Cara Memulai Bisnis Waralaba di Indonesia

Starting a franchise in Indonesia offers a safer business model 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 the franchising business model as there is a huge, young, and digitally savvy population with a growing middle class.

Franchises in Indonesia

Franchise businesses in Indonesia face bureaucratic procedures and complex laws, similar to other types of business investments. 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:

• Both franchisors and franchisees are to obtain a franchise registration certificate or Surat Tanda Pendaftaran Waralaba (STPW). The franchise company is to update the Indonesian authorities which issued the STPW on the progress of their franchise through the submission of a detailed report by March 31 every year.
• Franchisors and franchisees intending to run their business in Indonesia must ensure that at least 80% of the raw materials, services, and business equipment are locally sourced, i.e. from Indonesia; an assessment team appointed by government authorities made the recommendation that such must be the case.
• Franchisors must provide a clear business proposition after having registered Intellectual Property Rights and need to abide by the franchise license rules.
• Franchisors need to possess at least five years of business experience and be able to report on the goods and services used for their business activities.
• Franchisors need to be able to demonstrate the profitability of the business and provide continuous support to their franchisees.

Franchisors must complete the following tasks

• Obtain the STPW franchise registration certificate, which takes approximately three months to be issued and is valid for five years with the possibility of extension
• Approach the Ministry of Trade and register for the Prospect of Offer, which must be in Indonesian and legalized by a public notary and the Indonesian Embassy where the franchisor is located
• Provide franchising agreement

Franchisees must complete the following task

• Register the franchising agreement with the Ministry of Trade; the franchising agreement must be in Indonesian and by Indonesian laws.
• 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 franchisor’s 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 in Indonesia is bound 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.

1. All franchising agreements in Indonesia mention the fees and royalties to be received by the franchisor.
2. They outline franchisee rights for using and producing patented, copyrighted, or service-marked objects within the franchise agreement.
3.  These objects are to be used to identify the enterprise in question.
4. They typically specify operational directions to be followed by the franchisee.

Alternatives to Franchising in Indonesia

Franchising offers profitability, but some prefer full ownership by establishing their own company tied to a specific brand. Create a new brand from scratch by choosing a local PT or PT PMA company for your business setup. These are the two most common types of business entities in Indonesia.

Incorporating a company in Indonesia, be it a local PT or PT PMA company, has its own set of advantages and disadvantages. It is recommended that you understand more about each business type before incorporation.