Starting a franchise business in the Philippines offers entrepreneurs a chance to operate under an established brand while leveraging a proven business model. However, you still have all the responsibilities of an entrepreneur, including business registration and complying with regulations. We’ll guide you through how to start franchising, what to expect along the way, and how to register your business.
What Is a Franchise Business?
A franchise business is an arrangement where an entrepreneur (the franchisee) purchases the right to operate a business using the brand, products, and operational systems of an established company (the franchisor). Popular franchises in the Philippines include Jollibee, Starbucks, 7-Eleven, Master Siomai, and LBC Express. The franchisee benefits from the franchisor’s expertise, marketing, and support while paying fees, such as royalties or an initial franchise fee.
However, operating a franchise business does not exempt owners from legal obligations. While franchisors may offer varying levels of support, you are still responsible for fulfilling business registration requirements and complying with all relevant regulations.
Why Learning Franchise Registration Matters
Both the government and franchisor will require you to register your business. Without proper registration, you risk fines, business closure, or breaking your franchise agreement. So let’s go over the steps and what to expect when registering a franchise business.
Step 1: Choose a Reputable Franchise
Research and select a franchise that aligns with your goals, budget, and market demand. Review the franchisor’s track record, financial stability, and support system. In the Philippines, reputable franchisors are often members of organizations like the Philippine Franchise Association (PFA), which promotes ethical franchising practices.
After selecting your ideal franchise, the next step is to submit an application to show your interest. The franchisor will usually evaluate your financial capacity, relevant experience, and how well your goals align with theirs. If you’re approved, you’ll begin the process and be asked to submit your business registration documents and other necessary permits. We’ll show you how to obtain these in the following steps below.
Keep in mind that launching a franchise takes several months. Mistakes in your business registration and compliance requirements can lead to costly delays. Our team can streamline the process, making your applications prompt and accurate so you can focus on running your business.
Step 2: Register Your Business with the DTI/SEC
Before signing a franchise agreement, you choose your business name and structure. Here’s how:
- Department of Trade and Industry (DTI): Sole proprietorships give you the most control but put your personal assets at risk of business liabilities. Register your business name with the DTI via their online portal or office.
- Securities and Exchange Commission (SEC): For corporations or partnerships, file with the SEC. Submit your partnership agreement, articles of incorporation, bylaws, and other required documents to their eSPARC online portal or regional office.
Most franchisee businesses choose a corporation or partnership structure. However, registering this way can be overwhelming and often requires professional help. Don’t hesitate to contact us for expert guidance.
Step 3: Obtain Mandatory Permits
- Barangay Hall: Obtain a Barangay Clearance to operate your franchise in the local area.
- LGU (City/Municipal Hall): Secure a Mayor’s Permit (also called Business Permit) from the city or municipal hall where your franchise will operate.
- Bureau of Internal Revenue (BIR): Register with the BIR to obtain a Taxpayer Identification Number (TIN) and comply with tax obligations, such as value-added tax (VAT) or percentage tax.
- SSS, PhilHealth, Pag-IBIG: If hiring staff, register with the Social Security System (SSS), Philippine Health Insurance Corporation (PhilHealth), and Home Development Mutual Fund (Pag-IBIG) for employee-related compliance.
Each permit typically takes a few days to a week to obtain, but errors in your submitted requirements may cause delays. We can help you streamline the process, ensuring fast and accurate applications to each agency.
Step 4: Sign the Franchise Agreement
Once your business entity is registered, review and sign the franchise agreement. Consult a professional (we have franchise lawyers on our team) to ensure the terms are fair and compliant with Philippine laws. The agreement should detail royalties, territorial rights, and obligations.
Step 5: Obtain Necessary Permits and Licenses
Secure additional permits specific to your business such as:
- Local Health Department: Sanitary Permit for food franchises, post-hygiene inspection (3–7 days).
- Local Fire Department: Fire Safety Certificate for code compliance (5–10 days).
- DENR: Environmental Compliance Certificate for high-waste operations (1–3 months).
Working with a professional business registration service is the best way to ensure you have all the necessary legal documents to legally operate.
Step 6: Comply with Ongoing Reporting and Renewal
After registration, maintain compliance by filing annual reports with the SEC, submitting tax returns to the BIR, and renewing local permits. Keep accurate financial records and adhere to the franchise agreement’s reporting requirements to avoid penalties or termination.
Final Thoughts
Registering a franchise business in the Philippines involves multiple steps, from selecting a franchise to securing permits and maintaining compliance. Learning this process is vital to protect your investment, avoid legal pitfalls, and ensure long-term success. Do your research and contact us to help ensure a successful application with both your franchisor and the relevant government agencies.
First Time Registering a Business? Here’s Where to Find Help
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.
Thankfully, the Business Registration Philippines team provides comprehensive support for your business registration, so you don’t have to stress over the paperwork.
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:
- Contact Us Here
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- Call us at +63 (02) 8540-9623