Franchise

Franchise is a business concept that grants a franchisee the right to operate under a franchisor’s brand and system in exchange for fees.

Definition

In the Philippines, a franchise is a contract where a franchisor allows a franchisee to use its trademarks, marketing plan, and operating system in return for initial and continuing fees. Executive Order No. 169 (2022) requires franchisors serving MSME franchisees to register franchise agreements with the DTI and provide disclosure documents. Real estate brokerage franchises must also comply with the Real Estate Service Act for PRC-licensed brokers, BIR invoicing for commissions, and DHSUD requirements when marketing pre-selling projects.

Key Components

• Franchise agreement covering brand usage, territory, term, renewal, and termination.
• Fee structure: initial franchise fee, continuing royalties, and marketing fund contributions.
• Operations manual for listing standards, sales scripts, compliance checklists, and quality control.
• Training and support: onboarding, marketing templates, CRM/MLS access, and periodic audits.
• Compliance filings: DTI franchise registration (EO 169), SEC/DTI business registration, PRC broker license renewals, BIR registration for official receipts, and DHSUD coordination for project selling.

How It Works

1. Franchisor packages the brand, systems, and support for franchisees.
2. Franchisee completes due diligence, signs the franchise agreement, and registers with DTI under EO 169.
3. Franchisee secures PRC broker credentials, BIR registration, local permits, and onboarding to the franchisor’s tools.
4. Brokerage team markets listings via shared workflows, remits royalties/marketing fees, and follows audit schedules.
5. Ongoing compliance is maintained through PRC renewals, BIR filings, and DHSUD alignment for project launches.

Pros & Cons

• Pros: Faster market entry using an established brand; standardized training; pooled marketing; technology and playbooks that reduce setup time.
• Cons: Continuing royalties/marketing fees; territory or branding limits; required adherence to franchisor processes; added disclosure and registration steps.

Real-World Application (Philippine Real Estate Brokerage)

• Brands like RE/MAX and Realty One Group use franchising so local brokerage owners can leverage brand reputation, training, and standardized listing workflows.
• You can streamline agent intake and retention with Agent Recruitment, Agent Directory, and Agent Profiles while keeping roles compliant with the Real Estate Service Act.
• Commission control improves through Commission Management and Commission Scheme Configuration, while listing reach scales via Property Listings and lead capture through Lead Generation.
• For compliance, align BIR invoicing with Value-Added Tax and use BIR Tax Reports to keep filings up to date.

Related Terms

• Multiple Listing Service
• Real Estate Service Act
• Agent Recruitment
• Commission Management
• Lead Generation

References

• Executive Order No. 169, s. 2022 – Strengthening the Franchising Industry for the Protection of MSMEs