Franchise Trademark License in the Philippines: How It Works Under the IP Code

A franchise trademark license in the Philippines is a contract in which the trademark owner (the franchisor) permits the franchisee to use the mark in exchange for fees, while the franchisor keeps ownership of the mark. Under the Intellectual Property Code of the Philippines, or Republic Act No. 8293, this kind of agreement is treated as a technology transfer arrangement. That means it involves the licensing of intellectual property rights, and the law contemplates its registration with the Intellectual Property Office (IPO). The franchisee never becomes the owner of the mark; it only receives the right to use it within the terms of the license.

What a trademark license is under the Intellectual Property Code

Section 4.2 of the Intellectual Property Code defines "technology transfer arrangements" as contracts or agreements involving the transfer of systematic knowledge for the manufacture of a product, the application of a process, or the rendering of a service, including management contracts, and the transfer, assignment or licensing of all forms of intellectual property rights.

A franchise trademark license falls squarely within this definition. The franchisor licenses a trademark — one of the intellectual property rights listed in Section 4.1 of the Code — and typically bundles it with system knowledge, operating methods, and management support. The Code therefore treats the franchise agreement as more than a simple permission to use a name.

Why the IPO is involved

The Intellectual Property Office is not a passive registry. Under Section 5.1 of the Code, the IPO has the function to register technology transfer arrangements and to settle disputes involving technology transfer payments. It also develops and implements strategies to promote and facilitate technology transfer.

The Documentation, Information and Technology Transfer Bureau performs this work day to day. Under Section 11.8, that Bureau registers technology transfer arrangements and settles disputes involving technology transfer payments. Section 11.7 adds that the Bureau provides technical, advisory, and other services relating to the licensing and promotion of technology, and carries out a program for technology transfer.

For franchisors and franchisees, this means the trademark license at the heart of a franchise system is a document the IPO expects to see and record.

The trademark itself must be registered

A franchise trademark license is only as strong as the mark behind it. The Bureau of Trademarks handles the search and examination of applications for the registration of marks, geographic indications and other marks of ownership, and issues the certificates of registration (Section 9.1).

Registration matters because it is what the franchisor licenses. A franchisee who pays for the right to use a mark should confirm that the mark is registered in the franchisor's name, that the registration covers the relevant goods or services, and that the franchisor has the right to grant the license.

What the license should cover

A well-drafted franchise trademark license in the Philippines generally addresses the following:

• The mark. The exact registered trademark, including the registration details, so the franchisee knows what it is paying for.
• Scope of use. The goods or services, the territory, and the channels through which the franchisee may use the mark.
• Quality control. The franchisor's right and duty to set and enforce standards, since uncontrolled use weakens the mark.
• Fees. Initial franchise fees, continuing royalties, and the manner of payment.
• Term and termination. How long the license runs and the grounds for ending it.
• Ownership. A clear statement that the mark remains the franchisor's property and that the franchisee acquires no ownership interest.

Disputes over technology transfer payments

Because franchise royalties are technology transfer payments, disputes over them can reach the IPO. Under Section 11.8, the Documentation, Information and Technology Transfer Bureau settles disputes involving technology transfer payments.

Under Section 7.1, the Director General exercises exclusive appellate jurisdiction over decisions rendered by the Director of the Documentation, Information and Technology Transfer Bureau, and those decisions are appealable to the Secretary of Trade and Industry. This gives parties a defined route within the IPO structure rather than an immediate trip to the courts.

Frequently asked questions

Does a franchise trademark license need to be registered in the Philippines? The Intellectual Property Code treats a franchise trademark license as a technology transfer arrangement, and the IPO is mandated to register technology transfer arrangements under Section 5.1 of the Code. Registration is the mechanism the law provides for recording these agreements.

Who owns the trademark in a franchise? The franchisor. A trademark license transfers only the right to use the mark. Ownership stays with the licensor, and the franchisee's rights are limited to what the license grants.

Can the IPO hear a dispute over franchise royalties? Yes. The Documentation, Information and Technology Transfer Bureau settles disputes involving technology transfer payments under Section 11.8 of the Intellectual Property Code, with appeals to the Director General and then to the Secretary of Trade and Industry.

Practical takeaways

• A franchise trademark license in the Philippines is a technology transfer arrangement under Section 4.2 of the Intellectual Property Code, because it licenses a trademark and usually transfers system knowledge as well.
• The IPO is mandated to register technology transfer arrangements, and its Documentation, Information and Technology Transfer Bureau handles that function under Section 11.8.
• Confirm that the franchisor's mark is registered with the Bureau of Trademarks before paying for a license.
• Put quality control, scope of use, fees, term, termination, and ownership in writing — an unclear license invites disputes.
• Disputes over technology transfer payments can be brought before the IPO, with appeals to the Director General and the Secretary of Trade and Industry.

Primary sources

The rules discussed above are drawn from the following primary sources, as published in the Official Gazette and the national statute book.

• REPUBLIC ACT NO. 8293 - AN ACT PRESCRIBING THE INTELLECTUAL PROPERTY CODE AND ESTABLISHING THE INTELLECTUAL PROPERTY OFFICE, PROVIDING FOR ITS POWERS AND FUNCTIONS, AND FOR OTHER PURPOSES

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.