This new advisory by DTI(Department of Trade and Industry) serves as a guide to potential franchisees or investors.

This source is from DTI Bureau Order No. 10-24 Series of 2010.

Subject : Advisory on due diligence to be undertaken by a prospective franchisee.

1. Scope and Coverage

• This advisory is addressed to persons engaged or interested in the franchise business.

2. Definition of Terms

2.1 “Franchise Agreement” is a written contract or agreement between two or more parties by which a Franchisor grants the Franchisee the right to engage in the business of offering, or distributing goods or services under a marketing plan/system/concept, for a certain. consideration. Unless otherwise provided, said right includes the use of a trademark, service mark, trade name/business name, know-how, logo-type advertising, or other commercial symbols associated with a particular business.

2.2 “Franchisor” is a person, individual or a corporation, duly registered with the Department of Trade and Industry (DTI) or the Securities and Exchange Commission (SBC).

2.3 “Franchisee” is a person, individual or a corporation, duly registered with DTI or the SEC.

2.4 “Franchise Disclosure Information” refers to a set of information and documents that needs to be disclosed by the franchisor to the franchisee and/or prospective franchisee.

3. Due Diligence to be undertaken by a prospective franchisee

Before a person decides to engage in or acquire a franchise business, due diligence should be done by the prospective franchisee.

3.1 Secure or ask Disclosure Information from the Franchisor as follows:

• 3.1.1 Business address, email address, internet home page/website, fax numbers and other contact details;
• 3.1.2 Copy of DTI or SEC Registration Numbers;
• 3.1.3 Parent companies and affiliates, if any, and their respective roles in the Franchise, and franchisor’s declaration if an affiliate  is a supplier and what they will supply;
• 3.1.4 Names of the Board of Directors and officers with a brief description of their qualifications and background, ownership of interests and references;
• 3.1.5 The contact number and business location of existing Franchisees;
• 3.1.6 Executed promotional/marketing materials;
• 3.1.7 Description of the business concept, which includes: brand image, brand personality, unique selling proposition, target market, mission and vision, among others;
• 3.1.8 Basic information on training, commercial and/or technical assistance;
• 3.1.9 Certificate that the Franchisor is a member in good standing of any Franchisor Association and that the Franchisor has no pending administrative, civil or criminal case;
• 3.1.10 Declaration of the Initial Fee; amount that will be collected and services covering these fees;
• 3.1.11 Training that will be provided: number of persons, how long and trainingmodules;
• 3.1.12 Number of years company has operated and number of years it has franchised with corresponding numbers of company owned branches and franchised branches;
• 3.1.13 Draft Franchise Agreement;
• 3.1.14 Full disclosure of the financial requirements of the franchise business;
• 3.1.15 A provision that requires the franchise applicant to seek adequate legal and financial counsel before signing the Franchise Agreement; and
• 3.1.16 Mechanisms for dispute resolution.

3.2 Call or visit or consult any of the following:

• 3.2.1 Franchisor Association
• 3.2.2 Nearest DTI Regional or Provincial Offices
• 3.2.3 Securities and Exchange Commission
• 3.2.4 DTI Direct (Telephone Number: 751-3330)
• 3.2.5 Certified Franchise Executive
• 3.2.6 Franchise Consultant.

4. Franchisor Association or Organization

To establish a databank of Franchisor association or organization nationwide, franchisor association or organization should submit to DTI-Bureau of Trade Regulation and Consumer Protection (BTRCP) the following documents:

• 4.1 A certified true copy its articles of Incorporation and By-Laws;
• 4.2 A current certified true copy of Certificate of Good Standing from the SEC;
• 4.3 Updated list of trustees, officers and members of the organization including their addresses; and
• 4.4 Other pertinent documents such as By Laws, Code of Ethics and Standards.

5. Self-Policing of Members

This Advisory aims to promote and encourage the franchise industry self-police its own ranks by setting a Code of Ethics and Standards grievance or dispute resolution mechanism to redress complaint against its members, including issues arising from any transactions wit their franchisees, prospective or otherwise.

6. Publication

This Advisory shall be published in newspapers of general circulation and shall be part of the DTI’s Information, Education and Communication Program.

By Ma. Elisa P. Osorio (The Philippine Star)

MANILA, Philippines – Two franchise organizations are opposing government plans to set guidelines for franchisors.

The Philippine Franchise Association (PFA) and the Association of Filipino Franchisers Inc (AFFI) both said there is no need for guidelines. Earlier, the Department of Trade and Industry (DTI) announced they will be setting guidelines for franchisors in an attempt to curb franchise scams that usually target overseas Filipino workers (OFWs) and retirees.

Trade Director Victorio Dimagiba said that there is a need to form a technical working group with franchisors to help protect the would be franchisees. “There must be guidelines in place in order to avoid fraud,” he noted.

Dimagiba said that this is a security issue that must be addressed because there are reports that unscrupulous traders have been scamming OFWs and retirees.

“The guidelines for franchisors must be clear in order to protect consumers,” Dimagiba noted. He said that the guidelines may come in the form of a memorandum of understanding (MOU) with the franchise association. He said this is expected to be signed before the end of the year.

AFFI Executive Vice President Richard V. Sanz said that although the guidelines will be able to stop the scams, regulations will reduce the vibrance of the industry especially since the Philippines is being positioned as the franchising hub of Asia. “If regulated then the growth will be abated.”

PFA Chairman Emeritus Sammie Lim however said there is no need to regulate the franchisors because they are already regulating themselves. “Through the years I believe we have done a good job of regulating ourselves.”

Dimagiba agreed that members of credible associations like PFA have done a good job of policing themselves. However, he said there have been reports of fraud which usually involve smaller companies. For instance, he said the company Pran.com has targeted OFWs. The company charged 500,000 for a franchise. There is now a warrant of arrest for the incorporators of this company.

Dimagiba said the guidelines will place a cap on the number of years the firm should be operating before a franchise is offered. He said this will highly depend on the profitability of the company but he noted that certain rules must be in place.

source : philstar.com

MANILA, Philippines – The Philippine Franchise Association (PFA) renews its commitment to work hand-in-hand with the Department of Trade and Industry (DTI) in curbing illegal franchises that are victimizing aspiring entrepreneurs and would-be franchisees.

PFA and Wendy’s Philippines president Yvette Pardo-Orbeta underscored the importance of exemplary business ethics as an integral part of running a successful franchise enterprise. “In PFA, members are bound by the Fair Franchising Standards (FFS) which provides a framework for the implementation of best practices in their respective franchise relationships,” she noted. Orbeta explained that the FFS represents the ideals to which PFA members agree to subscribe, promoting transparency in the conduct of business between franchisor and franchisee, thereby maintaining the highest ethical standards in franchising.

“The PFA has continued its advocacy in informing, guiding, and educating new players, especially OFWs who wish to own their franchise. Unfortunately, an unscrupulous few have taken advantage of the good name of franchising for their selfish benefit,” Orbeta added.

Philippine franchising has significantly contributed to enterprise development and job creation. At present, the sector accounts for about $6 billion or about 25 percent of the country’s entire retail sales.

“The shady practices of the few should not diminish the public’s interest and trust in franchising,” said the PFA chief. “Be more diligent when looking into a franchise concept. Check the facts first before parting with your hard-earned money. It would be wise if you can consult with your lawyers and show the documents presented to you. Inquire if they are members of PFA,” she added.

To check the legitimacy of franchise operations, contact the PFA at 687-03 65 to 67 or (63917) 832-0732, emailpfa@pfa.org.ph, or call DTI at telephone number 751-3330.

source: http://www.philstar.com

(The Philippine Star) Updated April 26, 2010 12:00 AM

MANILA, Philippines – Despite election jitters, the Philippine Franchise Association (PFA) is confident of a positive economic outlook for 2010.

“Being an election year helps since most people will be more optimistic. The incoming President will also be given its traditional honeymoon for 100 days, which means three months of continued optimism,” predicts Elizabeth Pardo-Orbeta, CFE, newly-elected president of PFA.

With opportunities in tourism, business process outsourcing (BPO), and agriculture as possible areas of growth which the franchising sector can explore, there is so much room for growth in franchising, added Orbeta, also the president of Wendy’s Philippines.

Interest in franchising as an investment option continues to be robust. The record number of visitors in the Philippine International Franchise Conference and Expo (PIFCE) 2009, for instance, is a tangible proof: 25,000 visitors up by 12 percent in 2008.

Moreso, players in the franchise arena, traditionally dominated by professionals and retirees, now include newly graduates and OFWs.

Sustained by a growing number of Filipinos who had been made aware of looking for a more secure investment option, PFA sees a continuous increase in the number of members along with more solid business opportunities.

“Franchises that cater to BPOs have continued to perform well this year and will do so in the coming years. This includes convenience stores and quick service restaurants that are open 24 hours,” Orbeta adds.

Another very important sector that must be developed is tourism. Franchises that offer services such as health spas, beauty salons, medical/dental clinics, internet cafes, and hotels are facing good prospects, according to Orbeta.

Orbeta added that it will be good business decision to cater to ‘the bottom of the pyramid’ as what has been done in countries like India and Pakistan. “An important development is the generic drugstores and a social enterprise which franchise sari-sari stores.”

Because of its strategic position, reinforced by a well-educated and English-speaking workforce, the Philippines continues to maintain its position as the franchise hub of Asia.

PIFCE is an annual event staged by the PFA. Now on its 18th year, the longest-running and biggest franchise show in the ASEAN region showcases the widest array of business opportunities, both local and foreign, for unlimited franchise investments and joint business ventures.

This year’s Franchise 2010, scheduled on July 14-18, is poised to be a precursor of the much-anticipated Franchise Asia 2011, which, aside from gathering the who’s who in the global franchise scene, will feature the twin meetings of the Asia-Pacific Franchise Confederation (APFC) and the World Franchise Council (WFC) which will be hosted by the Philippines through PFA.

(The Philippine Star) Updated April 26, 2010 12:00 AM

MANILA, Philippines – The forthcoming Franchise Expo 2010 of the Philippine Franchise Association (PFA) will virtually confirm the sustained growth of the franchise industry and the continued vigor of the domestic consumer market as it is poised to become the biggest ASEAN franchise event thus far.

PFA chairman emeritus Samie Lim said this positive development stemmed from the increasing remittances of overseas Filipino workers, the rebound in exports, sustained inflow of foreign tourists, a vibrant business process outsourcing sector and continued government spending in infrastructure enabling franchised businesses to expand.

“All these signs of economic rebound are building up the confidence of our industry players and the many entrepreneurs wanting to join the franchise bandwagon,” Lim pointed out.

“Thus, we expect to post the biggest participation thus far in our Franchise Expo this year with 336 booths and 30,000 visitors,” Lim added.

An integral component of Franchise 2010: The 18th Philippine International Franchise Conference and Expo (PIFCE), Franchise Expo 2010 is slated at the SMX Convention Center on July 16-18, which will occupy over 10,000 square meters of exhibit space, virtually providing a sneak preview of the Franchise Asia 2011 that will be held in Manila on Sept. 21-25 next year, according to PFA chairman Robert Trota.

Constituting Franchise Expo 2010 are colorful exhibits of local and international franchises, exciting business presentations, and vigorous industry networking and marketing activities.

“There’s a pavilion for almost every field of interest. We have the Incubation and Emerging Concepts Area, the Young Entrepreneurs and Women Entrepreneurs Sections, the International Pavilion, and the Franchise Pavilion,” PFA vice chairman Bing S. Limjoco said, adding that many surprises await both exhibitors and visitors, including new business ideas and concepts.

All types of allied and support services will also be available, making Franchise Expo 2010 a complete one-stop shop for business development and joint business ventures, according to PFA president Yvette Pardo-Orbeta.

“Franchise Expo 2010 will be a substantially different franchise event in both content and significance,” Orbeta pointed out.

Organized by the PFA, the expo is designed for new entrepreneurs, budding enterprises, and established small and medium enterprises eyeing new areas for business expansion. Moreover, this annual event traditionally serves as the venue for starting a business, networking with suppliers and forging bonds with prospective local, foreign and transnational joint-venture partners.

To know more about the event, visit www.franchise2010.com and register on-line for special admission rates. Other expo details can be obtained from the PFA Secretariat (tel. 6870365 to 67, or e-mail franchiseshow@pfa.org.ph), or through the exhibit management team Global Link MP Events (tel. 750-8588 or e-mail franchise@globallinkmp.com).

source: The Philippine Star Feed

Woman-Focused

Franchises that focus on women and are run by women have grown a lot in popularity over the last year and are expended to continue to do so in 2009. These businesses can include anything from women’s health centers to women-targeted clothing stores.

Fun Food

Crazy food franchises have grown a lot trendier over the past year as well. By offering something different then the normal fast food like menu, these businesses can reach out to crowds that are tired of unhealthy, processed foods. Additionally, by letting consumers create their dishes, such as yogurt shops that let you create your own custom dessert, they can connect with customers of a more creative level.

Thinking Green

It is no surprise that green-thinking businesses made our list. Nowadays any business can be labeled “green” just by stating their cups are made of recycled materials or their food is organic. However, it is more than trendy, as green businesses often build very loyal customer bases that do not mind paying a “green” surcharge.

Pets

People have always loved their pets, but in recent years doting on your dog or cats has become increasing popular. Stores that offer accessories, clothes, food, and toys for pets have seen a decent increase in business over the last year, and that increase is expected to skyrocket in 2009.

Pampering Services

With the stress of the economy and long days at work, people are looking for the occasional release. Massage services, and fair-priced day spas are making a comeback and incorporating other trends along the way. Spas with natural or organic services attract business because wellness then natural way is so popular.

For the Kids

Businesses catering to the higher education of children are also expected to boom in 2009. Part of this is due to the second coming of the baby boom, but also because of the general falling faith in America’s education system. Tutoring services as well as after-school programs are both expected to be trendy franchises in 2009.

Home Improvement

Since the real estate market is expected to continue its decline into 2009, home improvement businesses have proved to be a fair alternative. Many homeowners are opting to remodel their homes instead of seeing for a loss, or foreclosing on their loan to buy a new house. Additionally, families that do move into foreclosed houses often need help making improvements to the property before they move in.

Year-Round Opportunities

Some franchises thrive off of seasonal business, but as the economy gets worse some of these franchise owners are seeking to keep their store open year round for additional business opportunities. Calendar franchises are offering stationary and supplies, Halloween stores are selling costumes and party supplies throughout the year, and tax preparation franchises, like the Roni Deutch Tax Center, are offering additional business services, to generate new customers throughout the year.

The Tax Lady Roni Deutch and her law firm Roni Lynn Deutch, A Professional Tax Corporation have been helping taxpayers across the nation find IRS tax relief for over seventeen years. The firm has experienced IRS tax attorneys who will fight the IRS on your behalf.

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