Aug

02

FRANCHISING IN INDONESIA

Under the Ministry of Trade Regulations No. 53/M-DAG/PER/8/2012 JO and No. 57/M-DAG/PER/9/2014 Regarding to Franchise Organizers (“Law”), a Franchise is defined 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 proven successful and can be utilized and / or used by other parties under a Franchise agreement. In order to become a Franchise Organizer, the products or the method must meet the following criteria. The Franchise must :

  1. Posses a business characteristic;
  2. Be proven to have been profitable;
  3. Have a standard for services and goods and/or services offered in the form of writing;
  4. Easy to teach and apply;
  5. Offer continuous support; and
  6. Own Intellectual Property Rights that have been registered.

Prior to operating a Franchise business, both the Franchisor and Franchisee are obliged to obtain a Franchise Registration Certificate issued by the Ministry of Trade department. The Franchisor is required to submit and register all of the related documents to his/her franchise business including a Prospectus (proposal) that has been translated into the Bahasa Indonesia language. A Prospectus made by other Country (other than Indonesia) is mandated to obtain Legalization from a Public Notary of the origin Country and Legalization from the Indonesia Embassy within the origin country. Moreover according to the Ministry of Foreign Affair Regulation Number 09/A/KP/XII/2006/01, in order to a foreign document to be accepted in the the jurisdiction of Indonesia, every document/letter issued or signed in foreign country must obtain prior Legalization by the Indonesia Embassy in the origin country.

We, at Schinder Law Firm, have funneled several questions regarding the acceptable parameters of the relationship between the Franchisor and the Franchisee in Indonesia. One query that often arises is to whether the Franchisor can form a joint venture company and then act as a Franchisee to accept the Franchise. According to the Law Article 7, the Franchisor is prohibited to appoint a Franchisee that possesses a controlling relationship with the Franchisor either directly or indirectly. This is to prevent unfair competition arising and to protect consumers and business. In connection to this issue, Indonesia boasts an exact regulation that can be found on the Law No.5 Year 1999 regarding the Ban on Monopolistic Practices and Unfair Business Competition.

Further questions continually surface at our firm about specific sectors, one being Food and Beverage. Indonesia has went a step further to address this sector in the Ministry of Trade regulation No. 07/M-DAG/PER/2/2013 JO No. 58/M-DAG/PER/9/2014 concerning Partnership Development in Franchising for types of Food and Beverage services (“MOT”). The types of Food and Beverage services designated consist of :

  1. Restaurant;
  2. Eatery;
  3. Bar;
  4. Cafe.

The Franchisor and Franchisee in this sector may develop its business activities through the establishment of outlets / stores that are:

  1. Owned and managed (company owned outlet);
  2. Franchised;
  3. Operated in cooperation with a method of equity participation.

The MOT has regulated that Food and Beverage services companies that fall into the category of “Owned and managed (company owned outlet)” can only be owned up to a maximum of 250 (two hundred fifty) outlets. After reaching the 250 (two hundred fifty) outlets, the next outlet must be :

  1. Franchised;
  2. Operated in cooperation with the method of equity participation.

For more information regarding to franchising please contact info@schinderlawfirm.com

Written by Erick Sanjaya Perkasa, SH., M.Kn

Let Us Be Your Guide.
Our thorough understanding of local culture
ensures that your business will be in compliance
with all laws and regulations and receive
a warm welcome in the community.

Dear valued Visitor,

Data is a valuable currency in this new world. In the midst of digital transformation, the Indonesian government has taken the final decision to pass the Pelindungan Data Pribadi (PDP) Bill by September 2022. The PDP Law applies to all businesses established in Indonesia and puts the consumer in control. The task of complying with this regulation falls upon businesses.

The PDP Law affects a variety of business operations, including how your sales team prospect and how marketing initiatives are managed. Businesses have had to reassess their business procedures, applications, and forms. Additionally, all businesses that work with personal data should designate a Data Protection Officer (DPO) or data controller to oversee PDP compliance.

In line with this spirit, it gives us great pleasure to announce and share with all our esteemed clients and business associates that Schinder Law Firm is prepared to assist your company to understand the impacts of the Personal Data Protection Law (PDPL) and take the required measures to comply with the law. Our Privacy, Data Protection, and Cybersecurity practice group is a pioneer in providing data privacy law services in Indonesia. Personal data protection services include but are not limited to:

  • Assessing the existing systems, processes, and controls, etc.
  • Providing provide gap assessment on the existing systems, processes, and controls, etc.
  • Developing and ensuring contracts and agreements comply with the PDP Law
  • Developing policies, best practices, and procedures
  • Advising on the security of personal data and managing data breaches
  • Acting as the Data Protection Officer (DPO) and advising upon the appointment, role, and responsibilities of a data protection officer
  • Advising on cross-border transfers of personal data
  • Carrying out data protection impact assessments and data protection audits
  • Recommending other necessary corrective actions in order to comply with the PDP Law
  • Training on the PDP Law tailored to clients’ businesses

We look forward to many more opportunities in the year ahead with your continued support and trust. For consultation, please send us a WhatsApp or Email.

Warmest regards,
Naz Schinder
Managing Partner

Keep Up with the New Law in Indonesia: Personal Data Protection

  • Assessing the existing systems, processes and controls, etc.
  • Providing provide gap assessment on the existing systems, processes and controls, etc.
  • Developing and ensuring contracts and agreements comply with the PDPL.
  • Developing policies, best practices and procedures.
  • Advising on security of personal data and managing data breaches.
  • Acting as the Data Protection Officer (DPO) and advising upon the appointment, role and responsibilities of a data protection officer.
  • Advising on cross-border transfers of personal data.
  • Carrying out data protection impact assessments and data protection audits.
  • Recommending other necessary corrective actions in order to comply with the PDPL.
  • Training on the PDPL tailored to clients’ businesses.
Privacy, Data Protection and Cyber Security
We help our clients to understand the impact of the Personal Data Protection Law (PDPL) on their companies and take the required measures to comply with the law.