How to Protect Your Capital: Vetting Franchise Agreements

Buying a franchise is one of the fastest ways to start a business in the Philippines because you are copying a model that already works. However, hundreds of buyers lose their hard-earned capital each year by signing agreements with hidden costs or restrictive clauses.\n\nHere are three parameters you must evaluate before signing any franchise agreement:\n\n### 1. The True Royalty Structure\nSome brands offer 'zero royalty' but mark up raw inventory by 30% to 50%. Always calculate your cost of goods sold (COGS) under conservative assumptions to see if the model remains profitable after all operational expenses.\n\n### 2. Territory Protection Rights\nEnsure your agreement contains a clear radius-protection clause (e.g., no other branch of the same brand within 1 to 2 kilometers). Without this, a franchisor could license a competitor right next to your unit.\n\n### 3. Equipment & Setup Autonomy\nAre you forced to buy setup equipment from the franchisor at inflated rates? Premium platforms like franchises.ph list standard equipment manifests so you can cross-compare prices with third-party fabricators.\n\nFor hands-on deal vetting and mentorship, you can enroll in the Franchise King Mentorship Program to ensure your next business move is a win.