Franchising is an exciting way to become an entrepreneur in the Philippines, combining the advantages of a well-known brand with the freedom of running your own business. Leading companies like Jollibee, Starbucks, and 7-Eleven offer franchise opportunities, allowing you to share their success and grow alongside them.
If you’ve identified an ideal location and possess a business-oriented mindset, you’re well-positioned to achieve financial prosperity. You just have to register your business first. To help you, we’ll show you how to register a franchise business.
What is a Franchise Business?
A franchise business is an agreement where a franchisor, who owns a well-known brand, allows a franchisee to run a business using their brand, products, and system. In return, the franchisee pays fees and royalties. In the Philippines, franchises span various sectors, including food (e.g., Jollibee, McDonald’s, Master Siomai), retail (e.g., 7-Eleven, The Generics Pharmacy), and services (e.g., tutoring centers).
Why You Should Know How to Register Your Business
As a franchisee, you are fully responsible for registering your business and ensuring compliance with Philippine law. The franchisor may provide varying levels of assistance (depending on the company) but they typically expect you to manage the following compliance aspects of your business:
- Business Registration: Register your business with the Department of Trade and Industry (DTI) or Securities and Exchange Commission (SEC). Secure a Mayor’s Permit, register with the Bureau of Internal Revenue (BIR) for taxes, and enroll employees in SSS, PhilHealth, and Pag-IBIG. Non-compliance risks penalties or closure.
- Securing Permits: Obtain a Sanitary Permit, Fire Safety Inspection Certificate, and other legal documents specific to your business.
- Reporting and Audits: Submit regular financial and operational reports and comply with franchisor audits to maintain standards.
Legal and regulatory obligations are normally the franchisee’s responsibility. Permits and registrations must be under the franchisee’s name or a separate business name.
Steps to Legally Start a Franchise Business in the Philippines
Step 1: Select and Apply to a Franchise
Begin by identifying a franchise that aligns with your interests, budget, and market demand. Contact franchisors to inquire about specific requirements, costs, and support. Once you’ve chosen one, submit your application to express your interest in franchising their business. The process typically involves an initial review of your financial qualifications, business experience, and alignment with the franchisor’s vision.
After you’re approved as a suitable candidate, you’ll typically need to provide business registration documents and other compliance-related permits. We’ll walk you through these requirements in the next steps below.
Launching your business can take months, and delays can be costly. To prevent setbacks, we recommend working with a professional business registration service. Our team can handle all your registration and compliance needs, so you can focus on running your franchise.
Step 2: Choose a Business Structure
Decide on the appropriate business structure for your franchise before proceeding with registration. The structure you choose will determine which government agency you need to register with, and the documents required.
- Sole Proprietorships: Register your business name with the Department of Trade and Industry (DTI) via their online portal or regional office. This is the simplest form of business registration, ideal for individual owners.
- Partnerships and Corporations: These require registration with the Securities and Exchange Commission (SEC) through their eSPARC online portal or regional office. You will need to prepare and submit key documents such as the Articles of Incorporation, Bylaws, and business name registration. This process establishes your business as a separate legal entity and involves more compliance requirements.
Step 3: Secure a Location
Secure your ideal location for your franchise business, the perfect place with good foot traffic and the right demographics Many franchisors assist with site selection to ensure alignment with brand standards. Secure a lease and a zoning clearance from the local government unit (LGU) if applicable.
Step 4: Register with Government Agencies
Ensure compliance with legal requirements by registering with the following:
- Barangay: Obtain a Barangay Clearance to confirm your business complies with local community regulations.
- Local Government Unit (LGU): Secure a Mayor’s Permit (also called Business Permit) and fulfill any additional city or municipality requirements.
- Bureau of Internal Revenue (BIR): Acquire a Tax Identification Number (TIN) and register for applicable taxes, including employee withholding tax.
- Social Security System (SSS), PhilHealth, and Pag-IBIG: Enroll employees in mandatory benefit programs to comply with labor laws.
Securing each legal document can take a few days to a week. The requirements can be strict and mistakes can result in delays or even rejections. We’re here to streamline the process, ensuring your applications are accurate, complete, and promptly submitted.
Step 5: Review and Sign the Franchise Agreement
The franchise agreement is a legally binding contract outlining rights, obligations, and terms like territory, fees, and renewal conditions. Per Executive Order No. 169 (2022), the agreement must include the franchise’s products/services, intellectual property rights, and fee disclosures. Review it thoroughly with a franchise lawyer to ensure fairness and clarity.
Step 6: Obtain Other Necessary Permits
Secure additional permits based on the business type, such as sanitary permits for food franchises or fire safety certifications. Working with a professional business registration service ensures you have all required legal documents and are fully compliant with regulations.
Final Thoughts
Starting a franchise business in the Philippines can be incredibly rewarding. But it’s important to remember that while your franchisor provides support, you’re ultimately responsible for your business. This includes ensuring your business is properly registered and securing necessary legal documents from relevant government agencies. Contact us today so we can help you navigate these regulations and ensure a smooth launch.
Are You Registering a Business for the First Time? Here’s Where to Find Assistance.
Registering a business in the Philippines can be a complex and challenging process. With numerous permits and licenses required by the government, it’s easy to miss a document or forget to renew it. Unfortunately, this can lead to costly fines or even force your operations to shut down.
That’s where Triple i Consulting comes in. Our team of experienced lawyers and accountants provides comprehensive support for your business registration, so you don’t have to stress over the paperwork. Our expertise and network enable us to streamline your registration process, ensuring it’s completed swiftly and correctly.
We’ll handle the permits and renewals so you can focus on what matters most—running your business and achieving financial success.
Contact us today to schedule an initial consultation with one of our experts:
- Fill out the form below
- Call us at: +63 (02) 8540-9623
- Send an email to: info@tripleiconsulting.com
