Franchising in the Philippines

Franchising is a highly popular way of developing a business. In the Philippines a huge number of foreign F&B outlets can be seen; with US ones especially popular.

There is no specific franchising law in the Philippines. Franchising arrangements are therefore subject to the Civil Code and the IP Code. The parties to a franchising contract are free to agree their own commercial terms. But agreements must not breach Philippine laws, morals, good customs, public order and public policy.

Franchising agreements can also fall under the definition of "technology transfer arrangements" which are governed by the IP Code. Under the IP Code, technology transfer arrangements must not contain any specified Prohibited Clauses in Section 87. Also they must include all the Mandatory Provisions in Section 88. If an agreement does not comply with IP Code requirements, the agreement is unenforceable, unless it is exempted on very limited grounds where there are substantial benefits to the economy.

With only a few limited areas to keep in mind, franchise agreements are a simple way to proceed.