Indonesia

Franchise regulation

There are several franchise-specific regulations.

Pre-contractual disclosure requirements

At least 14 days before signing, franchisors must provide franchisees with a ‘franchise offering prospectus’, containing information such as a brief history of the franchisor’s business, audited financial reports for the last 2 years, and the names and addresses of all the franchisor’s existing franchisees.

The prospectus must be notarized by a public notary along with a letter of statement issued by the Trade Attaché of the Republic of Indonesia, the Investment Promotion Officer of the Republic of Indonesia, or the Official of the Representative Office of the Republic of Indonesia in the country of origin.

Registration

Franchisors must register with the Ministry of Trade (the franchise offering prospectus forms part of the registration). The franchise agreement must also be submitted. Franchisor and franchisee must submit an annual report to the Ministry of Trade on the development of the business.

The registration of the prospectus and franchise agreement by the franchisor is necessary to obtain the Surat Tanda Pendaftaran Waralaba or “STPW”. It is mandatory for both the franchisor and franchisee to hold an STPW.

Other issues

The franchisor and franchisee are required to prioritize the use of local goods/or services in Indonesia as long as the local goods/services meet the quality standards set by the franchisor.

The franchise agreement must be governed by Indonesian law and the agreement must be in the Indonesian language.

If the franchise agreement is prepared in a foreign language, the agreement must be translated into the Indonesian language by a sworn translator.

Franchisor must provide development assistance and training to the franchisee.

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