Franchising and intellectual property rights for F&B businesse in Vietnam

Overview of franchising for F&B Business in Vietnam

Business in the form of a chain has become a popular business model for businesses at this time. Not only stopping at the domestic market, many businesses have been aiming to “beat” to foreign markets, or in other words penetrate international markets to expand their business chains. One of the business forms that businesses can apply to open a business chain abroad is franchising.

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Article 284 of the Commercial Law 2005 stipulates: “Franchising is a commercial activity whereby the franchisor permits and requires the franchisee to conduct the purchase and sale of goods and provision of services by himself/herself according to the terms and conditions the following case:

(1) The purchase and sale of goods and provision of services are carried out in accordance with the business organization method prescribed by the franchisor and are associated with trademarks, trade names, business secrets, and business slogans. franchise, business logo, advertisement of the franchisor;

(2) The franchisor has the right to control and assist the franchisee in running the business.” The franchisor usually receives a fee or a percentage of the revenue or Franchisee’s profits.

Franchise is a popular and effective form of business chain extension leading to businesses intending to penetrate into new markets today, especially for F&B businesses. For Franchisee – an enterprise that wants to expand its business model, penetrating many foreign markets will be done quickly and economically, without much capital, bringing in large revenue, and without needing many resources by taking advantage of Franchisor’s resources to learn about new markets.

On the other hand, maintaining control over franchisees can be difficult, there are legal risks when disputes arise, the protection of image and brand reputation also becomes more complicated, requiring check and evaluate the franchisee’s performance, provide regular support; In addition, franchisees can take advantage of acquired knowledge and become future competitors by sharing business secrets and expertise.

Regarding intellectual property objects to note when conducting franchising

The objects of intellectual property that an F&B business need to pay special attention to in the process of expanding its business chain include trademarks and know-how – two factors that make up the restaurant’s brand and reputation. A know-how is automatically protected when it meets all the conditions, while a trademark needs to be registered to receive legal protection.

In order to successfully register for trademark protection abroad, enterprises should first conduct a search to assess the registrability of the mark, thereby taking appropriate development steps. Businesses can choose to register their trademarks by applying for registration through the Madrid Agreement/Madrid Protocol system or by applying directly to the destination country through the IP representative organization in the country. there.

It is necessary to register for trademark protection as soon as possible to avoid the risk of trademark infringement, theft, and imitation. The choice of the appropriate application method depends on the number of countries designated to register as well as the financial ability and actual conditions of the restaurant because these two methods have certain differences in cost and cost. How and when to complete the registration procedures. Usually, if you are applying in more than one country at the same time (whose countries are also members of the Madrid Protocol or Agreement), registering through the Madrid system will be more beneficial for businesses when it comes to saving costs. fees and time than applying directly.

In addition, businesses also need to be aware of competitive risks. By sharing know-how and expertise in the business, some franchisees, in fact, after the end of the franchise agreement have created their own brand based on what they have learned from the franchisor.

In summary, an F&B business needs to have appropriate strategies and preparation and study carefully the law, especially the law on intellectual property, as well as the political, economic, cultural and social situation. The national association is aiming to minimize barriers and risks in the process of expanding its business chain abroad.

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