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 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 in accordance with 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 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.