Question: We are Italy company and would like to open company conducting franchise consultancy services in Vietnam, please advise?

Answer: This is reference to your email from which, we understand that you would like us to advise on establishment of a wholly foreign invested company (hereinafter referred to as “FIC’) in Vietnam.

We further understand that upon establishment, the FIC shall conduct franchise consultancy services in Vietnam. We are therefore grateful to present you hereinafter our Legal Services Proposal for your review and consideration.

1. OUR PRELIMINARY COMMENTS

1.1. BRIEF INTRODUCTION ON SETTING UP FOREIGN INVESTED COMPANY IN VIETNAM

The establishment of a FIC in Vietnam requires an Investment Certificate and a Certificate ofBusiness Registration from the licensing authority. Depending upon the location of thecompany, the licensing authority may be the Provincial People’s Committee (for companieslocated outside industrial or export processing zones) or the provincial Industrial and ExportProcessing Zones Management Authority (for companies located in industrial or export processing zones).

We would like to clarify that the procedure for establishment of a FIC in Vietnam generally t akes a rather long time in comparison with other countries in the region.

We would like toclarify that the procedure for establishment of a FIC in Vietnam generally takes a rather longtime in comparison with other countries in the region.

Our practical experiences show thatalthough the total time for establishment of a foreign invested company as stipulated underVietnam Investment Law 2014 is only 15 days, the actual process may take a longer time dueto that the competent authority must consult other relevant offices to evaluate the investmentproject.

With respect to several cases that involves with relocation of 10,000 people or morein highlands; 20,000 people or more in other areas or requirement for changes of landpurposes or project in several special field such as Construction and operation of airports; airtransport; Construction and operation of national seaports; Petroleum exploration, extraction,and refinery etc, it shall require for approval from the National Assembly, Prime Minister orProvincial People Committee before starting the licensing process.

In this case, we assumethat your case is not subject to such requirement for approval. However, we reserve our rightto re-quote our professional fee and amend the work schedule if your case is subject toapproval of the National Assembly, Prime Minister or the Provincial People Committee.

Inorder to setup a FIC, it shall require you to undergo two following steps:

Step 1: Obtainment of Investment Certificate. The Law requires that within 15 working daysfrom submission of the application dossier the competent authority shall have to issue the Investment Certificate for Foreign Investor. However, having preliminarily discussed with the Licensing Authority, we do not much expect that the licensing authority can comply with this requirement in practice, especially, those relating to conditional investment sectors. For granting the Investment Certificate, the relevant licensing authorities shall evaluate the legitimacy and the feasibility of such Investment Project to determine on granting of the Investment Certificate on the following basis:

·Legal framework including Vietnam’s WTO Commitments, Vietnam Investment Law, Vietnam Enterprise Law, Regulations applicable to specific industries as well as the master economic development plan of the city or province that the FIC shall register its head-office.

·Your financial ability, investment capital to put in the Investment Project, facilities and human resources serving the implementation of such investment project in Vietnam.

Step 2: After obtainment of Investment Certificate, Client shall be required to obtain the Certificate of Business Registration. The Law requires that within 05 working days from submission of application dossier, the competent authority shall have to issue the Certificate of Business Registration for forming the FIC.

2. SPECIFIC COMMENTS

2.2.1. In Vietnam there is no concept on franchise consultancy service. However, this servicecan be classified to business management consultancy or management consultancy service.

Please note that, FIC must not involve with financial consultancy or legal consultancy.

1.2.2. Key factors to be noted

For securing possibility of obtaining Investment Certificate for FIC, we highly recommendClient to carefully consider following matters:

– Capital: Vietnam Law does not stipulate minimum capital amount for this industries.

However, according to our practical experience in previous case, an amount of150,000USD upward should be reasonable. The Vietnam Government can alsorecommend you to increase the Capital Amount if the number of goods to beregistered is large;

– Parent Company must have positive business operation result in at least 02 recentyears. This must be evidenced by audited Financial Statements for 02 recent years andbank account statement.

– Head office address of the FIC in Vietnam must be compliant with master plan ofVietnam.

– Location and scale of warehouse or factory must be compliant with master plan of theCity and it must secure enough space for assembly of construction material.

1.2.3. Licensing Process

– 02 working days from receipt of documents duly signed and sealed from Client, we shall submit the application dossier for starting the licensing procedure. It shall take about 15 working days from submission of application dossier to the competent authority for the provincial licensing authority to grant the Investment Certificate.

– 03 working days from receipt of Investment Certificate issued by the competent authority, we shall submit the application dossier for obtainment of Certificate of Business Registration. We shall obtain the Certificate of Business Registration within 05 working days from the submission date. –

Post licensing: Within 15 working days we shall complete the post licensing procedures such as publishing the FIC in National Data on company registration, obtaining seal. – For avoidance of any doubt, in practice, the administrative procedure can be longer due to that the competent authority must consult relevant ministries before granting License. In such case, SB Law shall try its best to accelerate the progress in order to obtain the approval at the soonest.

3. PROFESSIONAL FEE

Professional Fee for performing the SB Law services as mentioned in item above willbe 5,000USD (Five thousand US Dollar). The above service fee is exclusive of 10% VATand cost for translation of documents from English into Vietnamese (10USD/150 words).

If you would like further information on Establishment of company conducting franchise consultancy services in Vietnam, please either email to our Partners at: info@sblaw.vn or call to our Office:

Ha Noi Office: +84 (4) 62 62 0246

HCM Office: +84 (8) 35 208 101.

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Hotline: +84.904.340.664 | Email: info@sblaw.vn

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