LAW ON FRANCHISING

I. E
II. Uniformity = creates the positive image and experience with the brand
- Business format
- Product and service uniformity
- Related Issues
1. Confidentiality
o Confidentiality clauses = valid
2. Non-compete = possible use of the knowledge and information obtained
from the franchise agreement to create the same business brand; client-
poaching
o Example: Stipulation states not to engage in the same line, limited
period, limited in territory. Valid? YES, provided it is limited as to
the time.
3. Exclusivity for supplies = supplies only from the franchisor
o Tie-in provisions = one obligation tied with the grant, without
concurrence to the obligation then no grant
o Related issue of overpricing by the franchisor = group purchasing
or economies of scale (e.g. regular price of a can of tuna is P75 but
if bought by bulk P50; franchisor sells to the franchisee a can of
tuna for P75 and pockets the difference)
o Contrary to public policy of restraint of trade = prohibits the
franchisee to contract with another supplier with better terms and
conditions
III. Cont