QFA: Clarify your right to withdraw after signing a franchise agreement

In guidance published on 1 November 2026, the Quality Franchise Association (QFA) highlighted the importance of a clear right to withdraw after signing a franchise agreement. For anyone considering a franchise in the Philippines, it is important to understand not only whether there is an opportunity to reconsider, but also how to exercise that right and which liabilities may remain.

A cooling-off period, not simply cancellation

According to the guidance, a cooling-off period is a defined window in which to review the agreement and exercise an agreed right to withdraw. This differs from cancelling a reservation before signing. It is also distinct from terminating an agreement because one party has breached its terms.

This distinction matters because each situation requires different circumstances and provisions to be considered. During the cooling-off period, the focus is on assessing the agreement’s legal and financial implications before proceeding fully.

The QFA identified Executive Order No. 169, series of 2022, as an important legal basis. For agreements covered by the order involving franchisees that are micro, small or medium-sized enterprises, a cooling-off provision is among the minimum required terms.

The order also sets requirements for fee disclosure and registration of the agreement with the Department of Trade and Industry. The guidance explains existing protections; it does not announce a new law or a new withdrawal deadline.

Clarify when the period starts and ends

A key recommendation from the QFA is to request the full draft agreement before signing. Prospective franchisees need to identify exactly what triggers the cooling-off period: their own signature, both parties signing, receipt of the completed agreement or payment.

If these dates differ, a dispute could arise over the final day for withdrawal. The agreement should therefore clearly state how many days are allowed and whether these are calendar days or working days. It should also specify what happens if the final day falls on a public holiday or a non-working day.

The number of days alone is not enough. It must be clear who should receive the notice, which delivery methods are accepted and whether a particular form or supporting documents are required. It is also important to establish whether sending the notice before the deadline is sufficient, or whether the other party must have received it by then.

The guidance recommends keeping the signed agreement, proof of receipt and correspondence relating to the relevant dates. Do not rely solely on verbal explanations from the salesperson.

A full refund is not automatic

The QFA also clarified that a right to withdraw is not an unconditional promise of a full refund. The relevant contract clause must be read and checked for compliance with the law.

Before signing, prospective franchisees should request an itemised breakdown of all fees and an explanation of how each will be treated if they withdraw. This should identify which amounts will be refunded, which may be subject to deductions and what actual costs may be deducted. The evidence required to support any deductions should also be clear.

The timing and method for returning the remaining money should be set out in writing. If equipment, stock or branded materials have already been delivered, the arrangements for dealing with them must also be clear.

Although the Philippines has no single comprehensive law covering all franchise matters, the Civil Code governs obligations and contracts. Under Article 1306, cited in the guidance, agreed terms must not conflict with the law or other prescribed standards. A clause is therefore not automatically legally valid simply because it appears in writing.

Separate obligations may remain

Another important warning is that withdrawing from a franchise does not automatically cancel separate contracts. Liabilities to a landlord, bank or shopfitting contractor may remain.

Where possible, the QFA advises avoiding non-recoverable expenditure while reviewing the agreement, or negotiating terms that allow cancellation. Nor should the cooling-off period be treated as a substitute for thorough due diligence before signing.

If you decide to withdraw, follow the written notice procedure. Identify the agreement, the date and the clause you are relying on; request acknowledgement of receipt and a clear refund breakdown. Do not simply stop making payments and assume the relationship has ended.

Practical takeaway: Before signing, ask your own solicitor and accountant to review the deadline, notice procedure, refundable amounts and any obligations that may remain.