🇵🇭 Country hub · reviewed 2026-10-09
Franchising in the Philippines: the 2027 guide for foreign franchisors
The Philippines has no franchise law and no disclosure filing, which makes entry look easy. The real rules sit elsewhere: the IP Code dictates what a franchise agreement may and must say, retail-trade law sets how much a foreign-owned operator has to invest, and the tax code takes 25% of every royalty before it leaves the country.
The Philippines at a glance
- Franchise statute
- None. Civil Code and IP Code apply Secondary · Chambers Franchising 2025, Cruz Marcelo & Tenefrancia, 2025-01-01
- Franchise-specific rule
- EO 169 (2022): register MSME franchise agreements with DTI within 30 days Official · Executive Order 169 (2022), Lawphil, 2022-05-12
- Foreign retailer capital
- PHP 25M paid-up, plus PHP 10M per store if more than one Official · RA 11595, Lawphil, 2021-12-10
- Royalty withholding tax
- 25% final tax, before treaty relief Official · RA 11534 (CREATE), Lawphil, 2021-03-26
- VAT on royalties
- 12%, withheld by the Philippine payor Official · RA 12023, BIR, 2024-10-02
- Industry body
- Philippine Franchise Association; Franchise Asia Philippines expo, April Official · Philippine Franchise Association, 2026-04-23
Guides for the Philippines
Vietnamese brands already trading here
Phúc Tea, listed on FranX as HappiTea, opened its first store in the Philippines in July 2024, the brand's first market outside Vietnam. It is the kind of corridor deal this guide is written for: a mid-sized Asian brand entering through a local partner rather than a company-owned subsidiary. Secondary · Inside Retail Asia, 2024-07-03
How the Philippines compares
The Philippines: No statute. Franchise agreements fall under the Civil Code and are treated as technology transfer arrangements under the IP Code (RA 8293). Executive Order 169 (2022) is the only franchise-specific instrument. Compare it with Vietnam, Indonesia, Malaysia, Thailand, Singapore and Cambodia in the ASEAN franchise law comparator.
Frequently asked questions
Is there a franchise law in the Philippines?
No. There is no franchise-specific statute. Franchise agreements are governed by the Civil Code and treated as technology transfer arrangements under the Intellectual Property Code (RA 8293). The only franchise-specific instrument is Executive Order 169 of 2022, which covers agreements with micro, small and medium-sized franchisees.
Do I need to register my franchise agreement in the Philippines?
Not with IPOPHL, provided the agreement avoids the clauses banned by IP Code section 87 and includes those required by section 88. Under EO 169, a franchisor must register agreements with MSME franchisees with the Department of Trade and Industry within 30 days of signing.
Can a foreigner own a franchise outlet in the Philippines?
Yes, through retail-trade rules. Under RA 11595 a foreign retailer needs at least PHP 25 million of paid-up capital, and at least PHP 10 million of investment per store if it runs more than one store. Stand-alone restaurants are generally treated as retail trade; confirm with local counsel.
How much tax is withheld on franchise royalties paid out of the Philippines?
25% final withholding tax on the gross royalty for a non-resident foreign corporation, plus 12% VAT withheld by the Philippine payor. A tax treaty may lower the 25%; the rate depends on the specific treaty.
Who pays Philippine tax on the royalty, franchisor or franchisee?
IP Code section 88.4 says Philippine taxes on all payments under a technology transfer arrangement are borne by the licensor, so the foreign franchisor. Gross-up clauses need careful drafting.
Looking for a partner in the Philippines?
Master and area rights open in the Philippines are listed on the FranX Rights Board. Operating stores for sale are on Resales.