A franchise must:

• have distinctive characteristics;
• be proven to provide benefits;
• include standards for the goods and/or services offered;
• be easy to teach and implement;
• be able to give ongoing support; and
• have registered intellectual property (IP).

The MoT Reg reflects the Old Regulation.

A franchise must:

• have a structured business system (standard operating procedure), which generally covers the full range of activities from operational matters to marketing strategy;
• have demonstrated profitability;
• have registered or recorded IP; and
• be able to give ongoing support.

Note:

Details of the above four criteria are expanded in the New Regulation.

A franchise agreement must include provisions covering:

• names and addresses of the parties;
• types of IP;
• business activities;
•  rights and obligations of the parties;
• assistance, facilities, operational guidance, training, and marketing provided by the franchisor to the franchisee;
• business territory;
• term of the agreement;
• procedures for payment of fees or royalties;
• ownership, transfer of ownership, and rights of heirs;
• dispute resolution; and
• procedures for extension, termination, and cancellation of the franchise agreement.

The MoT Reg reflects the Old Regulation, but includes the following additional clauses:

• The franchisor or advanced franchisor¹ must guarantee to the franchisee or advanced franchisee² the continuation of its obligations. as outlined in the agreement until the end of the agreement term.
• the number of outlets to be managed during the agreement term.

The New Regulation maintains the same provisions as the MoT Reg, but also requires the following to be set out in the franchise agreement:

• a business system; and
• a guarantee for the franchisor to pay the franchisee compensation and/or grant the right to continue the franchise, including the business system, if the franchisor ceases business activities.

A franchise offering prospectus must contain information on the:

• franchisor’s identity;
• franchisor’s business legal status;
• history of the franchisor’s business activities;
• franchisor’s organisational structure;
• franchisor’s financial statements for the last two years;
• number of business premises within the franchisor’s network, which includes outlets or stalls to carry out business activities;
• a list of franchisees, which includes domestic and overseas franchisees; and
• the franchisor’s and franchisee’s rights and obligations.

This regulation maintains the same provisions as the Old Regulation but includes an additional clause that requires information on the franchisor’s IP.

The New Regulation maintains the same provisions as the MoT Reg, but also requires the prospectus to set out a business system.

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To obtain an STPW, the applicant must submit to the Ministry of Trade an offering prospectus that must be legalised by a public notary. The submission must also include a statement letter from the Trade Attaché of the Republic of Indonesia or an official from the Indonesian representative office in the country of origin.

The New Regulation also requires the applicant to obtain an STPW by submitting an offering prospectus that must include:

1. business licence issued by an authorised institution in the country of origin, which must be legalised by:

• an authorised authority, for countries participating in the Convention Abolishing the Requirement of Legalisation for Foreign Public Documents (that is, by way of an apostille); or
• the Indonesian representative office in the country of origin, for countries not participating in the above Convention; and

2. certificate evidencing the continuity of the franchise business activities, issued by the Trade Attaché of the Republic of Indonesia or the Representative Office of the Republi of Indonesia in the franchisor’s country of origin.

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Franchisors, advanced franchisors, franchisees, and advanced franchisees must submit any changes to the STPW through the Online-Single- Submission (OSS) system if there are alterations to the data set out in the STPW.

Note:

There is no specific guidance on the limits to data changes that necessitate STPW changes.

In case of certain changes to:

• the prospectus, except for a change in: (i) the franchisor’s financial statements for the last two years; (ii) the number of business premises within the franchisor’s network; and (ii) the list of franchisees; and/or
• the franchise agreement, franchisors, advanced franchisors, franchisees of overseas/foreign origin are required to update the STPW data through the OSS System.

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Franchise businesses are required to cooperate with local MSMEs as suppliers of goods and/or services and provide MSMEs with the opportunity to become franchisees, provided that the MSMEs meet the required standards set by the franchisor and advanced franchisors.