If you’re looking to expand your business through franchising but are unsure about the conditions and procedures for buying and selling a franchise, we can help. This article will outline the process and provide you with the information you need to successfully navigate the world of franchise ownership.
1 What is Franchise Ownership?
Franchise ownership, or franchising, is a form of business model in which an individual or organization is granted the rights to use a brand name or product/service to conduct business for a specified period, in exchange for a fee or a percentage of profits/revenue as agreed upon.
Franchising is a popular business model that allows for expansion
There are four basic types of franchising:
- Comprehensive business model franchising;
- Non-comprehensive business model franchising;
- Management-involved franchising;
- Capital investment franchising.
2 Preparing the Necessary Documents
Ensure you have all the necessary documents before initiating the process
The documentation required for buying and selling a franchise varies depending on whether it is a domestic or commercial brand. However, the basic requirements are outlined in Article 19, Clause 3 of the Regulations on Franchise Activities, which include:
- An application form for franchise registration as prescribed by the Ministry of Industry and Trade;
- An introduction to the franchise activities as prescribed by the Ministry of Industry and Trade;
- Other confirmation documents (legal papers, intellectual property rights certificates in cases of transfer, etc.).
For commercial franchise transfers, the following documents are required:
- 1 original copy of the application form for registration of commercial franchise activities as per Circular No. 09/2006/TT-BTM;
- 1 original copy of the introduction to commercial franchise activities as per Circular No. 09/2006/TT-BTM;
- 1 certified copy of the Business Registration Certificate or equivalent document of the foreign trader, certified by the competent authority in the country where the foreign trader is established;
Commercial transfers require multiple certifications and verifications
- 1 certified copy from the original or a certified copy presented with the original for verification of the business ownership protection document in Vietnam or abroad, in cases where there is a transfer of protected business ownership rights;
- Documentary evidence of approval from the original franchisor for the secondary franchisor to franchise in cases where the registering trader is a secondary franchisor;
- All the above documents, financial reports, and other attachments to the dossier, if made abroad, must be legalized by the Vietnamese consulate as per Vietnamese law before submission.
3 Franchise Transfer Procedures
According to Article 20, Clause 3 of the Regulations on Franchise Activities, the procedures for franchise transfers include:
- Submitting the application dossier for franchise registration to the competent state agency as prescribed in Article 18 of the Decree on Franchise Activities;
- The transferor shall hand over the Registered Business Booklet and notify the transferee in writing of the registration.
Step 1: Prepare all necessary documents and visit the Ministry of Industry and Trade.
Step 2: Ministry of Industry and Trade officials will receive the dossier:
The process is carried out at the Ministry of Industry and Trade
If the application is approved, within 5 days from the date of submission, the Ministry of Industry and Trade will enter the commercial activity in the register and notify the registrant. In case of rejection, the Ministry of Industry and Trade will provide a written response stating the reason.
If the application is incomplete or rejected, the Ministry of Industry and Trade will notify the applicant in writing, requesting them to amend and supplement the application in accordance with the regulations. The reason for rejection will also be clearly stated.
Step 3: The applicant will pay the fees and receive a receipt.
Step 4: The applicant will return to the initial agency to receive the results according to the scheduled time on the receipt.
The above are the basic conditions and procedures for buying and selling a franchise. Hopefully, this information will help aspiring franchisees understand the process and successfully register their franchise.
