Franchise in VIETNAM
Bud & Prairie are profusely expert and experienced to advise and assist you with franchising related matters.
As you may be aware, franchising in Vietnam is a popular method for expanding businesses and entering new markets, thanks to its potential for growth and profitability. Here’s a detailed guide on franchising in Vietnam, including legal considerations, registration, and best practices:
1. Understanding Franchising
1.1 Definition
- Franchising: A business model where a franchisor grants a franchisee the right to operate a business using the franchisor’s trademark, brand, and business system. The franchisee pays fees or royalties in return.
1.2 Types of Franchises
- Product Distribution Franchise: The franchisee distributes products of the franchisor.
- Business Format Franchise: The franchisee adopts the entire business model, including brand, operating procedures, and support.
2. Legal Framework for Franchising in Vietnam
2.1 Franchise Law
- Law on Commercial Franchise: The primary legislation governing franchising in Vietnam is the Law on Commercial Franchise, enacted in 2005 and last amended in 2018.
- Regulations and Guidelines: Detailed regulations are provided by the Ministry of Industry and Trade (MOIT), including guidelines on franchise registration, agreements, and compliance.
2.2 Key Requirements
- Franchisor Requirements: The franchisor must have been operating its franchise system for at least one year and must have at least one outlet operating under the franchise system.
- Franchise Agreement: The agreement must comply with Vietnamese law and be in Vietnamese or accompanied by a Vietnamese translation.
3. Franchise Registration Process
3.1 Pre-Registration Considerations
- Market Research: Conduct thorough market research to understand local demand, competition, and regulatory environment.
- Legal Consultation: Engage with local legal experts to ensure compliance with Vietnamese laws and regulations.
3.2 Franchise Registration with MOIT
- Required Documents: To register a franchise in Vietnam, you need to provide:
- Franchise Agreement: A copy of the franchise agreement, including details about the rights and obligations of both parties.
- Franchise Disclosure Document: Information about the franchisor, including business history, financial statements, and the franchise system.
- Proof of Operation: Evidence that the franchisor has been operating its business for at least one year.
- Franchisor’s Business Registration Certificate: Proof of the franchisor’s legal status and business activities.
- Submission: Submit the registration documents to the Department of Industry and Trade (DOIT) in the relevant province or city.
- Review and Approval: MOIT reviews the application and issues a franchise registration certificate if all requirements are met.
4. Franchise Agreement
4.1 Key Components
- Grant of Franchise: Defines the rights granted to the franchisee, including use of trademarks, business methods, and support.
- Franchise Fees and Royalties: Details about initial franchise fees, ongoing royalties, and any other financial obligations.
- Term and Renewal: Duration of the franchise agreement and terms for renewal.
- Training and Support: Provisions for training and ongoing support provided by the franchisor.
- Termination and Dispute Resolution: Conditions under which the agreement can be terminated and mechanisms for resolving disputes.
4.2 Compliance with Local Laws
- Language: The agreement must be in Vietnamese or accompanied by a Vietnamese translation.
- Legal Requirements: Ensure the agreement complies with Vietnamese commercial laws and regulations.
5. Operational Considerations
5.1 Site Selection and Setup
- Location: Choose a suitable location based on market research and franchise requirements.
- Lease Agreements: Ensure lease agreements comply with local regulations and align with the franchise model.
5.2 Training and Support
- Initial Training: Provide comprehensive training for the franchisee to ensure consistent quality and operations.
- Ongoing Support: Offer ongoing support, including marketing, operational guidance, and quality control.
5.3 Quality Control
- Standards Compliance: Ensure the franchisee adheres to the franchisor’s operational standards and brand guidelines.
- Regular Audits: Conduct regular audits to maintain quality and consistency.
6. Challenges and Best Practices
6.1 Challenges
- Regulatory Compliance: Navigating the regulatory environment and ensuring compliance with local laws.
- Cultural Differences: Adapting the franchise model to local cultural and business practices.
- Market Competition: Competing with local and international brands in a growing market.
6.2 Best Practices
- Local Partnerships: Collaborate with local business partners to navigate the market and regulatory landscape.
- Adaptation: Tailor the franchise model to fit local consumer preferences and market conditions.
- Legal and Financial Advice: Seek professional legal and financial advice to ensure smooth operations and compliance.
7. Conclusion
Franchising in Vietnam offers significant opportunities for business expansion and market entry. By understanding the legal framework, following proper registration procedures, and adhering to best practices, franchisors can successfully establish and grow their franchise systems in Vietnam. Engaging with local experts and staying informed about market trends will further enhance the chances of success in this dynamic and evolving market.
For further information, please do not hesitate to contact us at [email protected].
1. Patentability Search
Patentability search is also known as a novelty search, which helps identify whether or not an idea is novel and involves an inventive step (nonobvious). The most complete searches include all types of prior art to give an inventor or organization a comprehensive look at the technology landscape. A patentability search should be completed during the ideation phase, as well as prior to disclosure.
A patentability search is conducted by examining published patents that relate to your own invention to figure out whether your idea has already been patented. You can also see similar inventions, allowing you to improve and refine your own invention without infringing on someone else’s patent. And you can do all this before you have spent many hours and thousands of dollars on an idea that you can’t patent.
2. Freedom to Operate Search
A freedom to operate search (often abbreviated as FTO) determines how similar your product is to existing patents, and therefore how likely you are to infringe on a patent by making and marketing your invention. You may also see this type of search called a patent infringement search or right-to-use search.
Completing an FTO search early in the innovation cycle helps R&D teams design around existing patents. Later on, the results of the search can identify whether you may need to license other patents to bring your product to market.
3. State of the Art Search
Completing a state of the art search (also known as a product clearance or patent landscape search) allows you to examine the literature related to a specific industry, rather than around a certain technology, which may be applicable across industries. Using a state of the art search helps businesses find competitors and existing products within their field. These insights allow researchers, engineers, and leaders to make strategic decisions at any point within the innovation cycle.
4. Invalidity Search
To assess the strength of a specific patent, companies will use an invalidity search. This is also called a validity search. The results of this search determine whether or not the patent holder can claim infringement. They can also be used to decide licensing fees or value. If an invalidity search finds evidence in the form of existing, yet undiscovered, prior art, the patent should not have been granted and is unenforceable. This type of patent search is completed after a patent is granted.
5. Evidence of Use Search
Some organizations actively seek out products that infringe on their patent rights. This type of search is called an evidence of use search. To find these products, an organization or inventor will review similar patents and look for evidence the patent is utilized in a way that infringes on the searcher’s rights. Evidence of use searches happen after a patent is granted and as it matures.
6. Search Database
There are several databases in which patent searching may be done. Many databases such as USPTO, Google Patents, Free Patents Online, esp@cenet etc. are freely available, while other databases such as ThomsonInnovation, Orbit, Patbase etc. are available on the basis of a subscription. Each of these databases varies in terms of at least one of the following: Data Coverage, Search Engine, Interface.
• Google Patent Search Database. The Google search engine has revolutionized how people use the Internet. …;
• Patentscope. Patentscope is a free database put out by the World Intellectual Property Organization (WIPO)…;
• The USPTO Database…;
• Espace European Database…
The following are some of the largest and most popular patent office databases.
• Canadian Patents Database (CIPO)…;
• DEPATISnet (DPMA)…;
• Espacenet (EPO)…;
• JP-PlatPat (JPO)…;
• PatentScope (WIPO)…;
• U.S. Patent Assignment Database (USPTO)…;
• U.S. Patent Center (USPTO)…;
• U.S. Patent Databases (USPTO).
However, an inventor or applicant can also conduct their own patent search. The inventor or applicant has the advantage of often being more familiar with the art to which the invention relates, including having an understanding of the common knowledge held by persons skilled in the art and the relevant terminology.
Patent drafting is a part of how to patent an idea and is the process of writing the patent description and claims. It is at the core of every patent application. When the patent is issued or allowed, the draft serves as the specification part of the document. The patent applicants have to be more aware that depending on how well the complete specification is drafted and how precisely and correctly the claims describe the invention or the imaginary ‘boundary” is set, the easier it will be to defend it against third parties.
Normally, a patent specification covers the following parts:
• Field of Invention: It generally discloses a field to which the invention generally relates.
• Background: It discloses existing devices or methods related to the field of invention, broadly known as prior art. Background generally discloses prior art and limitations or disadvantages associated with the prior art.
• Summary of Invention: It (i) discloses the objectives of the invention, (ii) generally lists distinguishing features and advantages of the invention for which protection is being sought, (iii) summarizes the main features of the invention to be claimed, and (iv) also includes a broader explanation of the invention and briefly mentions the solution provided by the invention.
• Brief Description of Drawings (if any): If the invention includes any drawings, then this section includes a description of the drawing briefly such that a reader can get an overview of what could be disclosed by the drawing. The drawings are to be prepared in separate sheets as per different guidelines of different jurisdictions. The drawing sheets are filed with the patent specification.
• Detailed Description of Invention: It explains the different features of the invention in detail. Detailed description should be written such that a skilled person in the art can understand the invention solely after referring to this description. All claimed features and their interconnections, if any, need to be explained. In other words, all the claimed features need to be well supported in the detailed description.
• Claim(s): Claims are the most important part of a patent draft. Claims decide the scope of the protection which would be awarded to the inventor when the patent is granted. Claims are broadly divided into two categories, independent claim, and dependent claim. Every patent draft or patent application must contain at least one independent claim. Claims tend to change in course of the examination (narrower in most cases than the originally filed claims.
• Abstract: It is a technical summary of the invention. Generally, the Abstract should disclose the invention sufficiently to enable a person to perform a search for anticipation. The publication of a patent application includes publication of the abstract and representative drawing, if any.
• Drawings: Not all specifications have drawings. Such drawings, if any, would be prepared and submitted to the Patent Office in separate sheets. Different jurisdictions have different rules for allowable drawing sheets.
The significance of patent drafting and its impact on the patent protection should be conveyed to the SMEs, start-ups and inventors along with the information on importance of the patent protection in general. They should be informed that in case of any opposition or challenging the validity of their patent by a third party, a poorly drafted patent will be easily invalidated.
An opposition proceeding is an administrative process available under the patent law of many jurisdictions which allows third parties to formally challenge the validity of a pending patent application (pre-grant opposition), of a granted patent (post-grant opposition).
Once the patent application is published, an opposition may be filed within a certain time period prescribed under the applicable law. The opponent shall state the grounds for opposition and submit any evidence. If no opposition is filed during that period, the substantive examination will be carried out.
In the meantime, an applicant for a patent, any of whose claims has been twice rejected, may appeal from the decision of examiners to IP Vietnam, having once paid the fee for such appeal.
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