Franchising Scam to Franchise Fraud and TAX EVASION
Mag-ingat sa franchiser na umiiwas ng responsibilidad maging credible na negosyante.
Franchisors are responsible for registering their franchise agreements with the DTI, provided that the franchisors are members of registered franchise associations. Moreover, the franchisors are to execute an undertaking that all future agreements with MSME franchisees shall incorporate the terms and conditions under EO 169. Franchisors that are not members of any registered franchise associations must register all their franchise agreements entered into with MSME franchisees. Posted by Asean Briefing
Executive Order 169. Ang nagsasaad ng responsibilidad ng franchisor para sa DTI visibility at protection agreement para sa franchisee. Kung hindi siya miyembro ng Philippine Franchise Association, AFFI o FIFA bakit? Umiiwas ba sa buwis? Baka kayat naman, ang portfolio may halong fraud?
If ignored, repeated non-compliance could lead to DTI escalations, which may involve: public warning lists or referral to other government bodies for unfair trade practice claims.
Ang no. 1 na strategy ng franchiser ay ang mag palit ng pangalan ng negosyo para sa franchisee nito. Pwedeng itago as a fresh start-up lang ang kaya hindi kasama ang trademark at iba pang mga necessary documents like franchise requirements before offering. Iba na ang pangalan ng negosyo. (Note: Registered Business Name vs Brand Name. Pwedeng magkaiba as long as na ang brand name is naka IPO but this is the case of FRANCHISNG na ang system lang ang binebenta. So, there's a sale happening...legal bang binebenta or franchising ang inaalok na negosyo? If legal ang nagpapa-franchise dapat nagbabayad ng tamang buwis na may tamang documents as them being a franchiser. Rehistrado hindi gawa-gawa for show offs of credibility.)
Walang kapangyarihan na makipag negotiate sa franchisee kasi hindi legal tulad na walang record sa BIR ang kanyang kita sa franchise fee at royalties. Isipin nalang mabuti ang capital ng hinihingi ng franchisor, protektado ba ang iyong investment? Alarming na ito sa malaki o million-milliong franchise fee. Kung ganito na ang presyo at may transaction, may kontrata, dapat naman talaga ito'y gawing fair trading para sa ekonomya. Kaya dapat nagbabayad ng tamang buwis. Ipagpalagay nalang natin na ang laki ng franchise fee at naka forged ang breakdown, malaki ang kinikita nila. Hindi business pangekonomiya ang tawag sa pagiwas ng responsibilidad para sa equality ng iyong komunidad. Sa negosyo ang lagpas 250k ng kinikita ay dapat nakarehistro at may financial legit matched reports sa BIR.
The franchisor must still submit the franchise agreement to DTI and comply with minimum terms, even if the franchisee is operating under a different name.
Non-submission or misrepresentation can be challenged administratively or legally, because EO 169 protects the franchisee, not the brand.
By hiding the brand and changing the franchisee’s business name, the franchisor is acting in bad faith. The franchisee is still protected under EO 169 (if MSME), and the franchisor cannot use the concealment to claim negotiating or enforcement rights.
What matters is that all income from franchise fees or royalties is properly reported and taxed.
Hiding the agreement, the payments or the revenues from BIR is illegal. This becomes a franchise scam and for tax evasion.
Magsagawa ng Checklist bago magbigay ng perang pinaghirapan mo:
1.) Legal Documents (not for showoffs, legit registered) DTI, BIR, SEC, PFA & AFFI MEMBERSHIP.... and etc. 🛑
2.) FRANCHISER doesn't care about the location of your business. 🛑 Too many nearby competitors.
3.) NO IPO registration. 🛑 NO.#1 SIGN na dapat inuna sa nagpapafranchise! Kung wala namang hinihiram or binili na TRADEMARK, bakit pa need magpafranchise?
4.) INSTANT APPROVAL, DESPERATE FRANCHISOR. (Basta may pera, AUTOMATIC, wala ng halong investor screening kung fit ba kanya ang negosyo. 🛑 RED FLAG na yung OA mag-follow up at namimilit magpapirma o magpa-franchise.)
5.) TRACK RECORD. List of Franchisee and previous partnership as part of legitimacy check. ZERO or NO TRADING HISTORY! (At least make a background check sa former franchisee nila bakit nagsara or kamusta ang operations.) Word of mouth is a good marketing strategy. They should be proud to be exposed if the former franchisee is satisfied with the contract.
6.) BREAKDOWN. (Saan ba nabili ang mga kagamitan? Hindi ba overpriced? Original ba or recycled? Resibo galing sa supplier na hindi forged.) MALINIS. WALANG KICKBACK!!! Walang chance tubuan sa bawat item na maisisingit nila per product. One clue na din ang CONSTRUCTION ng shop kung ito ba ay bare finish na di natapos ng maayos na parang nakulangan ng budget.
7.) FALSE INFORMATION ABOUT THE PRODUCTS. (Features, quality, prices and where do they buy it? Causing problems from franchisees and resulting customer complaints.
8.) List of ACCREDITED Suppliers. (Dapat meron sila neto na may contact details.)
9.) WAG MUNA SA AWARDS. (Binibili nakasi ang ticket sa events para may show-off na kunyaring awardee at may presyo din ang awards or dumami ang certificates ng magmukang credible ang skills.)
10.) Inadequate Manpower. (Kilalanin ang mga empleyado, kung ito ba ay tumatao lang para may maipakitang existing identity. Nagtratrabaho ba sa ibat ibang department?)
11.) Sweet Talking, DESPERATE FRANCHISOR. (Business ethical presentation can prove legitimacy and future success with the right amount of legal documents and existing positive feedback. No need to fantasize extravagantly just to closed a deal.)
12.) Too good to be true, promised outcome. A misinterpretation of revenues. (Business success should result in every work that has gone by, from the strategy and knowledge of the franchisee itself too. Remember, a franchise business is not an investment and let alone business. There should be no exact outcome of profit per month, it's too scarcely credible.)
13.) HIGH RETURN. They're closing you a deal for a QUICK MONEY instead of establishing long and profitable business relationships with you.
14.) Price of establishing a New Franchise. The franchise tends to misquote the money required for building a new franchise. For example, there can be undisclosed amounts for setting up the new outlet, but the new franchise owner can be unaware of it. 🔴 BARE FINISHED or SUBSTANDARD MATERIALS.
15.) Insufficient details 🛑
The franchisors must provide financials and other details to their partners while buying new franchisees. If they are reluctant to do so or provide false information to prove that they are a law-abiding company, then pause and make no hasty decision. (CHECK THE DATES!!!! Make sure the legitimacy and preparation of their business is LEGALIZED first, if they have months or even years of DELAY, why would they set back their credibility?) ❗⁉️‼️🆘
16.) No Physical Presence
The franchisor is not providing a physical address, or their "headquarters address is never a good sign." Ang isang FRANCHISOR ay dapat may corporate office. Magsagawa ng imbestigasyon kung bakit ba ito'y sarado ng sarado para lumipat-lipat.
17.) FAKE OR COMPLICATED DOCUMENTS 🛑
Mas maiging suriin ng business lawyers or consultants, ang mga business contracts. Copied, grammatical errors and confusing clauses ang nakasaad sa agreement.
18.) TAXES or any RECORDS about their business.
Make sure to conduct numerous research kung ang isang franchisers ay hindi tax evader. ⛔ No. 1 din strategy sa malalaking company na nagpapalit ng Brand Name dahil may mabigat na utos ng BIR na di masolusyonan. Resorting to changing the name but the company's old system is still existing and being used. So, papatayin ang old name para back to 0 sa filing pero continuously earning padin. (Note: Laging paalala. CHECK THE DATES! CHECK THE GRAMMAR. TRIPLE CHECK THE CONTRACT or GOVERNMENT DOCUMENTS kung hindi ba GINAYA or PEKE for show-offs. DAPAT ABOGADO MO NA DI NILA KILALA ANG MAG-CHECK ALL DOCUMENTS.)
*Hindi purkit pinakitaan ka ng mga pirmadong documento, ito'y ay nagsisilbing legal, malinis o totoo. Kadalasan ito ay gawa-gawa na nila. Manghingi ng kopya ng meron siyang actual na pirma sa documento na di lang ikaw ang nakapangalan para pumirma.
Registration of the franchise agreement with the DTI Registry. According to the EO, the DTI shall be in charge of creating an MSME Registry of Franchise Agreements. This means the franchise agreement should be lodged with the DTI pursuant to the DTI rules.
Huwag agad susugod sa franchise business na may pangakong profit. TANDAAN!!! "A FRANCHISING is not an INVEST and LET ALONE BUSINESS." Skills and credibility are matter more than sales. Ang pinangakong systema ay hindi lagi mag wo-work out kung hindi forte or hindi mina-manage ang business. Isa ding harrassment, swindler or estafa ang FRANCHISOR na napinipilit maginvest kahit hindi naman sigurado ang investor na tra-trabahuin ang negosyo dahilan nga na hindi sila handa sumubok sa hindi nila linya o bagong opportunidad.
Ipaimbestiga ang lahat ng documento, pesta, pangalan at mga galawan. Suriin kung ang mga documento kung hindi ba to lalabag sa ESTAFA thru FALSIFICATION of a PUBLIC/PRIVATE DOCUMENTS. Maari malaman ng experto kung ang documento ay kinopya galing sa ibang corporation for VIOLATION OF A COPYRIGHTS LAW.
ALWAYS. BAGO PUMASOK SA HINDI ALAM NA PAPASUKING INVESTMENT, IPAKONSULTA SA ABOGADONG KILALA AT HINDI ABOGADO NG IBA O NG KASOSYO, BAGO PUMIRMA DAPAT NAKAHARAP SILANG LAHAT!
A PUBLIC AWARENESS.
Remember, sa mga large scale estafa or syndicated estafa, hustisya nalang ilalaban nyo sa laki ng na "NAI-WALDAS", wala na silang maisauli. Sa laki ng "NAITAGO", nakakatakas pa sila.
HUWAG MAGPAPADALA SA KAHIT ANONG PEACE OFFERING lalot na hindi mo alam kung anong klaseng manipulation ito. Mas maiging suruin ng mas nakakaalam at huwag hayaan sila ang kumontrol ng negotiation ninyo. Hahayaan ninyo paba ang mandurugas sa buhay ay makalusot o manalo sa kalokohan sinimulan?
MODUS KUNG ITO'Y PAULIT ULIT NG GINAGAWA PARA MAKAPANLOKO NG TAO.
***A financial education for everyone. Feel free to educate me for everyone's benefit of protecting their family's finances, family's savings, family's emergency funds. Let's help one another.
Sources: Philstar.com FRANK REYES CEO of Reyes Barbeque and AFFI Board 2004. Franchise Market Philippines, and GMA NETWORK.
Sources:
https://ifranchise.ph/documents-needed-in-franchising/
https://www.franchisemarket.ph/blog/11-Signs-Franchise-Scam
https://franchisebyte.com/education/franchise-fraud/
*I do not own any pictures used for thumbnails. It is for education purposes only. FAIR USE. Copyright disclaimer under section 107 of the Copyright Act of 1976, allowance is made "fair use" for purposes such as criticism, comment, news reporting, teaching, education, scholarship and research. Fair use is permitted by copyright statute that might otherwise be infringing.
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