RELIEF SLSP for Franchise Businesses: Franchisor vs Franchisee Separate Filing Obligations

A franchisor and a franchisee are two separately VAT-registered taxpayers, each with its own Tax Identification Number (TIN) and its own independent RELIEF SLSP filing obligation — there is no consolidated filing across the two just because they are linked by a franchise agreement. The franchisor reports the franchise fee as its own sale; the franchisee reports that same amount as its own purchase, and separately reports its own retail sales to end customers. Below, each entity’s filing is covered on its own terms.

This guide builds on the general filing-obligation rule covered in Who Must File RELIEF SLSP? and the filing basics in What Is RELIEF SLSP?. For how the franchise fee itself is treated for withholding purposes, see Is a Franchise Fee a Royalty or Ordinary Income?.

Why a franchise relationship doesn’t create one combined filing #

A franchise agreement links a franchisor and a franchisee commercially, but it does not merge them into one taxpayer for BIR filing purposes — each keeps its own TIN, its own VAT registration, and its own separate RELIEF SLSP. The Summary List of Sales and Purchases (SLSP) obligation attaches to VAT-registration status, taxpayer by taxpayer, not to a business network or brand.

Revenue Regulations (RR) No. 1-2012 made this filing mandatory for every VAT-registered taxpayer regardless of transaction size, amending Section 4.114-3 of RR No. 16-2005. The regulation’s own title, as indexed by the Supreme Court E-Library, states the scope plainly:

“REVENUE REGULATIONS NO. 1-2012 - REQUIRING THE MANDATORY SUBMISSION OF QUARTERLY SUMMARY LIST OF SALES AND PURCHASES (SLSP) BY ALL VAT REGISTERED TAXPAYER THEREBY AMENDING SECTION 4.114-3 OF REVENUE REGULATIONS NO. 16-2005, AS AMENDED”

— RR No. 1-2012, official title as indexed by the Supreme Court E-Library

“All VAT registered taxpayer” means exactly that — each one, individually. A franchisor with fifty franchisees does not file fifty entities’ worth of RELIEF SLSP in one submission, and a franchisee does not get folded into the franchisor’s filing. Who Must File RELIEF SLSP? covers this universal, threshold-free obligation in more depth for a single taxpayer; the franchise setting is simply two (or more) taxpayers each independently subject to it.

What does the franchisor report? #

The franchisor reports the franchise or royalty fee it earns from each franchisee, along with any goods it sells to that franchisee under the franchise agreement, on its own Summary List of Sales for the quarter. From the franchisor’s side, the franchise fee is income from a sale of a franchise right, and any required-ingredient or supply packages it sells to franchisees are ordinary goods sales — both belong on the franchisor’s own sales listing, broken out by counterparty the way any other VAT-registered sale would be.

This is true regardless of how many franchisees the franchisor has signed. Each franchisee’s franchise fee and goods purchases for the quarter appear as separate counterparty rows within the franchisor’s single Summary List of Sales — one filing, one TIN, with every franchisee’s transactions itemized inside it.

What does the franchisee report? #

The franchisee reports the same franchise fee and goods purchase on its own Summary List of Purchases, and separately reports its own retail sales to end customers on its own Summary List of Sales — both lists belong to the franchisee’s filing alone. From the franchisee’s side, the amount paid to the franchisor is a purchase, not a sale, so it lands on the purchases list. Meanwhile, whatever the franchisee sells to its own walk-in customers is unrelated to what it owes the franchisor and gets reported as the franchisee’s own sales.

A single franchisee’s quarterly RELIEF SLSP therefore typically carries two distinct kinds of entries that have nothing to do with each other on the form, even though they’re connected by the same business:

• Summary List of Purchases — the franchise fee and any goods bought from the franchisor, reported as a purchase from that specific counterparty.
• Summary List of Sales — the franchisee’s own retail sales to its end customers, which the franchisor never sees or reports.

A worked example: Brew Masters Corp. and three franchisees #

The clearest way to see that this is two (or more) separate filings, not one, is to work through the same quarter’s figures from both sides. The names below are fictional. Consider Brew Masters Corp., a VAT-registered franchisor of a coffee shop concept, with three VAT-registered franchisees in a given quarter.

Brew Masters Corp.’s own Summary List of Sales reports what it earned from its franchisees:

Brew Masters Corp. files one Summary List of Sales for the quarter, with these three franchisees itemized as separate counterparty rows totaling ₱500,000.00.

Franchisee A’s own Summary List of Purchases reports the same transaction from the other side:

Franchisee A’s own Summary List of Sales reports its separate retail business, which has nothing to do with Brew Masters Corp.:

Franchisee A’s quarterly RELIEF SLSP, filed under its own TIN, carries the ₱150,000.00 purchase from Brew Masters Corp. on its Summary List of Purchases and the ₱1,200,000.00 in retail sales on its own Summary List of Sales — two lists, both filed by Franchisee A alone, with no overlap into Brew Masters Corp.’s filing or into Franchisee B’s or Franchisee C’s. Each franchisee files this same way independently, matched on the purchases side against Brew Masters Corp.’s sales list under the BIR’s cross-matching process.

Does VAT registration status on either side change the obligation? #

Yes — the obligation runs from each party’s own VAT-registration status, so a non-VAT franchisee has no SLSP of its own even though its VAT-registered franchisor still files. As Who Must File RELIEF SLSP? covers, RELIEF SLSP is strictly a VAT compliance filing — a taxpayer paying the 3% percentage tax under BIR Form 2551Q instead of VAT has no SLSP to file, regardless of size. If a franchisee in this example were non-VAT, it would simply have no Summary List of Purchases or Sales of its own to submit, while Brew Masters Corp., still VAT-registered, would continue reporting that franchisee’s franchise fee and goods purchases on its own Summary List of Sales exactly as before. The two filings stay independent in either direction.

Frequently asked questions #

Do a franchisor and its franchisees file one consolidated RELIEF SLSP together? #

No. Each entity with its own Tax Identification Number (TIN) files its own RELIEF SLSP independently, even though they are commercially linked through a franchise agreement. A franchisor and a franchisee are each separately VAT-registered taxpayers under Revenue Regulations No. 1-2012, and the BIR has no provision for one consolidated SLSP across related but separately registered businesses.

Where does the franchise fee appear on each party’s RELIEF SLSP? #

The franchisor reports the franchise fee, and any goods it sells to the franchisee, on its own Summary List of Sales, since that income is the franchisor’s sale. The franchisee reports that same amount on its own Summary List of Purchases, since it is a purchase from the franchisee’s perspective. The same transaction appears on two different lists filed by two different taxpayers.

Does a franchisee also have to report its own retail sales separately from what it buys from the franchisor? #

Yes. A VAT-registered franchisee reports its purchases from the franchisor on its Summary List of Purchases and its own sales to walk-in or end customers on its own Summary List of Sales. Both lists belong to the franchisee’s own quarterly RELIEF SLSP filing and are unrelated to the franchisor’s separate filing.

Does the RELIEF SLSP obligation depend on how much the franchisee pays the franchisor? #

No. Under Revenue Regulations No. 1-2012, which amended Section 4.114-3 of Revenue Regulations No. 16-2005, every VAT-registered taxpayer must file the quarterly Summary List of Sales and Purchases regardless of the peso amount involved. A franchisee’s obligation to file does not depend on the size of the franchise fee or its retail sales, only on its own VAT-registration status.

What if the franchisee is not VAT-registered? #

A franchisee that is not VAT-registered, and instead pays the 3% percentage tax under BIR Form 2551Q, has no RELIEF SLSP obligation of its own regardless of size. The franchisor, if VAT-registered, would still separately report the franchise fee and any goods sold to that franchisee on its own Summary List of Sales, since the franchisor’s filing obligation runs from its own VAT registration, not the franchisee’s.

Summary #

A franchisor and a franchisee never file one combined RELIEF SLSP — each VAT-registered entity files its own, under its own TIN, under the universal obligation RR No. 1-2012 placed on “all VAT registered taxpayer.” The franchise fee and any goods the franchisor sells the franchisee land on the franchisor’s Summary List of Sales and the franchisee’s Summary List of Purchases as the same transaction seen from two sides, while the franchisee’s own retail sales to its end customers are an entirely separate entry that the franchisor never reports. For the underlying filing-obligation rule, see Who Must File RELIEF SLSP?; for SLSP basics, see What Is RELIEF SLSP?; and for how the franchise fee itself is classified for withholding, see Is a Franchise Fee a Royalty or Ordinary Income?.