Up until 2006, Vietnamese law did not provide a clear legal basis for franchising arrangements.

Up to
that point, some prominent franchises managed to operate in Vietnam through a combination of
trademark licensing and technology transfer agreements. However, the 2006 regulations provide a solid
legal foundation for franchising. In addition to some basic provisions in the 2005 Commercial Law, these
regulations include:
 Decree No. 35/2006/ND-CP of the Government (it is now amended by Decree No.
120/2011/ND-CP) provides detailed implementing regulations to the Commercial Law in regard
to franchising activities.
 Circular No. 09/2006/TT-BTM of the Ministry of Industry and Trade (MOIT) provides guidelines
on the registration of franchising activities.
 Law on Intellectual Property, adopted by the National Assembly on 29 November 2005.
 Law on Technology Transfer, adopted on 29 November 2006.
Vietnamese franchise law applies franchising activities between (1) Vietnamese parties, (2) a foreign
franchisor who grants a franchise to a franchisee in Vietnam, and (3) a Vietnamese franchisor who
grants a franchise to a franchisee in a foreign country.

Prerequisites for Franchisors and Franchisees

Some prerequisites for franchisors and franchisees that must be considered before entering into a
franchise arrangement in Vietnam include:
 The business system to be franchised must have been in operation for at least one year prior to
franchising in Vietnam (Decree No. 35, Art. 5.1, para. 1).
 A prospective franchisee must be registered to engage in a line of business that is suitable with
the goods or services contemplated by the franchise agreement (Decree No. 35, Art. 6).
 A Vietnamese franchisee must operate a franchise for at least one year in Vietnam before it may
sub-franchise (Decree No. 35, Art. 5.1, para. 2) to ensure the sustainable development of a
franchising network. In a master franchise, in addition to the franchise arrangement, the master
franchisor gives the franchisee the right to act as a sub-franchisor and the right to grant a
franchise to a sub-franchisee. When we refer to a foreign franchisor in this article, we intend to
include a foreign entity that has been awarded a master right to sub-franchise a business in
Vietnam. The policy rationale is that the primary franchisee should gain experience to run the
franchised business before sub-franchising to others.
Registration Requirements
 Franchises from abroad are required to be registered with the Ministry of Industry and Trade
(MOIT), known as the central regulatory authority for franchising activities. The MOIT has the
power to provide guidance for implementation of policies and legislation on franchising, and to
organize the registration of franchises. The MOIT registers franchises from overseas, an export
processing zone, a non-tariff area, or a separate customs area. Meanwhile, the Services of
Industry and Trade (the "SOITs") are the provincial agencies of the MOIT that supervise
franchising in provinces and centrally-run cities and receive reports submitted by Vietnamese
franchisors who franchise their business to Vietnamese or to foreign franchisees.
 There are also registration requirements for sub-franchising. The registration procedures set
forth in Circular No. 09 are quite transparent and expedient, with clear time limits for
government action on registration dossiers submitted to register a franchise. The regulatory
time frame for the MOIT to register the franchising activity is five working days from the date on
 which a complete dossier is submitted by the franchisor although the time frame may be longer
in practical.
 A registration dossier will include copies of the Franchise Introduction Statement and Franchise
Agreement, as well as an application and other relevant documents, such as registration
documents for relevant intellectual property. These documents must be translated into
Vietnamese (Decree No. 35, Art. 19.)
Disclosure Requirements
 Franchisors are required to observe a number of disclosure requirements. For example, the
franchisor must provide a Franchise Introduction Statement (similar to a disclosure document)
and a model franchise agreement to a potential franchisee for the potential franchisee to review
for 15 days prior to signing the franchise agreement, unless the parties agree otherwise. (See
Decree No. 35, Art. 8.2.) Circular No. 09 provides a standard form for the Franchise Introductory
Statement.
 The law also prescribes a duty to update changes to the contents of a Franchise Introductory
Statement. Specifically, the franchisor has an ongoing obligation to inform the relevant
franchising registration authorities (i.e., the MOIT and/or local Service of Industry Trade) within
30 days when there are changes regarding the contents of the Franchise Introductory
Statement. (See Decree No. 35, Art. 21.)
 The following disclosure information is subject to the ongoing duty to report changes to the
MOIT:
o Legal status of the franchisor (Decree No. 35, Art. 19.3(a))
o Name of the franchisor (Circular No. 09, Appendix III, Part A, Point I.1)
o Address of the franchisor (Circular No. 09, Appendix III, Part A, Point I.2)
o Telephone and fax (Circular No. 09, Appendix III, Part A, Point I.3)
o Date of establishment of the franchisor (Circular No. 09, Appendix III, Part A, Point I.4)
o Information on whether the franchisor is a master franchisor or master franchisee
(Circular No. 09, Appendix III, Part A, Point I.5)
o Type of business of the franchisor (Circular No. 09, Appendix III, Part A, Point I.6)
o Sector of franchising (Circular No. 09, Appendix III, Part A, Point I.7)
o Information on the registration of franchising activities at authorized government
agencies (Circular No. 09, Appendix III, Part A, Point I.8)
o Rights to use trademarks or service marks and any intellectual property of the franchisor
(Circular No. 09, Appendix III, Part A, Point II.1)
o Details on the trademarks and services marks and rights with respect to intellectual
property registered under the law (Circular No. 09, Appendix III, Part A, Point II.2)
o Certificates of protection for industrial property in Vietnam or in foreign countries
(Decree No. 35, Art. 19.3(b)).
Intellectual Property
 In regard to intellectual property, Decree No. 35 affirms that the licensing of intellectual
property in connection with franchising is governed by Vietnam’s intellectual property laws. (See
Decree No. 35, Art. 10.) A franchise agreement may contain a separate section containing
provisions on intellectual property, and it is often recommended that a separate trademark
licence should be executed by the parties to the franchise arrangement.
  The Franchise Introductory Statement must also disclose certain details regarding intellectual
property licensed in connection with the franchise agreement, such as, inter alia, details on the
registrations of trademarks that are used in franchising activities. (See Circular No. 09, Appendix
III, Part A, Point II.1.) In this regard, it is important to note that the registration of a trademark is
generally required prior to commencing with franchising activities in Vietnam. A number of
companies have had their franchising activities in Vietnam delayed because they failed to
register their trademarks in Vietnam in the past, and were forced to forgo franchising activities
until their trademark registrations were issued in Vietnam. Therefore, it is important for
companies that may eventually engage in franchising activities to register their intellectual
property in Vietnam early.

Payment trends in the economy have shifted towards non-cash modes and e-banking channels.
 Cashless payments continued to grow fast in the first nine months of 2021 with 36.28
quadrillion VND (1.6 billion USD) in which 22.78 quadrillion VND were made via the internet,
increased by 54.1 percent in volume and 30.7 percent in value compared to the same period in
2019. The remaining 13.5 quadrillion VND were conducted via mobile phone, surging 74.98
percent in volume and 93.69 percent in value. It should be noted that a project on the
development of cashless payment in Vietnam in the 2021-25 period has been approved. The
project aims to achieve a target in which the value of non-cash payments will be 25 times higher
than GDP, and account for 50 percent in e-commerce by 2025.
 The potential of cashless digital payments in Vietnam is very high as there is a strong force of
young population showing a high degree of preference towards new technology backed by high
penetration of smart phones. Cashless payments support financial transactions through
electronic information transfer rather than physical banknotes, which results in a must need to
develop technological infrastructure and connectivity. For that reason, the enhancement of
digital tech has become one of the priorities under the program by 2030 implemented by the
Vietnamese government provided that the adoption of new technologies and models should be
effectively obtained in order to (1) completely overhaul the way the Government operates, (2)
update business operations, (3) change the work style of citizens, and (4) create a safe,
secure and humane digital environment. 
 In the past, cashless payments were often associated with credit and debit cards. While the
usage of cards has increased significantly over the years and quite a few banks have even
launched contactless cards, adding to the convenience of customers, the focus of cashless
payments has really moved to digital payments.

The Vietnamese Internet of Things Market stood at USD 2,022.21 Million in 2019 and is projected to
grow at a CAGR of around 24.03 % to reach USD 7,321.92 Million by 2025.

Increasing in adoption of IoT solutions across enterprises, growing number of connected devices
and increasing proliferation of smartphones to drive the Vietnamese Internet of Things Market
through 2025.

Significant increase in data generation and rising demand for analytics, owing to the surging
deployment of IoT devices and increasing demand for analytics in manufacturing is supplementing
the growth of internet of things market in Vietnam.

Cloud platform makes it convenient to access data from anywhere while ensuring security as well as
providing huge storage capacities. Such factors help in harnessing the potential of connected
devices, which is expected to propel the growth of the Vietnamese Internet of Things Market in the
coming years.

The Vietnamese Internet of Things Market can be segregated based on platform, component, type,
application and region. Based on component, hardware accounted for 42.42% share in 2019 and the
trend is anticipated to continue until 2025 due to increasing adoption of IoT in various End-user
industries for improving operational efficiency. In terms of regional analysis, Northern Vietnam led
the market in 2019 and the trend is likely to continue through 2025 due to government initiatives in
the region such as smart grid and smart city. In addition, majority of companies have their
headquarters in the region; thereby, positively influencing the growth of the market.

Thus, although there is great potential for the IoT market in Vietnam to develop, there are still certain
difficulties for the development of the IoT market in Vietnam, which are caused by: policies have not
kept pace with the rapidly growing IoT market; Vietnamese enterprises are not really ready to apply
because of high initial investment costs, limited ability to master technology and capacity (Nguyen Huu
Xuyen et al, 2020); Vietnamese people's acceptance of the new and changing habits of consumers is still
slow; IoT connectivity standards are lacking, asynchronous IoT connections create sudden large amounts
of traffic, especially when IoT technology requires interoperability between devices; Security issues are
not really guaranteed. Besides, the IoT market in Vietnam has not yet developed strongly because the
supply capacity of domestic enterprises is not high; Research and development capacity of universities
and research institutes is still limited, intermediaries of consultancy, legal assistance and technology
transfer connection are small in number and their operations are not highly professional.