Like many countries Indonesia has special franchising rules. Some are common, others more localized. See here for the background. The consensus has been that that franchising complexity is a challenge and restricts franchise growth.
A new regulation called Regulation of Minister of Trade Number 71 of 2019 on Franchising and was issued on 4 September 2019. It makes several changes:
- Clearer details about franchise business criteria are set out (uniqueness, track record, written manual, clear business model, ongoing support and IP).
- Providing a prospectus for 2 weeks applies to all forms of Franchiser
- Franchisers appoint more than one Franchisee provided there are clear separate zones.
- The new MoT Regulation 71/2019 does not include the previous (challenging) obligation to source of 80% domestic products, but only prioritizes raw materials from Indonesia.
- Reporting requirements are changed.
- Franchises must use the regulatory application system called the Online Single Submission (OSS) for all trading licenses.
Many prior franchising regulations are being revoked and declared invalid.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.