Documents Needed In Franchising a Business in the Philippines

One of the most sought-after and most profitable ways in gaining financial stability in the Philippines is to own a franchise business. There are many young entrepreneurs who are hooked in this kind of business because there are studies which show that the success rate is almost 90%. This is the reason why franchise business is booming.

Although the budget is considered as the prime mover of a franchise business, in reality it is just a part in the selection process. With the different franchise opportunities thriving around the country, the entrepreneur must decide which business is really meant for you. And after choosing the franchise business, there are other requirements to be accomplished as part of the franchisors screening process.

Required Documents to Be Submitted to the Franchisor

After the entrepreneur has made up his mind, he has to prepare certain documents to legalize his owning of the franchise business he chose. Below are some of the more common pertinent documents a franchisor needs in order to keep the ball rolling.

Letter of Intent to Franchise

A Letter of Intent is used in most business transactions like franchising. It sketches the different terms and conditions of the deal and acts as an agreement between two parties, in this case, the franchisor and the franchisee.

Application Form

Just like applying for a job, interested franchisee must accomplish an application form. This usually comes from the company he is interested in doing business and must be filled out completely and correctly.

Site Location Proposal

Most business owners today are keen on knowing the details of the location a franchisee is proposing. The owner usually sets a criterion to locate his business in the future. Included in the criterion can be population density of the place, volume of vehicles, a building that is conducive for the business, the type of market around the vicinity and many more.

Minor Requirements After Site Location Approval

Once there is a go-signal from the company that the proposed business location is approved, there are other legal requirements that a franchisee must comply in order to finalize his transaction and start his business franchise. These documents are as important as the LOI or the Application Letter as they act as legal proof for government recognition.

It is clearly understood that documents play an important role in protecting the interest of the business and the business owners in the franchising world. In some businesses, franchisors often bind the franchisee to a Memorandum of Understanding. This is aside from the Agreement made to formalize the franchisee’s interest to the company.

A Memorandum of Understanding can be found somewhere between the formal contract and a gentleman’s handshake. Under MOU are the records of conversations with the suppliers, potential partners and to those people involved in one way or another to your business.

Business Documents You Need to File Before Starting Your Franchise Business

In the Philippine business setup, the following are important documents needed to start a franchise business. The steps are as follows:

Business Name Registration (Department of Trade and Industry)

Now that your mind has finally decided to buy a business franchise, it is still important to get the nod of DTI because the name of the franchise is the one you are using in dealing with your clients. Why DTI? DTI is the government’s hand in overseeing and facilitating the creation of business and it governs the registration of business and trade names in the Philippines.

Barangay Clearance

Now that you are done with DTI, it is time to get a clearance from the barangay where your business is located. This is an important document as the clearance you get from the barangay will be used to get other documents like business permits. There should not be any worries as applying for a Barangay Clearance is very quick and easy.

To apply for the Barangay Clearance, you need to show the Business Name Registration from the Department of Trade and Industry. The other requirement is the Copy of Lease (if you are renting), or a Copy of the Land Title and Tax Declaration (if you own the property). You can request for your Barangay Clearance once these requirements are complete. All you need to do is proceed to the Barangay Hall which has the jurisdiction on your business location and fill out an application form for Barangay Clearance request.

Business or Mayor’s Permit

Here in the Philippines, every company to operate legally must secure its Business or Mayor’s Permit. This is a license from the Local Government Unit that is deemed important and a prerequisite for a business to start operating. In applying for a Mayor’s Permit, you must have completed the following basic requirements like:

3.1 Barangay Clearance

3.2 Business Name Certificate from the DTI

3.3 Lease of Contract or Tax Declaration/Land Title

3.4 SSS Certification

3.5 Community Tax Certificate or CEDULA

Step By Step Procedure in Applying for the Mayor’s Permit

1. Proceed to the Business Permit and Licensing Section and get an application form. This form will be filled out and submitted for verification.
2. You need to submit the building and occupancy permit to the Engineering Department. You will be also asked to submit sketch of your business location and its specifications.
3. Get a Certificate of Electrical Inspection from the Electrical Department. In some areas, the Engineering Department has the authority to inspect the area and issue a certificate. Inspection fee must be paid.
4. After the electrical inspection, you will go to the Health and Sanitary Office to get a Health and Sanitary permit. Some cities would require attendance in a seminar.
5. Secure Fire Permit from the Bureau if Fire Protection. They are the ones who will inspect the place before they sign your papers. It is a law that all establishments must have its Fire Exits, Fire Plan and Fire Extinguishers.
6. To get your zoning clearance, you have to proceed to the Office of the Municipal Planning and Development Coordinator. A zoning inspector will go to your place and see to it that the place adapts to the existing local ordinance.
7. You need to go back to the Bureau of Fire Protection to sign permit after zoning clearance is done.
8. Show to the Business Permit and Licensing Section that you already completed the process. You will be then asked to pay for the fees of Mayor’s Permit, Local Fire Inspection, Health, Sanitary and Service together with the Business Plate.

After this procedure is complete, the business plate which is the Mayor’s Business Permit itself will be released in 3 business days.