Underneath the Golden Boy - Robson Hall Faculty of Law

390 Underneath the Golden Boy
Instead, the Philippine Franchise Association (“PFA”) imposes a series of
rules upon its members. Formed in February 1995, the PFA’s aim is to promote
and sustain the growth of franchising as a tool for national development. It is the
PFA’s goal to professionalize and bring the franchising sector in the Republic of
the Philippines to a world-class level, and provide a forum for Filipino
franchisors, franchisees and suppliers to network, exchange ideas and explore
areas of growth and expansion. 171
The PFA regulates the franchise industry through its Fair Franchising
Standards, introduced on 21 March 2003 and adopted on 24 February 2005. 172
The Standards require that before any Franchise Agreement is signed, the
Franchisor must give the franchise applicant at least thirty days to review the
disclosure document (Franchise Offering Circular, the FOC). The FOC must
shall include the following information: (i) history of the franchise system being
offered, including the number of outlets opened, in operation, company owned
and franchisee-operated, and franchised outlets closed over the last five years;
(ii) a description of the business concept and how it differentiates itself form the
competition; (iii) the key terms of the franchise agreement; (iv) full disclosure of
the financial requirements of the franchise business; (v) a listing of the
franchisor’s key officials and a brief description of their qualifications and
background; (vi) a summary of past and present litigation involving the franchise
system being offered over the last five years; and (vii) a provision that requires
the franchise applicant to seek adequate legal and financial counsel before
signing the Franchise Agreement. 173 In addition, a franchisor must give the
franchise applicant at least fourteen days to review the proposed Franchise
Agreement. 174
The Standards impose several obligations franchisors must fulfill, in addition
to providing disclosure, once the Franchise Agreement is signed. For instance, a
franchisor must provide the franchisee with the operating manual before the
opening of the franchised outlet as well as adequate start-up and ongoing
training to the franchise and its personnel to ensure that the franchisee operates
the business according to the operating standards of the franchisor. 175 The
Standards also address the issue of dispute resolution by encouraging franchisors
171
Philippine Franchise Association, “Franchising Guide,” supra note 167.
172
Philippine Franchise Association, “The Fair Franchising Standards of the Philippine Franchise
Association,” online: About the PFA – Milestones
[Philippine Franchise Association, “Fair Franchising Standards”].
173
Ibid. at s. V(1).
174
Ibid. at s. V(2).
175
Ibid. at ss. VII(2) and (3).