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.

Business Documents in Starting a Franchse in the Philippines

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.


22 responses to “Documents Needed In Franchising a Business in the Philippines”

  1. Mervin says:

    Sir what if we have entered a franchise agreement and the promised outcome of profit was exactly as failure within a month . Napilitan kami magsara dahil dito. May batas po ba para dito na binayad namin sa franchisor?

    • The Blue Advisor says:

      Hi Sir, Franchisor is not allowed to provide a promised outcome for the franchise agreement. If there are any wording sa franchise agreement that this is a “promised outcome” then the agreement will be void.
      Any how we should be careful and mindful when entering a business, there is always a risk and this should be studied properly. No business will promise or provide a specific amount of income but it could forecast which are bound for deviation based po sa operation ng business. Ikaw nga don’t count the chickens before they hatched from the egg.


  2. Ally says:

    How much is the inspection fee?

  3. Yvette Gunda says:

    Does franchising a homebased travel need to have a business permit?

  4. YDCF says:

    Hi. Is there a required year of existence of your business before you open if for franchise?

  5. jong says:

    hi sir, we entered into franchise agreement, and now we are applying for business permit sir.. kelangan pa ba yong franchise agreement or kelangan ba na kung sino yung nasa kontrak ay yun din ang dapat nakapangalan sa business permit? thank u po sir…

    • Cris Anthony Mombay says:

      Hi sir what if i have my business and i want to be open for franchising. What are the documents i need to prepare or done for me to be able to franchise my business?

  6. Carlo walk says:

    Hi sir what if I havr my business and I want to be open for franchising. What are the documents I need to prepare or done for me to be able to franchise my business?

  7. Matthew Isuan Mancera says:

    Hi Good Day!, if Food Cart franchising what are some legal papers and permit to be needed?

  8. Ric Morilla says:

    Hi. Ask ko lang po kung required pa rin po ba kami kumuha ng Mayor’s Permit, kahit sa compound area lang kami magtatayo ng franchise business? Barangay permit lang po kase nire require saamin na kunin.

  9. Shaira Angela Lanotan says:

    Hi. Does an online franchise require the same documents as the traditional franchise?

  10. Sir, i have a pizza business sole proprietorship, can i process an open franchise? Where do i exactly refer the franchising documents? Is it solely at Dti or should i go to SEC also? Thank you.

  11. Julius says:

    Pag ako frinchisor, kelngan ko po a ng permit? Or liscense? Balak ko po sana i open for franchise business ko.

  12. Rolly Panizales says:

    Hello Gud Day.
    I would like to ask if is allowed in the Philippines that a franchisor is not yet register in the BIR and yet he has already a franchisee.

  13. Anna says:

    Hi po i have a business po and gusto ko po sna i open for franchase pano po proseso? thanks.

  14. Lawrence Canega says:

    As a franchisee do we need to have the main companies ITR or not?

  15. kathrina teves says:

    What should be the name in the DTI and MAYOR’s Permit? the franchise name like JOLLIBEE? or another name which I want to put?

  16. RUE says:

    Hi sir! Ask ko lang po, if franchisee ako, anoong business name ang dapat kong i-register sa DTI? Is it my name or the name of the fraanchised business po? Thankyou

  17. Ray says:

    Hi sir, ask ko lang po if tama ang ginawa namin, nag franchise po kami, ang ginamit naming dti is ung personal dti ko nung nag apply ng permit, not under the name of franchised business. Thankyou

  18. Evelyn wise says:

    Dear Sir my food business I believe ready to explore in the Philippines and I wanted to go to the next level of franchising. I also had existing resto all register in all aspect of business documentations . My food business is in the market for 10 years now. It’s time to explore and needs too start a franchising business . What necessary documents needed to start?

  19. Jenilyn Gutierrez says:

    Hello po, nag franchise po ako ng coffee business. Nakakuha na po ako ng DTI, fire, zoning permit at mayor’s permit. Kelangan ko pa po ba kumuha ng BIR? Kelangan po ba dalhin lahat ng documents na eto para sa BIR? Magkano po kaya ang babayadan sa BIR?
    Thank you po kung masasagot at matutulungan nyo ako ng advice.

  20. Andy says:

    Meron po kaming bagong Negosyo at gus2 po namin ipafranchise ito, anu-ano ang mga documento na kailangan kong ipasa at anu mga requirements nmn ng Franchisee? Salamat sa mga sasagot po sa aking tanong. God Bless!

Leave a Reply

Your email address will not be published. Required fields are marked *