The Philippine Competition Commission (PCC) advised the franchising industry to watch out for possible anti-competitive provisions in franchising contracts such as those that strictly impose the prices or geographic market of franchisees.
This is what the PCC keeps watch of as part of its enforcement of the Philippine Competition Act, according to chairman Arsenio Balisacan.
The PCC held a webinar last week on competition law and policy with the Philippine Franchise Association, a self-regulating organization of over 1,000 franchise brands in the Philippines.
At the webinar, PCC cited Section 15(e) of the Philippine Competition Act which prohibits the imposition of restrictions on the contract for sale of goods or services, but acknowledges franchising, licensing, merchandising and distributorship agreements as permissible business practices.
The PCC notes that franchisees are required to follow a limited set of formats or supplies offered by franchisors to retain the standards of a brand.
“The franchising industry represents a challenging issue for competition as it requires balancing competition enforcement with maintaining contractual limitations that protect intellectual property rights and trade secrets of franchisors. For this reason, the PCC wants a proactive approach to ensure that the sector remains competitive as it grows,” Balisacan said.
Franchising refers to the use of proven business concept, product, or method by a franchisee which is granted the right to market a product or service using the recognized trademark, name, logo and advertising of a franchisor in return for a stream of royalties and other payments. – Irma Isip
