Enterprises to require legal framework for franchise development

Vietnam's enterprises will require a strong legal framework including government legislation and supporting policies to develop franchises in the coming years, according to economists at a symposium held in HCMC late last week.

Economists at the Franchise Vietnam 2008 conference stated that franchising is a relatively new concept in Vietnam, and in order for it to develop stably, the central Government should improve the legislative sectors.

Pham Chi Lan, an economic expert, said Vietnam needs to continue to improve commercial law, intellectual property law, standards for goods and protocols for solving commercial disputes.

"If these four legislative improvements are executed, franchises will develop more stably because the risk of commercial dispute in franchising is predictable," said Lan.

According to economists, franchises have been developing in Vietnam for the past two years. However, few enterprises or trademarks were able to successfully franchise until now.

Le Cong Dinh, a lawyer from DC law firm, said most of Vietnam's 65 franchises are foreign-owned. However, after the country's inclusion into the World Trade Organization there has been a surge in franchise development.

Ly Qui Trung, chairman of the Nam An Group which owns Pho 24, said that enterprises should apply these four steps in franchising nationally and internationally: franchising demand specification, partner selection, partner examination and partner negotiation. "The enterprise's franchise development could be impeded if one of the four steps is neglected," Trung said.

The development of domestic and foreign franchises will be crucial for commercial activities, especially in the service sector. It is predicted that franchises will be fully developed in Vietnam by 2012, said Tran Anh Tuan of the FT-Pathfinder Consulting Group.

"The enterprises need more supporting policies from the government in the legislative and administrative sectors, so that they can successfully conduct franchising activities in the country," said Tuan. (SGT)