love to hear from you.

Date: 22 August 2025

Writer: Chau Dang