DTI-Cebu warns public on "pseudo-franchisers"

CEBU, Philippines - The Department of Trade and Industry (DTI)-Cebu is urging prospective franchisees to be “very careful” in buying franchises of businesses so as not to become victims of fly-by-night franchisers.

“Although this (buying a franchise) is the easiest way of owning a business, one has to be very careful in choosing a franchise. They should check whether the franchisor is duly registered with the DTI (or with the SEC and all other pertinent business papers) before buying a franchise,” said DTI Cebu Provincial Director Nelia Navarro.

Bureau of Trade Regulation and Consumer Protection (BTRCP) Director Victorio Macario said in a report that the local franchising industry is now facing an issue on the proliferation of shady or pseudo franchisers. The DTI is planning to issue an administrative order to regulate this concern and has asked locally-bred franchisers in the Association of Filipino Franchisers Inc. (AFFI) to provide inputs.

DTI-Cebu’s Navarro told The Freeman that the province has not received reports and complaints from victims of pseudo-franchisers. She however reminded would-be franchisees to remember that the name and success of a business should be the primary concern.

“When a franchise is being sold, this means that the business model and the business quality system are already in place. A franchisee is paying for this (and not for anything else,) she said.

BTRCP’s Dimagiba said the participation of AFFI in the drafting of the rules in the administrative order is important as one of the regulations, among others, would be to require the accreditation of franchisers before they will be allowed to sell franchise.

“Before, franchising is only free-wheeling. On account of its growing importance; the efforts, time and resources people invest in their ventures, and its implications to the national economy, we will now be more in their documentation and full disclosure,” he said in the report.

AFFI is an organization of prime movers in the local franchising industry composed of home-grown franchise concepts.