Franchising in Vietnam

Not legal or tax advice. This page is for general orientation only. Verify all details with a licensed Vietnamese lawyer and accountant before acting.

Franchising is one of the more accessible entry routes for foreign brands entering Vietnam, but the regulatory framework has real teeth. Fees must be registered, contracts must follow a specific format, and the Ministry of Industry and Trade (MOIT) keeps a public register that franchisees and partners can check. If you skip the paperwork, you expose yourself to fines and contract unenforceability.

Vietnamese franchising regulatory framework

Vietnam's franchise rules are primarily set by the Commercial Law 2005 and Decree 35/2006/ND-CP, as amended by Decree 08/2018/ND-CP. These require both the franchisor and the franchise agreement to meet defined conditions before commercial operations begin.

Key points:

• A foreign franchisor must register its franchise activity with MOIT before offering franchise rights in Vietnam.
• The franchise agreement must be in writing and cover specific mandatory clauses (territory, term, royalties, termination conditions, training obligations).
• Franchisors must have operated the franchised business concept for at least one year before they can franchise it in Vietnam.

Foreign direct investment licensing requirements may also apply depending on how the franchisor structures its Vietnam presence. A franchisor operating through a locally incorporated entity faces different obligations than one licensing from abroad.

MOIT registration

Foreign franchisors register with MOIT's Department of Domestic Market. The process involves submitting a dossier that typically includes:

• A description of the franchise system and the franchised business concept
• A copy of the draft franchise agreement (Vietnamese or bilingual)
• Evidence that the franchisor has operated the concept for at least one year
• Proof of intellectual property ownership or a valid licence for Vietnam

MOIT publishes approved franchisors on a public register. Franchisees are advised to check this register before signing anything. Processing times vary — most cases take four to six weeks, but delays are common if documents are incomplete.

Domestic franchisors (Vietnamese brands franchising within Vietnam) register with the provincial Department of Industry and Trade in their home province rather than at MOIT central level.

Master franchise vs unit franchise

Two structures dominate:

Master franchise. A single entity (the master franchisee) takes the rights to sub-franchise within Vietnam or a defined region. The master franchisee handles local sub-franchisee recruitment, training, and quality control. This suits brands that want rapid expansion without building a local management team themselves. The master franchisee typically pays an upfront master fee plus ongoing royalties, then charges its own sub-franchisees.

Unit franchise. The foreign brand deals directly with each individual franchisee location. More control for the franchisor, but also more administrative load. Common for brands that already have a Vietnam representative office or subsidiary.

For the legal entity side — whether an LLC or joint venture makes more sense for your Vietnam presence — see company registration LLC vs JV.

Royalty caps

Vietnam does not impose a statutory ceiling on franchise royalties as a percentage of sales. However, royalty payments remitted abroad are subject to withholding tax, currently at 10% under domestic rules (the rate may differ under a tax treaty if one applies between Vietnam and the franchisor's home country — verify this with a tax adviser).

Royalty fees paid to a foreign franchisor are treated as a service fee for tax purposes. They must be declared and documented carefully. The Vietnamese tax authority has historically scrutinised transfer-pricing arrangements between related parties, so arm's-length pricing matters if the franchisor and franchisee are connected entities.

Royalty rates seen in practice range from 2% to 8% of net sales for F&B concepts, and up to 12% to 15% for specialised service or education franchises — though these are rough market observations, not current advertised rates in all markets.

Common franchise sectors

Vietnam's most active franchise sectors as of 2025-2026:

• Food and beverage — bubble tea, fast food, coffee, casual dining
• Education and tutoring — language centres, STEM programmes, early childhood
• Fitness and wellness — gym chains, yoga studios, beauty and skincare clinics
• Retail and convenience — pharmacy chains, convenience concepts, fashion accessories
• Business services — accounting software, staffing, logistics

Brand recognition matters heavily in Vietnam's urban markets (Ho Chi Minh City and Hanoi in particular). A franchise with no existing name recognition locally will need a realistic marketing budget before the model pays.

F&B franchise realities

F&B is where most foreign franchise interest concentrates, and where most disappointments happen. A few honest observations:

Vietnamese consumers are price-sensitive and the market has strong local competition. Established local chains (Highlands Coffee, Phuc Long, The Coffee House) have deep distribution and pricing advantages. A foreign coffee or casual dining concept often needs to position clearly premium or accept thinner margins.

Rental costs in prime Ho Chi Minh City and Hanoi locations have risen sharply. Street-level ground-floor space in District 1 or Hoan Kiem can run USD 60–150 per square metre per month (2026 estimate, varies widely). Factor this into unit economics before committing.

Supply chain reliability for imported ingredients is variable. Most serious F&B franchisors in Vietnam have moved toward local sourcing for commodities and reserve imports for brand-critical items.

Education franchise realities

English-language and STEM education franchises have grown steadily. The licensing and operating requirements overlap with education sector regulations, not just commercial franchise law. Centres teaching children typically need approvals from the provincial Department of Education and Training in addition to MOIT franchise registration.

Protect your curriculum and teaching materials before entering. IP and trademark registration in Vietnam should happen before the franchise agreement is signed, not after.

Indicative costs

These figures are estimates based on market observation as of early 2026. They will vary by sector, location, and negotiation.

None of these are fixed or currently advertised as definite. Get itemised quotes from local advisers and contractors.

Common pitfalls

Unregistered franchise agreements. A franchise agreement signed before MOIT registration is completed may not be enforceable in a Vietnamese court. Do not launch operations ahead of registration.

Trademark gaps. Foreign brands sometimes discover their trademark is already registered in Vietnam by a third party. This can block MOIT registration or force a costly dispute. Run a trademark clearance search early — see IP and trademark registration.

Weak termination clauses. Vietnamese contract law and courts tend to interpret ambiguous termination clauses narrowly. Be explicit about grounds for early termination, notice periods, and post-termination non-competes.

Underestimating the master franchisee relationship. A master franchisee with poor operational standards can damage your brand across a whole country. Due diligence on prospective master franchisees — financials, track record, local network — is worth the time before signing.

Currency controls. Royalty remittances abroad require documentation showing the underlying service contract. Banks will request the registered franchise agreement. Delays happen; plan cash flow accordingly.

This page reflects publicly available information and general market observation. It is not legal or tax advice. Verify all requirements with a qualified Vietnamese lawyer and tax adviser before entering into any franchise arrangement.

Related

• Company registration — LLC vs JV
• IP and trademark registration
• Foreign direct investment licensing