Legal experts are warning domestic business exercise caution when entering into agreements with well-known, international franchisers, saying that not all deals result in the success advertised.
Dr Le Net from the HCM City University of Law, said not all global franchises would be able to succeed in Viet Nam in the way KFC has, as many franchises that have shown strength in other markets around the world may fail to meet local tastes.
Franchises in Viet Nam are expected to mushroom in the near future as local consumers have increasingly demonstrated a desire to access internationally-known products and services. Franchises are likely to develop not only in the fast food industry but also in tourism, fashion and education providers.
With the expected potential for growth and profit, domestic businesses have been lining up to sign franchise agreements without careful scrutiny, Net said.
The fact is, said Net, franchises are as high a risk as any business start-up. A franchised trademark was not a guarantee of success.
Franchise agreements, Net warned, were also frequently structured to shift risks and liability from the franchisor to the franchisee. In lawsuits, the franchisee would often lose.
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