Franchising in the Philippines: Check the Agreement’s Registration

When a business says, “We’re registered”, ask straight away: what is registered, with whom, and for what purpose? Registering a company and registering a franchise agreement are different things. Anyone buying a franchise in the Philippines needs to understand this distinction. In franchising, clear documentation provides a basis for accountability—not a guarantee of profit or proof that every contract term is fair.

1. Distinguish business registration from agreement registration

The Philippines has no single comprehensive law covering every aspect of franchising. General contract rules under the Civil Code, Republic Act No. 8293, or the Intellectual Property Code, and other applicable laws govern the sector. There is also a specific order protecting micro, small and medium-sized enterprises (MSMEs): Executive Order No. 169, series of 2022, or EO 169.

If the franchisor is a corporation, it must be registered with the Securities and Exchange Commission (SEC). It also needs the appropriate registration with the Bureau of Internal Revenue (BIR) and a business permit from the local government. However, these documents do not prove that the franchise agreement has been registered under EO 169.

Ask for copies of the documents and compare the legal name with those on the contract, receipts and payment instructions. If the names differ, request a written explanation and evidence of authority. Simply using the same brand is not enough.

2. Understand what EO 169 requires

Under EO 169, agreements between franchisors and MSME franchisees in the Philippines must be in writing, notarised and include specified minimum terms and conditions.

These include full disclosure of fees that may be charged before signing, at the outset and on an ongoing basis. The franchisor’s responsibilities must also be detailed, including the types and particulars of assistance provided and submission of the agreement to the Department of Trade and Industry (DTI).

The franchisor is responsible for registration. The order sets out different procedures:

• Members of a duly registered association: the standard agreement must be registered with the DTI, together with a written undertaking to include the minimum terms and conditions required by EO 169 in all subsequent agreements with MSMEs.
• Non-members of such an association: all agreements with MSMEs must be registered within 30 days of signing.

Timing matters. If your particular agreement must be registered after signing, it is not reasonable to demand proof of its registration beforehand. Instead, ask for a written procedure identifying the person responsible and explaining how you will receive proof afterwards.

Do not confuse these rules with a general system requiring standardised disclosure documents before every franchise is offered. The Philippines has no such comprehensive system, but EO 169 imposes specific obligations on the agreements it covers.

3. Compile a record of evidence before signing

Create a simple checklist with four columns: document, purpose, date and any outstanding points requiring clarification. Include the following:

• Evidence of the other party’s legal identity and its signatory’s authority.
• Proof of association membership, if this determines the registration procedure being used.
• A copy of the standard agreement and relevant evidence of submission or registration, where applicable.
• The undertaking required by EO 169 for subsequent agreements with MSMEs.
• The final agreement, all attachments and a submission timetable if registration will take place after signing.

Compare the version you have received with the standard agreement presented as registered. If they differ, ask what has changed and why. Make sure all attachments referred to in the contract are included.

Confirm the current procedure and the type of evidence available directly with the DTI. An acknowledgement of receipt does not automatically mean that every part of a document has been reviewed or approved.

4. Do not confuse the DTI with IPOPHL

The Intellectual Property Code raises a separate issue. Franchise agreements fall under the rules on technology transfer arrangements, or TTAs. The prohibited clauses in Section 87 and mandatory provisions in Section 88 need to be reviewed.

An agreement that complies with these provisions generally does not need to be registered with the office responsible for TTAs at the Intellectual Property Office of the Philippines (IPOPHL). If it does not comply, the appropriate exemption, approval and registration are required to avoid the agreement being unenforceable.

An explanation that “IPOPHL registration is not required” therefore does not establish that there is no obligation to register with the DTI. These are separate rules. Have a lawyer familiar with franchising review the contract and any claimed exemption.

Practical takeaway: Before signing, establish which registration is required, who will handle it, when it must be completed and what evidence you will receive. Do not accept the word “registered” without clear supporting documentation.