Question & AnswerQ&A (EXECUTIVE ORDER NO. 169)
The main objective is to strengthen the franchising industry to protect micro, small and medium enterprises (MSMEs) by developing a transparent and business-friendly environment and promoting fair and equitable practices.
A 'Franchise' is a contract between a franchisor and a franchisee where the franchisor grants the right to operate a business according to the franchise system, use intellectual property, control the franchisee's business operations, and the franchisee pays a fee or consideration.
It is a written contract granting the franchisee rights to sell or distribute goods or services under a marketing system, including use of trademarks, service marks, trade names, know-how, logos, or commercial symbols, for a consideration.
Both franchisor and franchisee are defined as duly registered entities with DTI, SEC, or CDA and may be sole proprietorships, partnerships, cooperatives, or corporations.
MSMEs are businesses with total assets (excluding land for office or plant) falling under micro (less than P50,000), cottage (P50,001-P500,000), small (P500,001-P5,000,000), and medium (P5,000,001-P20,000,000) categories.
They include name and description of goods/services, specific rights granted, full fee disclosures, responsibilities of franchisor and franchisee, non-discrimination provisions, duration and renewal terms, grounds for termination, cooling off period, dispute resolution mechanisms, and remedies for violations.
Yes, franchisors must register franchise agreements with the DTI. Members of registered associations can register their standard agreement and undertake that future agreements include required terms; non-members must register each agreement within 30 days.
It serves as an official repository of franchise agreements entered into by franchisors and MSME franchisees that meet the prescribed minimum terms and conditions.
Franchisors who comply with the required minimum terms in franchise agreements may be entitled to government incentives or benefits as formulated by the DTI, subject to existing laws and policies.
It is a provision allowing MSME franchisees the option to terminate the agreement within a specified time after signing, providing a safeguard in case of change of mind or reconsideration.
The agreement must include mechanisms for dispute resolution, including voluntary mediation under RA No. 9285, the Alternative Dispute Resolution Act of 2004.
No, existing agreements must comply upon renewal as stated in Section 5 of the EO.
The rest of the Order not affected shall remain in full force and effect as per the separability clause in Section 8.
It took effect immediately upon its publication in the Official Gazette or a newspaper of general circulation.