By Pilar Manuel, May 16, 2022; CNN Philippines

Metro Manila (CNN Philippines, May 16) — A new executive order signed by President Rodrigo Duterte aims to fortify the country’s franchising sector to ensure protection for micro, small, and medium enterprises (MSMEs).

“[T]here is a need to intensify government efforts to strengthen the franchising industry to help businesses, especially MSMEs, by developing a transparent and business-friendly environment, and promoting fair and equitable practices,” said Duterte’s EO 169.

The issuance prescribes minimum terms and conditions of franchise agreements, which franchisors may also consider for non-MSME franchisees as “best practice.”

The Department of Trade and Industry is tasked to create an MSME Registry of Franchise Agreements, which will only accept deals incorporating specified minimum terms and conditions.

Franchisors which are part of registered franchise associations must register their standard franchise agreement with the DTI and execute an undertaking that all future agreements will incorporate the specified terms and conditions.

The EO says those not part of such associations must register all agreements with MSME franchisees within thirty days from execution. These franchisors are also encouraged to join registered associations.

The order also directs companies with existing franchise agreements with MSMEs to comply with specified requirements upon renewal of these contracts.

EO 169 takes effect immediately after its publication in the Official Gazette or a newspaper of general circulation.

Philippine Statistics Authority data show that as of 2019, some 99.5% of Philippine businesses are MSMEs, 68% of which are into franchising.