Franchising in the Philippines: Check Your Data Rights

Before buying a franchise in the Philippines, ask whether you will be able to view and obtain your own sales records. A shop may look attractive but prove difficult to manage if the franchisor alone controls the reports, equipment and data. In franchising, responsibilities for information need to be clear—from the first transaction to the end of the agreement.

1. Find out what data you can access

A promise of a “tracking system” is not enough. Ask for a live demonstration of the sales recording system before signing. Use sample data, not customers’ actual personal information.

Check whether you can review the following:

• Sales by day, product and payment method.
• Discounts, refunds and cancelled transactions.
• Stock levels, spoilage and discrepancies between actual and recorded stock.
• Deductions and amounts due from delivery and payment intermediaries.
• A history of changes to records and the identity of the authorised person who made them.

Distinguish the right to view records from the right to obtain copies. You may be allowed to see a summary but not export detailed records for your accountant. Get written confirmation of which reports you can obtain, how often, and in what format readable by commonly used software.

Also ask whether you will retain access to reports during a dispute over charges. The information you need to reconcile sales, taxes and money actually received should not depend on a verbal promise.

2. Separate business data from personal information

Total product sales figures are different from lists of customers’ names, telephone numbers, addresses or purchase histories. The latter may fall under Republic Act No. 10173, the Philippines’ Data Privacy Act, and the relevant rules of the National Privacy Commission.

It is not enough for a contract to state that “the brand owns all data”. Individuals have rights over their personal information. Processing requires an appropriate legal basis, a clear purpose, adequate security and reasonable limits on collection and retention. Consent is not the only possible legal basis, but neither is data automatically available for use in any promotional campaign.

Have an adviser assess who determines the purposes and means of using personal information, and who processes it on someone else’s behalf. Responsibilities depend on what each party actually does, not merely on the labels used in the contract.

Before choosing a brand, ask for clear answers to these questions:

• Who provides customers with the privacy notice?
• Who responds to requests concerning their personal information?
• Who investigates and takes action if there is unauthorised access or disclosure?
• Can other branches use your customer list, and on what legal basis?

3. Calculate the full costs and risks of the system

Do not assume that a price including a till and sales recording device covers everything. Ask for an itemised breakdown of charges for equipment, installation, monthly use, data storage, repairs, system changes and copies of records.

Find out whether charges depend on the number of devices, users or transactions. Ask who can raise prices and whether a specified notice period applies. Include these costs when estimating your investment needs and ability to repay borrowing.

Also test what happens when the internet connection fails. Can you still record sales? How will duplicate entries be prevented when the connection returns? Who will help if the system stops working during a busy period?

For any new technology made compulsory during the contract term, ask about the approval process, how costs will be shared and how existing data will be migrated. A low-cost starter package can become expensive if subsequent charges have no limits or clear explanation.

4. Make the agreement and legal framework clear

The Philippines has a specific regulatory measure: Executive Order No. 169, series of 2022, sets out protections for micro, small and medium-sized enterprises buying franchises. These include minimum contractual provisions and registration of covered agreements with the Department of Trade and Industry (DTI). Ask a lawyer to establish whether it applies to your agreement, and confirm the relevant procedure with the department.

Registration is not a substitute for due diligence, nor does it automatically grant all the data rights you want. The Civil Code is also relevant to contractual obligations, while the Data Privacy Act governs personal information.

Have a schedule attached to the agreement specifying the reports you can obtain, security measures, incident response times, costs and record retention. It should also set out how you will receive copies you are legally entitled to retain when the relationship ends, and how other data will be deleted or returned in accordance with the law.

Practical takeaway: Before signing, try obtaining a sample report, have the full system costs calculated, and get data rights and responsibilities in writing. Clear control over information is part of buying a franchise with due care.