Open a Franchise Business in the Philippines

Updated on Wednesday 03rd October 2018

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Starting a business in a foreign country in collaboration with a local partner can significantly increase the rate of success of the company. One of the most employed types of structures, in this case, is the franchise which represents one of the most successful business models in the Philippines.

There are two types of franchise businesses which can be created in the Philippines: the local and the international franchise business. Below, our company formation agents in the Philippines explain how to establish a franchise in this country.

Legislation on franchise businesses in the Philippines

There is no specific law which provides for the establishment of franchises in the Philippines, however, these types of structures fall under several laws, among which:
  •           the Civil Law through the contract legislation which provides for the legal means of establishing a franchise;
  •           the Intellectual Property Code which covers the right to use the trademark of the franchisor;
  •           the Philippines Company Law which provides for the creation of a company in order to enter the franchise;
  •           other specific laws provided by the sector in which the franchise business operates.

Our local advisors can offer more information on the legal requirements related to creating a franchise in the Philippines.

Elements of the franchise

There are three main elements which define the creation of a franchise business in the Philippines:
  •           the franchisor represented by the party giving the right to the franchisee to use their business model;
  •           the franchisee represented by the party taking over the business model from the franchisor;
  •           the franchise contract which is the documents providing for the rights and obligations of the franchisor and the franchisee.

The franchisor is required to provide all the materials, specific training and assistance during the franchise agreement. The contract can be signed for a definite or indefinite period of time. In return, the franchisee must pay a franchise fee at the beginning of the contract. The franchisee will also be subject to a royalties fee which must be paid on a monthly basis.

If you want to start a Filipino franchise business and need assistance, please contact our local representatives. We can also help you open a company in the Philippines.