Permits Required Before Opening a Franchise Outlet

When you franchise an existing business in the Philippines, a new outlet cannot automatically operate under your original shop’s permits. The owner, location, business activities and required approvals may differ. A responsible, reliable franchise network needs a clear way to verify that each outlet can legally open—not just that the premises look good and the stock is ready.

1. Separate business registration from permission to operate

Keep three things distinct in your records: the business’s legal identity, obligations relating to the franchise agreement, and permits for the individual outlet. A single document is not enough to establish all three.

Registering a sole trader’s business name with the Department of Trade and Industry (DTI) does not replace a business permit from the local government. Likewise, registering a company with the Securities and Exchange Commission (SEC) does not mean it can open in any building. The relevant registration with the Bureau of Internal Revenue (BIR) and tax obligations must also be addressed.

The Philippines has no single comprehensive franchise law. General laws apply, including the Civil Code for contracts, the Intellectual Property Code for licensing, the Local Government Code for local permits, and national tax legislation.

There is also a specific measure: Executive Order No. 169, series of 2022. It sets minimum requirements for franchise agreements involving micro, small and medium-sized enterprises and directs the DTI to create a register of these agreements. Franchisors have registration obligations; confirm the applicable procedure and current guidance with the DTI. This does not replace outlet permits.

Do not rely on the incorrect description of Republic Act No. 9178 as a franchise law passed in 1995. It is the Barangay Micro Business Enterprises Act, enacted in 2002, covering micro businesses at the local community level.

2. Check the premises before committing to irreversible expenditure

Before signing a long-term lease or commissioning equipment, find out whether the intended business activities are permitted at your chosen location. Premises suitable for basic retail may not be suitable for cooking, manufacturing or services involving specialist equipment.

Prepare a checklist:

• Land and building use: Are the type of business and the proposed alterations to the premises permitted?
• Safety: What checks are required for fire safety, exits, electrical installations and other hazards?
• Health and hygiene: Is a sanitary permit or certification for workers required?
• Specific activities: Are additional approvals needed for manufacturing, importing, storing or distributing products?

Do not assume that all food businesses need the same licence from the Philippine Food and Drug Administration (FDA). The requirements depend on the actual activities and product types. Confirm them with the relevant authority rather than copying another brand’s checklist.

Record the date, the office consulted and any written response received. Documented confirmation is more useful than hearsay that ‘the shop next door did it this way’.

3. Assign responsibility for each document

Create a register with five columns: document, applicant, person responsible for handling the application, evidence of completion, and validity or renewal date. Adapt it to each location; do not treat one city’s requirements as universal.

The franchisee operating the outlet will usually handle its permits. However, it must be clear which documents need to come from the brand owner, landlord, engineer or another professional. An application may be delayed if no one can provide the necessary consent or plans.

Ensure the applicant’s name matches the actual business operator. Also check the address, business activities and scope of the document. Producing a permit is not enough if it names a different outlet or entity.

Specify in the agreement who is responsible for applications, costs, correcting deficiencies and ongoing compliance. Assistance from the franchisor does not automatically transfer all legal responsibility to them.

4. Establish a final sign-off before opening

Before announcing a firm opening date, check the originals or verifiable copies of the required documents. Distinguish between an application submitted and an approval granted. If an approval is temporary or conditional, verify its scope and conditions.

Appoint someone to review the documents and issue a written decision on whether the outlet is ready to open. The brand’s internal sign-off does not replace government approval. If legal requirements remain unmet, postpone the opening and set out clear corrective steps.

After opening, maintain a renewal calendar and reassess the requirements whenever the outlet relocates, expands or changes its activities.

Practical summary: Before taking on your first franchisee, create a permit register with clear responsibilities and supporting evidence. Do not open solely on a promise that the paperwork will follow.