Franchise Agreement in the Philippines: Template and Key Clauses (2026)

A franchise agreement in the Philippines is the contract by which a franchisor lets a franchisee run a business under its brand, system and standards in return for fees. It has to protect the brand, set the rules the franchisee must follow, and be fair and clear enough to survive disputes and local regulation. This guide sets out a clause-by-clause skeleton, the the Philippines law points that matter, and the common mistakes. This is general information, not legal advice. ## What a franchise agreement has to do A franchise is more than a trademark licence. The franchisor grants the right to use its brand and operating system, trains and supports the franchisee, and controls quality so every outlet feels the same. The franchisee invests, follows the manual, and pays an initial fee plus ongoing royalties. The agreement has to balance tight brand control with the fact that the franchisee owns and runs its own business. ## Clause-by-clause skeleton 1. Parties and grant. Who franchises to whom, the brand and system granted, and whether the grant is for a single unit, multiple units or a master franchise. 2. Territory and exclusivity. The area granted and whether it is exclusive, plus any online or delivery rights. 3. Term and renewal. Initial term, renewal conditions, and refurbishment on renewal. 4. Fees. Initial franchise fee, ongoing royalty (often a percentage of revenue), marketing-fund contribution, and when each is paid. 5. Franchisor obligations. Training, the operations manual, ongoing support, supply or approved suppliers, and marketing. 6. Franchisee obligations. Following the system and manual, meeting standards, minimum performance, reporting and record-keeping. 7. Intellectual property. Licence to use trademarks and know-how, how the brand must be presented, and that goodwill belongs to the franchisor. 8. Quality control and inspection. Standards, audits and the franchisor's right to inspect. 9. Confidentiality and non-compete. Protecting the system during the term and for a reasonable period afterwards, enforceable only as far as local law allows. 10. Insurance and indemnities. Cover the franchisee must carry and who indemnifies whom. 11. Assignment and transfer. Whether the franchisee can sell the business, and the franchisor's consent and first-refusal rights. 12. Termination. Grounds, cure periods, and what the franchisee must stop doing and return on exit (de-identification). 13. Post-termination. Stop using the brand, return materials, and honour the non-compete. 14. Governing law and disputes. Choice of the Philippines law, and courts or arbitration. 15. Disclosure. Any pre-contract disclosure the franchisor must give (see the law note below). ## Philippines-specific legal points - No single franchise statute. The Philippines has no dedicated franchise law. A franchise is governed by the Civil Code (RA 386) on contracts, the Intellectual Property Code (RA 8293) for trademarks and know-how, and general competition and consumer rules. <!-- [VERIFY] absence of a dedicated franchise statute; IP Code (RA 8293) -->

• Trademarks. Register the brand with the Intellectual Property Office of the Philippines so the licence rests on a protected mark. <!-- [VERIFY] IPOPHL registration requirement -->
• Foreign franchisors. Royalty and franchise-fee payments abroad and any foreign-equity limits may engage foreign-investment and exchange rules; check before structuring cross-border fees. <!-- [VERIFY] foreign investment and royalty remittance rules -->
• Tax. Franchise fees and royalties can attract VAT and withholding tax; confirm the treatment of cross-border royalties. <!-- [VERIFY] VAT and withholding on franchise fees/royalties -->
• Non-competes. Philippine courts enforce post-term restraints only where they are reasonable in scope, time and area. Draft them narrowly. <!-- [VERIFY] enforceability standard for post-term non-competes --> ## Common mistakes - Licensing a brand that is not registered as a trademark in the Philippines.
• Writing a wide, long non-compete that a court will cut down or refuse to enforce.
• Ignoring withholding tax and VAT on cross-border franchise fees and royalties.
• No clear de-identification clause, so a former franchisee keeps using the look and feel after exit.
• Vague standards, which make quality control and termination hard to enforce. ## One workspace instead of scattered files Drafting a contract like this is only the first step. It then has to be reviewed for risk, signed and stamped, tracked against its dates and obligations, and governed over its full life. In most companies that work is spread across email threads, a drive full of near-identical files, and a spreadsheet nobody fully trusts. The result is slow reviews and missed renewal and compliance dates. A better setup is to keep drafting, review, e-signing and e-stamping, tracking and governance in one AI workspace that is tuned to how your own company contracts, built on Claude. Adira is built around that idea, with public per-seat pricing and a 7-day free trial, India-first and global-capable. A single company command centre that shows every upcoming obligation in one view is on its roadmap. The point is not the tool. The point is that if your franchise agreement lives in one connected place, you can actually see what you signed and what falls due, instead of hunting for it. The guidance above stands on its own. ## Bottom line A franchise agreement works when it protects the brand with clear standards, sets fees and territory precisely, handles renewal, transfer and exit cleanly, and meets any the Philippines disclosure and registration duty. Non-competes and exclusivity are only as strong as local law allows, so draft them to be reasonable. Use the skeleton as a checklist and have a qualified local lawyer settle the final document.