DTI to set guidelines for franchisors

MANILA, Philippines - The Department of Trade and Industry (DTI) said yesterday they are planning to set guidelines for franchisors 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 would-be franchisees. “There must be guidelines in place in order to avoid fraud,” he said.

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 out of their hard earned money.

“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.

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 our selves.”

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 noted that certain rules must be in place.

Meanwhile, Association of Filipino Franchisers Inc (AFFI) Past President Rommel Juan said that there is a need for the DTI to regulate the franchise industry. “There are some who have been franchising the concept and not the company. There must be more protection for people who would like to buy franchises.”