Franchise Business in Indonesia

What is Franchise ?

The main regulation on franchise matters is the Minister of Trade Regulation No.53/2012 on Implementation of Franchise (“Permendag No.53/2012”)

Article 1 of Permendag No.53/2012, defines “franchise” as:

A special right owned by an individual or a business entity to a business system with a business characteristic in order to market goods and/or services that have been proven successful and can be utilized and/or used by other parties under a Franchise Agreement”. 

Criteria of Franchise

Franchise must meet the following criteria:

  • Possesses a business characteristic
  • Proven profitable
  • Have standards for goods and/or services offered in a written form
  • Easy to teach and applicable
  • Offers continuous support
  • Owns registered Intellectual Property

Mechanism of Franchise Implementation

Franchisor shall convey franchise prospectus to franchisee at least 2 (two) weeks before signing a Franchise Agreement. 

Franchise prospectus shall contain:

  • Identity of franchisor 
  • Legal business status 
  • Business history of franchisor (information regarding the establishment of business entity, business activities and business development, standard of production system, services, sales, and written franchise business management)
  • Organizational structure of franchisor
  • Financial statement for the past 2 (two) years
  • Number of franchise businesses
  • List of franchisees
  • Rights and obligations of franchisor

If a franchise prospectus is from foreign franchisor, it shall be legalized by Public Notary by attaching a statement letter from the Indonesian Embassy at the country of origin.

Franchise implementation shall be based on a Franchise Agreement which contains at least the following:

  • Names and addresses of the parties
  • Types of Intellectual Property Rights
  • Business activities
  • Rights and duties of the parties
  • Assistance, facilities, operational training, and marketing guidance provided by franchisor to the franchisee
  • Business areas
  • Term of agreement
  • Honorarium/royalty payment method
  • Ownership, change of ownership, and the rights of heirs
  • Dispute resolution
  • Procedures for the renewal, expiration, and termination of agreement
  • Warranty from the franchisor to perform its obligations to the franchisee under the agreement until the term of the agreement has ended
  • Number of outlets that will be managed by the franchisee

Franchisor and franchisee shall have Franchise Registration Certificate (STPW). Requirements to obtain STPW:

  • Copy of franchisor/franchisee ID
  • Copy of Deed of Establishment
  • Copy of prospectus of franchise business
  • Copy of the Franchise Agreement
  • Copy of Business Permit
  • Copy of Intellectual Property Rights Application
  • Employment composition
  • Composition of goods/ raw material used 


The information contained in this brochure is general information and should not be considered as a legal advice or any professional advice. Please consult with professional advisors for advice concerning this specific matters before making any decisions.