Is Franchise regulated in Philippines?
Yes, franchising in the Philippines is regulated. The Republic Act No. 11659, also known as the “Franchise Act,” along with other laws such as the Consumer Act of the Philippines (Republic Act No. 7394) and the Corporation Code, provides the legal framework for franchising in the country. Additionally, the Department of Trade and Industry (DTI) oversees and implements policies and programs related to franchising.
What is the registration process to have the franchise registered?
To register a franchise in the Philippines, franchisors must follow several steps:
- Register the business name with the Department of Trade and Industry (DTI) for single proprietorships or with the Securities and Exchange Commission (SEC) for corporations and partnerships.
- Obtain a Mayor’s Permit or Business Permit from the local government unit where the business will operate.
- Register with the Bureau of Internal Revenue (BIR) to obtain a Tax Identification Number (TIN) and register for VAT, if applicable.
- Secure a Barangay Clearance from the barangay where the business will be located.
- For foreign franchisors, they may need to register with the Board of Investments (BOI) or the Philippine Economic Zone Authority (PEZA), depending on their business activities.
What are the criteria for a company to be allowed to franchise in the country?
Companies must have a successful business model (with a proven track record), comprehensive operations manuals, a compliant franchise agreement, and, for foreign franchisors, adhere to foreign ownership regulations under the Foreign Investments Act (RA 7042).
What tips can we provide to Franchisors or Franchisees?
- Drafting the Franchise Agreement: Ensure the franchise agreement is clear, comprehensive, and complies with Philippine laws. It is advisable to have it reviewed by a local lawyer specializing in franchising.
- Understanding Local Regulations: Both franchisors and franchisees should familiarize themselves with local business regulations, including labor laws, tax obligations, and consumer protection laws.
- Market Research: Conduct thorough market research to understand the local consumer behavior, competition, and potential challenges in the Philippine market.
- Training and Support: Provide ongoing training and support to franchisees to maintain the quality and consistency of the brand.
- Language Considerations: While English is widely spoken in the Philippines, consider providing important documents and agreements in Filipino for clarity and legal compliance.
Examples of popular Vietnamese franchises:
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