Home Blog Franchise Business Regulations in Indonesia are Now More Relaxed Uncategorized Franchise Business Regulations in Indonesia are Now More Relaxed InCorp Editorial Team 18 December 2019 4 minutes reading time Table of Contents Scope of Regulation 71/2019 Criteria for Franchise Business Agreements and Prospectuses of Franchise Business Registration Certificate (STPW) Outlet Numbers Domestic Products Utilisation Reporting How Cekindo can Help There has been a significant development in franchise business in Indonesia, thanks to the country’s recent growing economy, market and wealth. Therefore, more and more foreign brands, especially in retail, food and beverages, service and healthcare sectors, want to seize these opportunities by expanding their business to Indonesia via franchising. Franchise business in Indonesia is now a prosperous one. However, certain challenges still persist in the Indonesian franchise world due to the government policy and regulations, hindering the market to reach its full potential. In an effort to improve the current situation and support franchise businesses, Regulation 71/2019 on the Organization of Franchise was enacted by the Minister of Trade and made effective on September 4, 2019. Regulation 71/2019 will replace several previous regulations that cover similar items. In this article, we will highlight some of the key changes in this regulation. Scope of Regulation 71/2019 Regulation 71/2019 covers a fairly broad scope and thus Cekindo will only choose some of them that are more vital and relevant to foreign investors. Main items discussed in Regulation 71/2019 include the following: Criteria for franchise business Agreements and prospectuses of franchise business Registration certificate, or Surat Tanda Pendaftaran Waralaba (STPW) Outlet numbers Domestic products utilisation Reporting Criteria for Franchise Business Business franchising is only allowed when they meet certain criteria set out in this regulation: The franchise business must have unique characteristics that are not easily imitated by similar businesses It must have written standards of its goods and services It must generate profits for at least five years and is able to provide evidence for that It must have a strategy to develop the business and overcome possible future business setback Franchisors must provide assistance and support continuously to franchisees The franchise business model can be applied and taught easily The franchise’s intellectual property rights must be registered Agreements and Prospectuses of Franchise Business It is mandatory for a franchisor to provide a franchisee with a franchise offering prospectus within two weeks before signing the franchise agreement. It is also the responsibility of the franchisor to register the prospectus prior to the agreement signing. Furthermore, the franchisor must present the unsigned agreement to the franchisee before any signing is done within two weeks prior to the exact date of agreement signing. All franchise agreements must be written in Indonesian language. Registration Certificate (STPW) In addition to the registration of the franchise prospectus and agreement, a STPW must also be applied and secured by all parties via the Online Single Submission System (OSS). The e-registration process must comply with the Government Regulation 24/2018 and Minister Regulation 77/2018. The compliance with Regulation 53/2012 is no longer required. Outlet Numbers Currently, Regulation 71/2019 does not limit the outlet number of most franchise businesses. However, limitations of franchise outlet numbers for certain circumstances still apply in President Regulation 112/2007. Domestic Products Utilisation Franchise businesses are required to make the utilisation of domestic products and processing of domestic materials a priority as long as these domestic products and materials meet the quality standards in accordance with relevant laws. However, no minimum utilisation and processing threshold are specified in this regulation. Reporting Franchise businesses with STPWs must submit their annual reports to relevant government authorities or provincial agencies every year by 30 June. It is also compulsory for franchise organisers to submit their report through OSS even if the relevant franchise activities have stopped. How Cekindo can Help As a leading business consultancy firm in Indonesia, Cekindo understands your needs when setting up and expanding your franchise business in this booming economy. We have a team of highly trained and professional proven consultants and extensive network, helping you tailor a development program that suits your franchise concept. Cekindo will make sure that your franchise business meets all legal obligations and assist you in mitigating all the non-compliance risks. For a free professional assessment regarding your franchise business in Indonesia, contact Cekindo today by filling in the form below. Read Full Bio Verified by Daris Salam COO Indonesia at InCorp Indonesia With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships. Frequently Asked Questions How many incorporation types exist in Indonesia? In Indonesia, there are three company types that you can establish based on your business nature, requirements, and preferences. Local Company (PT): 100% local ownership. Foreign Company (PT PMA): can be entirely owned by foreigners; however, restrictions in business sectors apply Representative Office: a branch of the parent company overseas whose purpose is to conduct marketing-related activities without generating income or profits What is PT (Perseroan Terbatas)? PT (Perseroan Terbatas) is the Indonesian term for a limited liability company. What is the difference between PT and CV? You can find the difference below: PT: limited liability company (shareholders are not legally liable for company liabilities) CV: a proprietary company where liability falls on the shareholders What is a PT PMA? Limited liability company with foreign direct investment ranging from 1-100% Get in touch with us. Lead Form Contact Full NameEmailPlease provide corporate email where possiblePhone NumberOffice SetupWhich city are you planning to expand into?JakartaSemarang/Central JavaBali/LombokBatam/SumateraSurabaya/East JavaOther ProvincesType of Service- Please Select -[SPECIAL PACKAGE] Company Registration + Office Package (20% OFF)[SPECIAL PACKAGE] Product Registration + License Holder (20% OFF)Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesType of Service- Please Select -[SPECIAL PACKAGE] Company Registration + Office Service (20% OFF)[SPECIAL PACKAGE] Comprehensive Industrial Package (15% OFF)Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesType of Service- Please Select -[SPECIAL PACKAGE] Company Registration + Office Service (20% OFF)[SPECIAL PACKAGE] Comprehensive Industrial Package (15% OFF)Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesType of Service- Please Select -[SPECIAL PACKAGE] Company Registration (25% OFF) + Office Space (Private Office 30% OFF)[SPECIAL PACKAGE] Company Registration + Investor KITAS (25% OFF)[SPECIAL PACKAGE] Accounting + Tax Services+ Annual Fintax Report (20% OFF)[SPECIAL PACKAGE] Payroll Services for Executive Role (20% OFF)Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesType of Service- Please Select -[SPECIAL PACKAGE] Company Registration (20% OFF) + Office Service (25% OFF)[SPECIAL PACKAGE] Company Registration + Micro Finance Services (25% OFF)[SPECIAL PACKAGE] Property Assistance: Due Diligence + AJB Purchase/Lease Agreement (25% OFF)Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesType of Service- Please Select -Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesServices Company Registration Renting Virtual and Serviced Office Mergers and Acquisitions Business and Import Licenses Corporate Recovery and Insolvency Closing of Company (Dissolution) Land and Property Ownership Shelf Company Local NomineeServices Accounting and Tax Reporting Audit and Review Transfer Pricing Compliance Tax RefundHuman Resource Sub Services Payroll Outsourcing Employer of Record Recruitment and HR Establishment Employment ServiceServices Business Visa Work Permit and KITAS Dependent Visa (Spouse and Family) OtherBusiness Visa Subservices Business Visa Visit Visa Visa ExtensionServices Medical Device Beauty (Skincare and Cosmetic) Food and Beverage Health Supplement Household Product Halal Certification TrademarkServices Legal Consultation Legal Agreement Service Due Diligence and Background Check Company Documents RevisionBusiness Advisory Business Advisory Services ESG Reporting & Advisory Internal Audit Risk ManagementMore Services Market Research and Analysis Local Distributor and Partner Bank AccountMessageSubmit What you’ll get A prompt response to your inquiry Knowledge for doing business from local experts Ongoing support for your business Disclaimer The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind. We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials. We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website.