Viet Nam lays legal foundation for franchising
Franchising is a relatively new business concept in Viet Nam. Although existing here since the early 1990s, it has been slow to develop and has yet to enjoy the level of popularity it has in more developed countries.
With Viet Nam’s accession to the WTO, however, franchising is expected to flourish, especially when the retail distribution sector is opened up to foreign competition in early 2009.
Before the Commercial Law was enacted, a franchise was regarded as a type of technology transfer or licensing agreement and was governed by Decree No 45/CP/1998. The decree tended to have a freezing effect on the establishment of franchises, imposing a maximum royalty of 5 per cent of net sales such that parties to franchise agreements were not free to agree a higher rate of return.
Lack of confidence in IP rights protection in Viet Nam also contributed to the concerns of foreign franchisors.
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