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Differences between Franchise laws in US and Vietnam
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Comparison and Contrast the differences between Franchise laws in US and Vietnam
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1. IntroductionGenerally, the franchise laws in The United States and Socialist Republic of Vietnam are
different on two main aspects, specifically including Legislation and Registration, which will
be respectively discussed below. There are also many issues that McDonald - an American
company may face with franchising relationships in Vietnam, which will also be mentioned
and further discussed following with an applicable law for avoidance.
2. Differences
2.1. The United States of America
2.1.1. Legislation
Franchising is heavily regulated in the United States, both at the federal and state levels. This
means that any firm considering a US expansion must first determine if their business
relationship is a franchise or an "opportunity" and then adhere to all applicable federal and
state requirements (The Law Reviews - The Franchise Law Review, n.d.).
2.1.2. Federal franchise legislation
The Federal Trade Commission's Franchise Rule oversees franchising at the federal level, as
previously stated. Federal Trade Commission rules apply to every state, the District of
Columbia, and the United States territories. Federal Trade Commission Rule: The following
three elements must be present for a company or licensing agreement to be classified as a
franchise: franchisor pays a fee of at least US$570, which includes a right to trademark usage
and extensive control or support over business activities by the franchisor over the franchisee
As long as the contract includes one of these three features, US franchise law will apply
regardless of what the parties to the agreement call the agreement (The Law Reviews - The
Franchise Law Review, n.d.).
2.1.3. State franchise legislation
In numerous states, the federal franchise requirements have been extended. In addition, the
franchisee and/or franchisor may be subject to additional FDD requirements and/or state
registration requirements, as well as restrictions or prohibitions on certain aspects of the
franchise agreement. Approximately 15 states govern the sale and acquisition of franchises.
There are franchise laws in more than a dozen additional states that govern various aspects of
the franchise agreement. To ensure that a franchise may be marketed in many states, the
franchisor must review each state's franchise legislation to determine whether it is relevant
and what the state's requirements are, if any. Based on criteria such as where a franchisee's
home or company is located, as well as where the offer was accepted, the franchise rules of
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