Who Should Sign the Franchise Agreement?

Before franchising your existing business, make sure it is clear who will actually enter into the agreement and who has the authority to sign it. The public may know the shop’s name, but a different person or corporation may be legally responsible under the agreement. In franchising, proper checks on identity and authority are a foundation of trust—not simply extra paperwork.

1. Distinguish the brand name from the legal party

Start with your own business. Its registered business name, the brand displayed on the sign and the owner’s name are not always the same. Simply putting the shop’s name on the first page of the agreement is not enough.

For a sole proprietorship, the business has no separate legal personality from its owner. You will generally need to identify the individual by their full name and state the name under which they trade. Registering a business name with the Philippine Department of Trade and Industry (DTI) does not create a corporation.

For a corporation or partnership, use the exact name registered with the Philippine Securities and Exchange Commission (SEC). Make sure this is also the party responsible for granting rights, receiving payments and providing the promised support.

Apply the same checks to your prospective franchisee. If they say they have yet to establish a corporation, do not simply name the proposed corporation as though it already exists. First ask a lawyer to review who can enter into the agreement now and how any agreement made before incorporation should be handled.

Practical step: draw up a list of each party’s legal name, business structure, registration number, address and representative. Check these details against the entire agreement and its attachments.

2. Check authority, not just identity

Valid proof of identity does not automatically establish that someone can bind a business to a contract. Even if they are the manager, your main contact or a major shareholder, you still need to check their authority.

For a corporation, request appropriate evidence of authorisation, such as a board resolution and a corporate secretary’s certificate. These should clearly identify who is authorised to sign and which agreement the authorisation covers. Ask a lawyer to check whether the documents are sufficient under the corporation’s rules and circumstances.

For a partnership, review the partnership agreement and the scope of the signatory’s powers. If someone is acting on behalf of an individual, check their written authorisation and whether a special power of attorney is required for the transaction.

Before arranging the signing, ask:

• Does the name match the identity documents and evidence of authority?
• Does the authorisation cover the franchise agreement and its attachments?
• Are there limits on the value, duration or type of obligations the signatory can accept?
• Is any separate approval still required?

Apply the same standards to your own representative. The applicant is not the only party who needs to demonstrate authority.

3. Base your checks on the relevant law

The Philippines has no single comprehensive franchise law. The Civil Code provides the general rules governing contracts, including consent, legal capacity and valid representation. Republic Act No. 11232, or the Revised Corporation Code, is relevant when one of the parties is a corporation.

Republic Act No. 8293, the Intellectual Property Code, is also important. Beyond checking the signatory’s authority, you must establish that the franchisor has the right to license the brand. If it belongs to another person or an affiliated company, have the documents reviewed to confirm that they permit its use and the granting of the relevant rights to franchisees.

There is also a specific executive order on franchising: Executive Order No. 169, series of 2022. It sets minimum provisions for agreements within its scope involving micro, small and medium-sized enterprises, and directs the DTI to establish a registry of agreements. Check the applicable process with the DTI; registration is not a substitute for checking the signatory’s authority.

Republic Act No. 9178 is not a franchise law. It concerns barangay micro business enterprises—a Philippine category of small local businesses. Avoid using it as the general legal basis for a franchise agreement.

4. Arrange a final review before signing

Appoint someone to compare the final agreement with the registration documents and evidence of authority. Make sure all attachments are complete and no essential details have been left blank.

If the signatory changes, do not assume the previous authorisation covers the replacement. Check again before proceeding. If the identity of the legal party is still unclear, postpone signing rather than promising to sort it out afterwards.

Keep a complete signed copy and the supporting evidence in secure storage. Limit the collection and use of personal information to what is necessary for legitimate checks.

Practical reminder: before signing, confirm three things—the correct party, valid authority and a complete agreement. If anything is missing, resolve it before obligations arise.