You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

May 29, 2014

Food and Beverage Franchising in Vietnam

Subscribe to Updates
Informed Counsel

On February 8, 2014, a few days after the Lunar New Year, Vietnam’s first-ever McDonald’s opened in Ho Chi Minh City’s District 1. Situated on a major transportation axis, but away from tourist areas and the downtown core, the new restaurant boasted 24-hour service and a drive-thru—for both cars and motorbikes—which was also purported to be the first in Vietnam.

Curious customers queued round the clock in snaking lines more commonly seen at amusement parks than chain restaurants, as a flood of teens, families, and professionals awaited their first taste of the famous Big Mac. In just the first 24 hours of business, 22,500 customers were served, according to the Daily Mail. By the end of the first month, a staggering 400,000 people had dined at this single location. Though those numbers may be inflated, they reflect an apparent truth: the Vietnamese market has a great demand for famous worldwide brands.

As of March 2014, there were approximately 120 foreign franchisors registered in Vietnam. The businesses predominantly come from the United States, the United Kingdom, and Singapore, but there is a good mix of nationalities. The dominant business sectors are retail, education, and food service, with food and beverage franchises accounting for 30% of the registered franchises. KFC and Lotteria came to Vietnam over a decade ago and currently have over 140 restaurants and over 170 outlets, respectively, in the country. Pizza Hut arrived in 2007 and now has over 40 restaurants. Meanwhile, newcomers such as Subway, Starbucks, Popeye’s, and Burger King are steadily opening restaurants in Vietnam, and McDonald’s surely has an eye on rapid expansion.

Franchising has become a popular way for foreign food brands to enter the Vietnamese market because it is considered to be the fastest and least risky alternative, one which sidesteps certain regulatory restrictions still imposed on foreign-invested businesses in the food service industry. For example, despite Vietnam’s accession to the WTO in 2007, foreign-invested businesses are not allowed to establish their own restaurants, subject to narrow exceptions (e.g., where a restaurant is established in parallel with the construction of a hotel), though this restriction is to be removed in 2015.

In addition, foreign food and beverage service providers entering Vietnam through a franchising arrangement with a Vietnamese partner do not need to have a legal presence in Vietnam or set up a business entity in Vietnam, and thus can avoid significant capital outlays. However, franchising carries its own set of challenges and hurdles.

Franchising Regulations and Procedures

Despite the market entries of a number of globally recognized food and beverage brands, potential franchisors should understand that franchising is still in an early stage in Vietnam, and the same could be said for Vietnam’s franchising laws. Franchising was first recognized as a form of commercial activity in the Commercial Law of 2005, with the legal groundwork for franchising activities laid out a year later in Decree 35 and Circular 09. There is now a registration system with the government and a comprehensive set of regulations; however, there is still a lack of depth in the regulations, which can leave ambiguities in many areas for those wishing to operate a franchise system in Vietnam.

Franchising law in Vietnam requires that all foreign franchisors register their proposed franchising activities with the Vietnamese authorities before carrying out the activities. The authority responsible for managing franchising is the Ministry of Industry and Trade (MOIT). The MOIT sets out requirements for the application file that foreign franchisors need to submit to register their activities in Vietnam. As part of the application, a foreign franchisor will need to submit a “Franchise Description Document” (FDD), which may contain a considerable amount of commercially sensitive data about the franchisor. Apart from the extensive FDD, the application file must include relevant business certificates, intellectual property certificates, and, in the case of a secondary franchisor, a letter of approval to sub-franchise from the franchisor. The amount of information that the franchisor must prepare may be substantial and the costs incurred to translate and notarize such documents can also be considerable.

Keys to Successful Franchising

As a prerequisite to franchising, foreign franchisors should ensure that their intellectual property rights (trademarks, patents, etc.) are registered in Vietnam. The registration of trademarks should be in the foreign franchisor’s own name as the registrant. Otherwise, if the local franchisee is the registrant, complications may arise if a dispute occurs between the two parties.

Franchisors often want disputes arising under franchise agreements to be resolved by foreign courts or arbitration centers. However, the recognition and enforcement in Vietnam of foreign judgments or awards can be extremely difficult or even impossible to secure. Foreign courts’ judgments are generally unenforceable in Vietnam unless there is a treaty between Vietnam and the relevant country on the recognition of judicial decisions. Thus, franchisors must give close consideration as to the dispute resolution provisions under their franchise agreements.

Finally, franchisors should also be aware that fees and payments arising from the franchise agreement, such as initial franchise fees, royalties, technical assistance fees, training fees, and marketing fees, are subject to Vietnam’s foreign contractor tax regime, which includes value-added tax and corporate income tax. Corporate income tax rates may vary depending on whether there are applicable double tax avoidance treaties. (Vietnam is a party to double tax avoidance treaties with more than 60 other countries, but notably not with the U.S.)

Outlook

The government has made great efforts to set up regulations allowing franchises to be established in Vietnam. This has resulted in a number of global brands entering the market, highlighted by the recent entry of McDonald’s. However, additional guidance will be required as Vietnam’s laws on franchising continue to develop.

Download Full Article
Related Professionals

Practices

Corporate/M&A

Location

RELATED INSIGHTS​ 

June 23, 2026
Thailand’s Board of Investment (BOI) has significantly revised its post-approval compliance framework for projects that receive investment promotion incentives, replacing the previous semiannual reporting system for project progress with a new quarterly reporting regime. The initial report is due by July 30, 2026, covering the second-quarter reporting period of April to June 2026. The new requirements—implemented through BOI Announcement No. 8/2569 and Office of the BOI Notification No. Por. 8/2569, both of which became effective on March 30, 2026—apply both to newly promoted projects and to existing promoted projects that remain in the implementation stage. Background Under the previous reporting framework, BOI-promoted companies that had not yet commenced full operations were generally required to submit reports on project progress to the BOI twice a year (February and July) through the BOI’s e-Monitoring system. By adopting a quarterly reporting regime, the BOI seeks to strengthen monitoring and evaluation of investment progress and project implementation. Reporting Requirements Under the new regulations, BOI-promoted companies must submit project progress reports on a quarterly basis during the implementation phase of a promoted project. The reporting periods and submission deadlines are: Q1 (January–March): April 30 Q2 (April–June): July 30 Q3 (July–September): October 30 Q4 (October–December): January 30 of the following year The quarterly reporting obligation runs from the date the BOI promotion certificate is issued until the BOI grants approval for commencement of full operations. For newly promoted projects, no quarterly report is required for the quarter in which the BOI promotion certificate is issued—the first reporting obligation arises in the immediately following reporting period. All project progress reports must be submitted electronically through the BOI’s e-Monitoring system. The existing annual reporting requirement also remains in effect, requiring promoted companies to submit an annual operating results report through the e-Monitoring system by July 31 of
Read More
June 9, 2026
On April 28, 2026, the Central Bank of Myanmar (CBM) issued Notification No. 18/2026 introducing the new Foreign Remittance Business Regulations. The new regulations apply to companies intending to operate foreign remittance businesses in Myanmar that are not licensed banks, non-bank financial institutions, or other financial institutions. The regulations supersede and replace the previous regulatory framework governing foreign remittance businesses under CBM Notification No. 21/2019. While the overall structure remains familiar, the new regulations introduce more detailed requirements for licensing, operations, reporting, and compliance, with a stronger focus on transparency and regulatory oversight. Broader Licensing Requirements Under the new regulations, applicants must submit detailed business plans describing the use of information technology and mobile platforms, along with clear plans for handling remittances from workers abroad and resolving customer complaints. Financial Thresholds and Reporting Requirements The baseline financial thresholds remain unchanged. Licensees must maintain a security deposit of MMK 100 million in an escrow account, along with a separate revolving fund dedicated solely to remittance operations. The new regulations introduce more structured reporting obligations. Licensees are now required to submit daily remittance transaction data by the next business day before noon, in addition to monthly and periodic reporting requirements. Foreign bank account statements must also be submitted regularly, and licensees must provide updates on business operations every six months. Strengthened AML and CFT Framework The new regulations place a greater emphasis on anti-money laundering (AML) and counter financing of terrorism (CFT), with tighter controls over management changes. Any changes in shareholding, share transfers, or the appointment of key management personnel such as the managing director require prior approval from the CBM. Licensing Fees and Validity The new regulations increase licensing costs, while maintaining the same validity period of three years. The new regulations provide more detailed grounds for suspension and
Read More
June 4, 2026
On May 19, 2026, the Cabinet of the Royal Thai Government approved, in principle, revisions to Thailand’s visa exemption scheme and visa on arrival (VOA) program, as proposed by the Ministry of Foreign Affairs and the Ministry of Tourism and Sports. The revisions represent a tightening of Thailand’s immigration framework and will affect a broad range of short-term visitors. Background On July 15, 2024, Thailand expanded its visa exemption scheme by increasing the permitted period of visa-exempt stay from 30 days to 60 days in order to promote tourism, support the country’s post-pandemic economic recovery, and facilitate international travel. Under this revised scheme, passport holders from 93 countries and territories (an increase from the previous 57 countries and territories) have been permitted to enter Thailand without a visa and remain in the country for up to 60 days per entry for purposes including tourism, business engagements, urgent work, and ad hoc assignments. In addition, eligible visitors may apply at the Thai Immigration Bureau for a further 30-day extension of stay. Key Changes The proposed revisions would revoke the current 60-day exemption and reinstate the previous stay period, thereby reducing the maximum permitted stay for eligible travelers to 30 days per entry. In addition, the number of countries and territories eligible under the 30-day visa-exemption scheme is expected to be reduced to 54. The scope of the VOA scheme would likewise be significantly narrowed, with the number of eligible countries reduced from 31 countries to just four (Azerbaijan, Belarus, Serbia, and India). Further, Thailand is expected to introduce a new 15-day visa exemption category for nationals of Seychelles, the Maldives, and Mauritius. The revised framework would also limit each country or territory to a single visa exemption privilege in order to simplify Thailand’s immigration framework and reduce overlapping immigration privileges.
Read More
May 25, 2026
After several years of policy discussion and continued efforts led by the Ministry of Commerce (MOC) to relax the list of reserved businesses under the Foreign Business Act B.E. 2542 (1999) (FBA), the reform process has now reached a significant milestone. On May 12, 2026, the Thai cabinet approved in principle two draft subordinate legislative instruments aimed at delisting certain reserved business activities under the FBA and reducing licensing requirements for foreign business operators. These developments signal a renewed and concrete effort by the government to modernize Thailand’s business regulatory framework in order to attract foreign investment and boost Thailand’s competitiveness in the global market. Nine Businesses Set for FBA Delisting Below is a list of the nine businesses that are being targeted for delisting from the FBA’s restrictions. A draft ministerial regulation would delist the first eight reserved businesses, while a royal decree has been drafted to delist the ninth business: Telecommunications services (Type 1 license only, covering operators without their own telecommunications infrastructure), under the supervision of the Office of the National Broadcasting and Telecommunications Commission. Treasury center services subject to the Foreign Exchange Control Act B.E. 2485 and under the supervision of the Bank of Thailand. Securities-collateralized lending, pursuant to the laws governing securities and exchange and derivatives regulated by the Securities and Exchange Commission. Agency, dealer, advisory, or fund management services relating to derivatives where the underlying assets fall outside the scope of the Derivatives Act B.E. 2546 (2003) Intra-group shared services, including administrative, human resources, and IT functions Intra-group domestic debt guarantee services Leasing of partial space for installation of financial service machines and automatic vending machines for employee use Petroleum drilling services Trading of agricultural product derivatives through a futures exchange, with physical delivery or receipt of agricultural products at a futures exchange–designated
Read More