Exporting Vietnamese brands to international markets has emerged as a significant trend in line with global integration. This approach not only enables businesses to expand their market presence and strengthen brand value but also minimizes the need for substantial investment. A notable recent example is the coffee brand Three O’Clock, which successfully entered the Indonesian market. From a legal perspective, such brand expansion is classified as a commercial franchise under Vietnamese law.
In this article, BLawyers Vietnam highlights some notes that Vietnamese enterprises should carefully prepare for when engaging in commercial franchising, to mitigate potential legal risks in the future.
1. What is commercial franchising?
Pursuant to the Law on Commerce 2005 (“LOC”), commercial franchising is a commercial activity in which the franchisor (a Vietnamese enterprise) permits and requires the franchisee (a foreign enterprise) to independently conduct the sale of goods or provision of services subject to the following conditions:
- The sale of goods or provision of services is carried out in accordance with the business model organized and prescribed by the franchisor (a Vietnamese enterprise) and is associated with the franchisor’s trademarks, trade names, business know-how, business slogans, business symbols, and advertising; and;
- The franchisor has the right to control and provide assistance to the franchisee in the operation of the business.
From the above provisions, commercial franchising enables Vietnamese enterprises to expand their brands into international markets while retaining a certain level of control over their brand and business system.
In addition, pursuant to Decree No. 120/2011/ND-CP, if the commercial franchising is conducted from Vietnam to overseas markets, Vietnamese enterprises are not required to register such franchising activities with Vietnamese competent authorities. However, they are still required to comply with the reporting procedures to the Department of Industry and Trade regarding this activity.
2. What should a franchise agreement include?
To ensure legal validity and regulatory compliance in commercial franchising, the commercial franchise agreement is a key matter that Vietnamese enterprises must pay close attention to. Such agreement should be made in written form and must comply with Vietnamese law, the laws of the country where the franchisee operates, and relevant international treaties to which the parties or jurisdictions may be subject.
Pursuant to the LOC, the parties of a franchise relation may have certain rights and obligations as follows:
This is the basic legal framework for Vietnamese enterprises to refer to when structuring a commercial franchise agreement. In practice, given the cross-border nature of franchising activities, these provisions often need to be amended and expanded to suit the specific legal and commercial conditions of each target market, thereby minimizing the risk of disputes. Therefore, the drafting and careful review of these contractual provisions are very important.
3. How to resolve a dispute in commercial franchising?
Pursuant to the LOC, disputes arising from commercial franchising may be resolved through the following methods:
- Negotiation between the parties in good faith;
- Mediation conducted by an agency, organization, or individual mutually agreed upon by the parties; or
- Resolution by arbitration or court proceedings.
However, given the international nature of commercial franchising, in practice, the parties often do not prioritize the courts or arbitral institutions of a single jurisdiction in order to ensure neutrality and fairness in cross-border relationships. Based on the experience of BLawyers Vietnam, parties to cross-border franchise agreements commonly agree to resolve disputes through neutral international arbitration forums, such as the Hong Kong International Arbitration Centre (HKIAC) or the Singapore International Arbitration Centre (SIAC). The selection of these mechanisms not only ensures neutrality and professionalism, but also provides a high level of confidentiality, which is particularly suitable for disputes involving franchising arrangements.
How does BLawyers Vietnam assist enterprises?
BLawyers Vietnam is ready to provide legal support to Vietnamese and foreign enterprises in relation to commercial franchising, as follows:
- Advising on and assessing appropriate commercial franchising models aligned with the enterprise’s business strategy during the initial evaluation stage, to support informed decision-making;
- Drafting and reviewing commercial franchise agreements to ensure legal compliance and risk mitigation;
- Assisting in the resolution of disputes arising between the parties, including mediation and dispute resolution at arbitral tribunals (VIAC/ HKIAC/ SIAC) or Vietnamese Courts.
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: 30 December 2025
Writers: Thanh Huynh & Ha Le
