Starting a Company or Franchise / Retail Business in

the Mekong Region

17 June 2015

What makes us unique?

We are pioneers in emerging markets

1994

1995

2005

2006

2010

2011

Lao PDR

Cambodia

Thailand

Vietnam

Singapore

Bangladesh

Myanmar

Indonesia

Part 1

Doing Business in the Mekong Region

Mekong Region Key Indicators: GDP Growth

Country

Vietnam

Laos
Cambodia

Population
2014
(M)

2014 GDP
per capita
(USD)

91.5

2,052

7.0
15.5

2012 GDP
Growth
(%)

2015 GDP
Growth
forecast
(%)

2013e GDP
Growth
(%)

2014e GDP
Growth
(%)

5.2

5.4

5.6

5.8

1,692

7.9

8.2

7.5

7.8

1,080

7.3

7.0

7.2

7.2

Source: IMF World Economic Outlook Database, April 2015

2014 Ease of Doing Business Ranking

148

78
135

Source: Doing Business 2015 Fact Sheet: East Asia and the Pacific

Part 2

Setting up a Retail Business

Key Legal Framework

Law on Investment
- Law on Enterprises
Law on Commercial
Decree 35/2006/ND-CP on commercial franchise
Circular 08/2013/TT- BCT of Ministry of Industry and Trade on
trading activities

Investment Promotion Law

- Enterprise Law
Decision 0977/MOIC regarding Business on Retail and Whole Trade
Notification No. 1489 regarding Categories of Goods and
Investment ratio open to foreign investors for investment in the
establishment of import business units for wholesales

The Civil Code

The Law on implementation of certain provisions of Civil Code
Law on Investment
Law on Commercial Enterprises
7

Setting Up a Retail Business

Setting
Companies

Franchising

100% foreign owned

or joint venture or
local

Foreign or local
companies

Investment or Joint
Venture for
construction or model
sales establishment or
local

100% foreign owned

or joint venture or
local

Lao
nationality
and residing
in Lao PDR

Foreign or local
companies

Part 3
Vietnam Setting up a
Subsidiary or Franchising
What you need to know

Establishing a subsidiary

10

Enterprise Structures

Country

LLC1

LLC2+

RO

Branch

Vietnam

Yes

LLC (2-50)
JSC (3+)

Yes

Yes (banks, insurers, securities firms, law firms)

Lao PDR

Yes

Yes (2-30)

Yes

Yes (banks, insurers, airlines)

Cambodia

Yes

Yes (2-30)

Yes

Yes

Establishing a foreign invested company

Time frame by law* In practice, it is longer

Application for
Investment
Registration
Submission

15
Local
working
Department of days

Planning and
Investment

3
working
Investment days

Registration

Enterprise
Registration

Rejection or
Supplementation

* Law on Investment 2014

12

Establishing a local company

Time frame by law* In practice, it is longer

Application for
Enterprise
Registration
submission

Local
Department of
Planning and
Investment

3
working
days

Enterprise
Registration

Publication

Rejection or
Supplementation

* Law on Enterprises 2014

13

Franchising

14

Franchising in Vietnam

Legal Definition* of Franchising

The sale of goods or provision of services conducted under the
business method or format of the franchisor;
The business carried out by the
franchisee itself;
The business carried out under the
trademark and commercial symbol of the
franchisor; and
Franchisors entitled to supervise and
assist franchisees in conducting their
business activities.

Law on Commercial
Decree 35/2006/ND-CP on commercial franchise as amended by Decree 120/2011/ND-CP
Circular 08/2013/TT- BCT of Ministry of Industry and Trade on trading activities

15

Franchising in Vietnam

Vietnam WTO Commitments:

100% foreign owned permitted;
Necessity to verify Vietnam Commitments
under WTO;
Involvement of the Ministry of Industry and
Trade
Economic Needs Test: permission
considered on a case by case basis,
depending on number of retail outlets,
market stability, population density in the
province/city of proposed additional retail
outlet, and consistency with the master
plan of such province/city.
16

Master Franchise vs Sub-Franchise

Global Franchisor

National Franchisee
(in Country or Area)
Master Franchise

Sub-Franchisee

Sub-Franchisee

Sub-Franchisee

17

Registration of Franchising Activities

Time frame by law* In practice, it is longer

Application for
franchise
activities
submission

Ministry of
Industry and
Trade

5
working
days

Registration

Publication

Rejection

Law on Commercial
Decree 35/2006/ND-CP on commercial franchise as amended by Decree 120/2011/ND-CP
Circular 08/2013/TT- BCT of Ministry of Industry and Trade on trading activities

18

Registration Of Franchising Activities

Franchise Description Document

Including the following information

Information of franchisor and

franchisee: organizational chart,
financial status

Trademark of the goods and

services;

The franchise system, initial and

ongoing franchising fees, the
number of franchisee currently in
operation and the agreement forms;
and

Other mandatory information

19

Registration Of Franchising Activities

One-year Rule

The franchisee system has been in

operation for at least one year.
The Vietnamese master-franchisee of
a foreign franchisor must also have
conducted a franchise business for at
least one year in Vietnam before
granting sub-franchise to others

20

Mandatory Provisions of The Franchise Agreement

1

Content of franchising

Rights and obligations of the franchisor

Rights and obligations of the franchisee

Price and periodic franchise fees and payment method

Term of contract

Extension and termination of contract

Dispute solution

21

Legal Rights and Responsibilities

Franchisor must

Franchisee must

Disclosure the information

Pay franchise fee

Provide initial training and regular

technical assistance

Invest in facilities, finance, human

resources

Design and arrange business at

franchisees expense

Keep confidentiality
Comply with the requirements of
franchisor regarding design and layout

Warrant intellectual properties

Stop using intellectual properties of

the franchisor at expiry of the
franchise contract

Treat all franchisees equally

Comply with operation system

NOT to sub-franchise WITHOUT
franchisors approval
22

Thank you

Hanh Tran
Partner, Vietnam
Deputy Managing Director, Ho Chi Minh City Office

hanh.tran@dfdl.com

23

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Since 1994

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