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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
Franchise agreements in the Philippines are not regulated by a single comprehensive statute. Instead, they are governed by a framework of general commercial and intellectual property laws. Standard franchise agreements in the Philippines contain clauses designed to protect the franchisor’s intellectual property and business integrity, which includes an IP license grant, quality control rights, and indemnification clauses.
Franchise agreements in the Philippines are not governed or regulated by a single comprehensive statute, but instead by a framework of general commercial and intellectual property laws.
Pursuant to Republic Act No. 8293, otherwise known as the Intellectual Property Code, a franchisor must register its trademarks, trade names, and proprietary systems with the Intellectual Property Office of the Philippines (IPOPHL) to serve as prima facie proof of ownership. Meanwhile, under the Civil Code of the Philippines, a franchise agreement is regarded as a contractual license to use certain rights, not as a transfer of ownership over those rights.
For corporate franchisors, compliance with R.A. 11232, otherwise known as the Revised Corporation Code, and R.A. 8799, otherwise known as the Securities Regulation Code, is essential, especially where the franchise structure resembles an investment contract. Meanwhile, consumer protection laws, such as R.A. 7394 (Consumer Act) and R.A. 7581 (Price Act), require honesty and fair dealing in franchise disclosures.
Standard franchise agreements in the Philippines contain clauses designed to protect the franchisor’s intellectual property and business integrity. These typically include an IP license grant defining the permitted use of trademarks, confidentiality, and reasonable non-compete covenants enforceable under Article 1306 of the Civil Code, quality control rights to preserve trademark validity under Section 147(3) of R.A. 8293, and indemnification clauses making the franchisee liable for IP violations. Transfers of franchise rights generally require franchisor consent, while royalties and fees, typically at 5–10% of gross sales, represent consideration for the continued use of the franchisor’s intellectual property.
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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 09175772207/ 09778050020.
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