The franchise industry in the Philippines is a robust driver of the economy, governed by a combination of intellectual property laws, contract law, and administrative regulations. However, the rise of "fly-by-night" operators and unauthorized use of established brands has made understanding the legal remedies for trademark infringement and unauthorized franchising critical for brand owners.

In the Philippine jurisdiction, protection primarily stems from Republic Act No. 8293, otherwise known as the Intellectual Property Code of the Philippines, and relevant jurisprudence from the Supreme Court.

I. The Nexus Between Franchising and Trademarks

At its core, a franchise agreement is a license granted by a franchisor to a franchisee, permitting the latter to use the franchisor's intellectual property—most notably its trademarks—and its proven business system.

Unauthorized franchising occurs when an entity:

Uses a mark that is identical or confusingly similar to a registered trademark.
Purports to sell "franchise rights" without the legal authority or ownership of the underlying IP.
Continues to operate under the brand name after the franchise agreement has been terminated or has expired (hold-over franchisees).

II. Causes of Action

A brand owner facing unauthorized franchising typically pursues two main legal avenues under the IP Code:

1. Trademark Infringement (Section 155)

To prevail in an infringement case, the complainant must prove:

Ownership of a Registered Mark: The mark must be registered with the Intellectual Property Office of the Philippines (IPOPHL).
Likelihood of Confusion: The unauthorized use must be likely to deceive the public or cause confusion as to the origin of the goods or services. This is determined through the Dominancy Test (focusing on prevalent features) or the Holistic Test (considering the entirety of the marks).

2. Unfair Competition (Section 168)

Unlike infringement, unfair competition does not strictly require trademark registration. It focuses on the employment of deception or any other means contrary to good faith by which any person shall pass off the goods manufactured by him or in which he deals, or his business, or services for those of the one having established such goodwill.

III. Available Legal Remedies

Victims of unauthorized franchising in the Philippines have three primary routes for redress: Administrative, Civil, and Criminal.

A. Administrative Actions

Filed with the Bureau of Legal Affairs (BLA) of the IPOPHL. This is often the fastest route for brand owners.

Cease and Desist Orders: To immediately stop the unauthorized use.
Administrative Fines: Ranging from PHP 5,000 to PHP 150,000, plus additional daily fines for continuing violations.
Cancellation of Permits: Coordination with the DTI or SEC to revoke the business permits of the infringer.

B. Civil Actions

Filed in Regional Trial Courts (RTC) designated as Special Commercial Courts.

Damages: Recovery of the reasonable profit the complainant would have made, or the profit the defendant actually made.
Injunction: A court order requiring the defendant to stop the infringing activity permanently.
Destruction of Goods: The court may order the destruction of all infringing materials without compensation.

C. Criminal Actions

Trademark infringement and unfair competition are criminal offenses in the Philippines.

Penalties: Imprisonment of two (2) to five (5) years and a fine ranging from PHP 50,000 to PHP 200,000.
Search Warrants: Brand owners can apply for search warrants to seize infringing materials and equipment used in the unauthorized franchise operation.

IV. Procedural Requirements and Evidence

In the Philippines, the "First-to-File" rule applies to trademarks. Therefore, the strongest defense against unauthorized franchising is a valid Certificate of Registration from the IPOPHL.

Essential Evidence Includes:

Proof of registration (for infringement).
Evidence of "Passing Off" (e.g., photos of the unauthorized store, receipts, social media advertisements).
Proof of the "Likelihood of Confusion" among the consuming public.
The original Franchise Agreement (in cases of hold-over franchisees or breach of contract).

V. Defensive Measures for Franchisors

To mitigate the risk of unauthorized franchising, brand owners should:

Register All IP: Ensure trademarks, service marks, and trade dress are registered.
Record with Customs: Record registered marks with the Bureau of Customs to prevent the importation of infringing materials.
Strict Termination Clauses: Ensure franchise agreements have clear "de-identification" clauses requiring former franchisees to remove all brand elements immediately upon termination.
Public Notices: Periodically publish lists of authorized franchisees in newspapers or official social media channels to warn the public against "fly-by-night" operators.

Conclusion

Unauthorized franchising and trademark infringement not only dilute brand equity but also pose a significant risk to the public. The Philippine legal framework provides a comprehensive suite of tools—from administrative fines to criminal prosecution—to protect the integrity of the franchise system. Vigilance in registration and promptness in litigation remain the most effective strategies for IP enforcement in the local market.