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Manila Bulletin devider Philippines devider National devider Duterte orders registration of agreements between franchisors, MSMEs

Duterte orders registration of agreements between franchisors, MSMEs

Published May 16, 2022 02:50 pm

President Duterte has issued an order requiring franchisors to come up with franchise agreements with micro, small and medium enterprises (MSMEs) for the protection of parties interested in acquiring franchises from them.

According to Executive Order No. 169, which was signed on May 12 but was released to the media on May 16, franchisors shall register their franchise agreements with the Department of Trade and Industry (DTI) and execute an undertaking that all franchise agreements with MSME franchisees shall incorporate the minimum terms and conditions prescribed in the order.

The terms and conditions under the order are the following:

  1. Name and description of the products or services under the franchise
  2. Specific rights granted to the MSME franchisee
  3. Full disclosure of any pre-signing, initial or recurring fees
  4. Detailed responsibilities of the franchisor
  5. Detailed responsibilities of the MSME franchisee
  6. Non-discrimination provisions
  7. Duration of the franchise and the terms and conditions for renewal
  8. Effects of and grounds for pre-termination, termination or expiration of the franchise agreement
  9. Provision on "cooling off" period where the MSME is given the option to terminate the agreement
  10. Mechanism for dispute resolution
  11. Remedies of the parties in case of any violation of the terms and conditions of the franchise agreements

Franchisors may also consider and incorporate in their respective agreements the same terms for non-MSME franchisees.

On the other hand, EO 169 also tasked the DTI to create an MSME Registry of Franchise Agreements, which will be entered into by and between a franchisor and an MSME franchisee.

In signing the order, Duterte said MSMEs compose 99.5 percent of the country's businesses, while the franchising industry "plays a crucial role in sustaining the country's economy by creating job opportunities, boosting consumption and promoting tourism."

Duterte added there is a need to intensify the government efforts to strengthen the franchising industry to help businesses, especially MSMEs, by developing a transparent and business-friendly environment as well as promoting fair and equitable practices.

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MSMES President Duterte EO 169 requirements registration Franchise
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