SEC EIPD Case No. 2026-8089In the matter of: Knoxport, Inc.

Commission Socurities md xchange

ENFORCEMENT AND INVESTOR PROTECTION DEPARTMENT

In the matter of.

secretary@santiagolaw.com.ph KNOXPORT, INC. Company Reg. No.: CS201122555 Fort Bonifacio, 1634 Taguig City Fourth District, National Capital Region (NCR) office@santiagolaw.com.ph 11th Avenue cor. 39th St., Bonifacio Triangle SEC EIPD CASE N0. 2026-8089

X-

REMIGIO C. CRUZ, JR. President / Chairman of the Board 45 Alondras Street, Mira Nila Homes, Quezon City

RESOLUTION

Republic Act No. 8799, otherwise known as the Securities Regulation Code ("SRC") for the possible unauthorized offering and sale of securities in the form of investment contracts. This resolves the findings against Knoxport, Inc. for violations of Sections 8, 26, and 28 of

FACTS

restaurants in the Philippines, with principal office address at 11th Avenue cor. 39th Street, Bonifacio Triangle, Fort Bonifacio Taguig City. Knoxport is the principal franchisee and operator of KFC (Kentucky Fried Chicken) Commission ("Commission") under Company Registration No. CS201122555 on 28 December 2011 Knoxport, Inc. ("Knoxport") is a corporation duly registered with the Securities and Exchange

Food Economy," aired on the Bilyonaryo YouTube channel. "Follow The Money: KFC Sub-Franchising: The Smartest Passive Investment in Today's Fast. The investigation was prompted, among others, by a publicly available interview entitled

Director of KFC Philippines, actively promoted Knoxport's so-called "sub-franchising" arrangement to the general public. In the said interview, Mr. Adrian Kent Galindo, identified as Franchise Management

headaches of daily operations. To quote: program as an investment opportunity intended for individuals seeking returns without the During the interview, Mr. Galindo, Knoxport's authorized officer, repeatedly described the

a management service provider setup. So we make it very easy for our franchisees. the designing of the store, the construction, even with the hiring and training and even with the day-to-day operations. sub-franchising way back in 2020. So doing it for 5 years already. And it's giving an opportunity for entrepreneurs to invest in a global brand such as KFC. We work under We provide all of the services that they would need right from the start. From "The objective is to bring KFC to more Filipinos nationwide, and so we launched our

XXX

" The SEC Headquarters, 7907 Makati Avenue I imessagemo@sec.gov.ph Saicedo Village, Bel-air, Makati City www.sec.gov.ph I htfps://linktr.ee/secphilippines INVESTORS IN PEPLE tin nuopl IS0 9001 e W .

kanilang staff, biglang nag-AWOL, We'll take care for them. businesses, but KFC presents another investment opportunity for them and we help them every step of the way. They don't have to worry so much about pag nawala yung They're pleasantly surprised that there's an opportunity for them to have their of running the store. As you said, a lot of them are very busy with their core own KFC franchise without having to, you know, go through all of the headache

XXX

and these audits are in place to make sure that everything is being prepared properly distinction between equity and sub-franchise." (Emphasis ours) We run our franchise stores the same way we run our company owned stores and again it's the same people running the company owned stores. So there's no

opportunity being offered by Knoxport, among others, is characterized by the following: From the foregoing, it is clear that Mr Galindo repeatedly emphasized that the investment

2 It is intended for passive investors; Knoxport operates under a management service provider structure 3 Knoxport retains exclusive control over store design, construction, hiring, training, staffing.

Profitability and return on investment (ROI) are presented as primary inducements; and Investors are not expected to participate in the management or operation of the business: inventory, and day-to-day operations;

3

1. The required investment ranges from approximately P25 million to P40 million, depending on the

type of store.

addressed to potential investors. Notably, these representations were made on a public, unrestricted media platform, clearly

submit a Position Paper. which, through counsel, appeared before the Commission on 24 0ctober 2025 and was directed to Accordingly, on 21 0ctober 2025, the EIPD issued a Notice of Conference to Knoxport

investment contract under the SRC. that its sub-franchising program constitutes a bona fide franchising arrangement and not an Thereafter, Knoxport submitted its Position Paper dated 12 November 2025, asserting

interview from online platforms following its initial discussion with the Commission, it nevertheless failed to issue any public clarification, correction, or disclaimer to address or rectify the It bears emphasis that although Knoxport subsequently caused the removal of the subject

statements made by its officer.

investing public. Hence, the mere takedown of the video, without providing any clarifications, failed as clearly illustrated in its promotional stints, good faith and prudence would have required it to to cure the misleading impressions already created. affirmatively correct the misleading public representations to properly guide and protect the Assuming arguendo that Knoxport was not engaged in unauthorized investment solicitation

which collectively convey the character of a passive investment opportunity. As posted: program through its official website, "https://corporate.kfc/com.ph," and other online platforms, To date, apart from the interview, Knoxport continues to promote its sub-franchising

daily operations. KFC Philippines will oversee full store management. "KFC Philippines offers a comprehensive, end-to-end franchising process and management. From site selection, planning and staff hiring, training, marketing, and

Franchisees will not undergo training. As the management Service Provider (MSP), KFC Philippines will manage the daily operations of the franchise store." (Emphasis ours)

KNOXPORT, INC. Page 2 of 4

Resolution

Galindo, clearly gives the impression that the franchisee or investor need not do anything to earr income and that Knoxport or KFC management will run the business entirely, from operations tc stocking and systems and, ultimately, the franchisee's role is largely limited to funding the enterprise These materials, whether considered independently, or together with the interview of Mr

and monitoring performance.

Thus, taken as a whole, these representations reinforce the understanding that profits are expected to be derived primarily from the efforts of Knoxport, not from the active participation of the franchisee.

for violations of Sections 8, 26, and 28 of the Securities Regulation Code. 08 January 2026, directing Knoxport to show cause why it should not be held administratively liable Considering the foregoing circumstances, the Commission issued a Show Cause Order dated

FINDINGS

Under Rule 3, paragraph 1(G) of the Implementing Rules and Regulations of the SRC, an investment contract exists when a person:

2. In a common enterprise 3. With the expectation of profits 4. To be derived primarily from the efforts of others 1.Invests money:

principle that substance prevails over form. Therefore, the Commission is not bound solely by how the scheme is marketed and understood by the public. contractual labels as in the case at hand, but must consider the totality of representations, including In determining the existence of an investment contract, the Commission is guided by the

program satisfies all the elements of an investment contract. To wit: Based on the evidence on record, the Commission finds that Knoxport's sub-franchising

1. Substantial sums of money or investment are required from investors; 2 3 The enterprise is centrally operated and controlled by Knoxport; Profitability and Return of Investment ("ROI") are emphasized in public promotions; and 4 Investors are led to expect profits primarily from the managerial and operational efforts of

Knoxport, while their own involvement is minimal.

promotional statements, which repeatedly assure prospective participants that they need not concern themselves with operations because Knoxport will manage everything for them. Evidently, Knoxport's claim that sub-franchisees are active entrepreneurs is belied by its own

Position Paper. In this light, the Commission is not persuaded by the arguments advanced in Knoxport's

present in this case. of the SRC. What the law proscribes is the inducement of an expectation of profits, which is plainly First, the absence of a profit guarantee does not remove an arrangement from the coverage

to the public as a passive income opportunity. agreement cannot prevail over the reality that the program is consistently marketed and presented Second, Knoxport's reliance on the formal provisions of its supposed International franchise

impression," when viewed alongside its failure to issue any public clarification or correction, further underscores the misleading character of its promotional activities. Finally, Knoxport's admission that the statements made by its officer created a "wrong

of the said International Franchise Agreement submitted, and was undertaken without the requisite constitutes the offer and sale of unregistered securities to the public, irrespective of the provisions Considering the foregoing, the Commission finds that Knoxport's sub-franchising program

KNOXPORT, INC. Page 3 of 4

Resolution

license or registration from the SEC, in clear violation of Sections 8, 26, and 28 of the SRC, for which administrative penalties must be imposed.

to address misleading public representations. public and widespread nature of the solicitation, the substantial amounts of money involved, the continued use of mass media and online platforms to promote the scheme even after the removal of the subject interview, and Knoxport's failure to timely issue corrective disclosures or clarifications Henceforth, in determining the appropriate penalty, the Commission takes into account the

INC. IS ENGAGED IN THE OFFERING AND SALE OF UNREGISTERED INVESTMENT CONTRACTS in violation of Section 8, and in the unlicensed solicitation of investments in violation of Sections 26 and 28 of Republic Act No. 8799, otherwise known as the Securities Regulation Code (SRC) WHEREFORE, premises considered,THE COMMISSION HEREBY FINDS THAT KNOXPORT

selling investment contracts or any securities to the public unless duly registered with the Commission and unless the persons engaged in such activities are properly licensed, in accordance with the SRC and its implementing rules. on its behalf are hereby ORDERED to CEASE AND DESIST from offering, promoting, marketing, or Accordingly, Knoxport, Inc., its officers, representatives, agents, and all persons acting

administratively liable and is ordered to pay the corresponding fine of One Million Pesos civil and criminal actions against the responsible officers and persons, when circumstances sc (P1,000,000.00) pursuant to Section 54 of the SRC, without prejudice to the filing of appropriate Further, for violations of Sections 8, 26, and 28 of the SRC, Knoxport, Inc. is hereby held

warrant.

strict compliance. Let copies of this Order be furnished to all concerned for their information, guidance, and

SO ORDERED.

05 February 2026.

Makati City, Philippines.

FILBERT CATALINO F. FLORES III, MN$A, CESO IV EIPD Direqtor w

Copy furnished: COMPANY REGISTRATION AND MONITORING DEPARTMENT(CRMD) CORPORATE GOVERNANCE AND FINANCE DEPARTMENT (CGFD) MARKETS AND SECURITIES REGULATION DEPARTMENT (MSRD) INFORMATION COMMUNICATIONS TECHNOLOGY DEPARTMENT (ICTD)

E35.E27.E88.E46/E3

KNOXPORT, INC. Page 4 of 4

Resolution