Protecting Franchisee’s Rights in an International Franchise Contract in Japan

Franchising is a mechanism in a business where a particular firm uses the other firm’s business model which is already successful. The success of a franchisor is actually the success of the franchisee. This concept of business has spread globally and is now adopted by most countries. This paper, therefore, aims to discuss the issue of protecting franchisee’s rights in an international franchise contract in Japan. The paper will also put some focus on how Vietnam can adapt Japan’s experience to improve.

Protecting franchisee’s rights in the international franchise contract have become an issue of concern in the economic world. These rights have been merged with the property rights of a franchisor. These can be the assets with the greatest value. This makes protecting the intellectual property value significantly. Protection may be done through continual proactive and protective measures and by carefully drafting a franchise agreement. In the franchise systems, the most intellectual property rights covered include the service marks and trademarks of the franchisor; the franchisor’s copyrighted and confidential information, and trade secrets and trade dress. The items are usually disclosed to the franchisees directly through operation manuals, training programs, advertising templates, franchisee intranet, and many other electronic means. The signed franchise agreement should therefore give limitations to the franchisee in using the franchisor’s intellectual property. This is done by conforming strictly to the specifications and standards of the franchisor which limits the unraveling of information considered propriety and confidential.

The contractual protection has however failed to serve the interest of the franchisor. He, therefore, has to devote all the efforts to ensuring that the contracts maintain and have a protectable interest within the intellectual property. In making efforts to protect this right, both parties have an obligation to meet. The franchisor will have to secure the trademark and protect knowledge. These services should carry the logos and signs of the franchisor while uniforms used by the franchisee’s staff should be of a particular color. Vietnam as a country still lags behind in such contracts, Japan’s experience is actually promising as a developed country, and most countries including Vietnam may gain from their experience. In my opinion, Vietnam can adapt to Japan’s experience in order to improve its franchise framework. Vietnam may adopt this particular experience through defining clear and unified legal instruments relating to the international franchising contracts that are globally recognized and very crucial in technical and business development. Vietnam may also perform an examination of the values of Japan’s franchising contracts and adapt the legal systems governing international franchising. The adoption of Japan’s legal system would improve Vietnam’s franchising framework since most of its companies fall under franchisees in the international franchise contracts. Vietnam would do this by negotiating carefully the license and developing both business and marketing plans together with the franchisor.

In summary, Vietnam would gain from the adoption of the framework and the legal system of Japan in that its companies will have a good profitability track record, detailed systems, procedures and processes, broad geographical appeal with unusual concept and relatively inexpensive and easy to operate. I would therefore conclude that this paper has summarized the issue of protecting franchisee’s rights in an international franchise contract in Japan and has also elaborated the ways in which Vietnam may adopt Japan’s experience in order to improve their franchising framework.