Starting an Indonesian company as a franchise is a relatively safer business model as compared to other types of business entities. The reason is simple – you start off with a reputable and known brand name that millions know about while enjoying the benefits of investing in the populous, vibrant nation of Indonesia.
Indonesia is indeed an ideal nation for franchising business model as there is a huge, young, and digitally savvy population with a growing middle class.
Franchises in Indonesia
Like all other types of business, franchise businesses in Indonesia still need to go through significant bureaucratic procedures and complex laws that regulate this type of investment. Investing time and finances into running a franchise business in Indonesia as a foreigner is not impossible. Those who choose to do so require proper preparation and knowledge of the various steps to be taken.
In Indonesia, both the franchiser and the franchisee can be either individuals or legal entities and either residents or non-residents (this varies depending on the entity registration and location). Franchisers can rely on sub-franchisers (resident or non-resident) to run their business in a pre-determined location.
What are the Requirements to Set Up a Franchise Business in Indonesia?
The requirements to set-up a franchise in Indonesia are listed below:
Franchisors must complete the following tasks:
Franchisees must complete the following task:
A disclosure document, which reveals the franchisor’s ID and company history, the franchisor’s enterprises and organisational structures, a list of all franchisees, and details of both franchisors and franchisees’ rights and obligations, is also required to register a franchise in Indonesia.
Franchisors must present audited balance reports for the previous two years, with the exception of small organisations. A recognised entity must legitimate any disclosure documents received from a foreign franchisor.
What are Franchising Agreements?
Every franchise business in Indonesia is bounded by the stipulations specified in such agreements. Franchisees must then guarantee that they will follow all of the operational directions specified in the franchising agreement. Franchisors typically provide training, guidance, and assistance to franchisees.
Alternatives to Franchising in Indonesia
While franchising can be a lucrative business model, some may prefer to set up their own company as a form of full ownership tied to that particular brand. For those who are interested in creating a new brand from scratch, you can opt for a local PT or a PT PMA company. These are the two most common types of business entities in Indonesia.
Incorporating a company in Indonesia, be it local PT or PT PMA company, has their own set of advantages and disadvantages. It is recommended that you understand more about each business type before incorporation.
Requirements to Setup a Company in Indonesia
If the franchise business model is not for you, consider the Local PT and PT PMA routes like mentioned above. You can find the basic requirements below for each entity type.
Local PT Company Requirements
PT PMA Company Requirements
FAQs
It’s not possible to start a franchise without any money. You’ll need to pay an initial franchise fee, and you will have other start-up costs. Furthermore, franchisors want to see that you have some skin in the game in the form of a down payment.
There are a variety of places a franchise owner can work, depending on the type of franchise they own. Some franchise owners choose to take an active role, and will work alongside their employees, while at the same time managing the business.
If you want to own a business, but don’t have an idea to build from scratch and you have the resources to make it work, a franchise can be a good choice. Make sure you are prepared to pay the costs associated with the franchise and that the corporate headquarters is likely to provide the support you need.
Franchise fees generally run in the $20,000 to $30,000 range, though they can top $100,000 for higher-end, more established brands.
I am interested to start small business in Indonesia bali
Hi Shashank,
We are sorry we cannot assist you to set up your business in Bali. We are happy to assist you to set up your business only in Jakarta area as our registered office address is located in Jakarta.
Please contact us via Paul Hype Page to discuss further.
Thank you.
I’m planning company in the Philippines wanting to partner via a master franchise, joint venture or licensing agreement in Surabaya in Indonesia. I plan to distribute soft ice cream in Lawson, Alfamart and 7-11 stores in Surabaya.
Hello Perry,
It is possible to established a foreign-owned company, also known as a PMA, in Indonesia through a joint venture with an Indonesian partner. If you would like to do so, we provide services which will enable you to establish a PMA in Indonesia.
You may contact us to receive further information on our services related to this matter.
Thank you.
Paul