How to Register a Franchise in Indonesia

Last Updated: December 2, 2024

How to Register a Franchise in Indonesia: A Step-by-Step Guide

Indonesia, with its vibrant economy and large consumer base, is an attractive market for franchise businesses. Whether you’re an international franchisor looking to expand or a local entrepreneur aiming to establish your brand, registering a franchise in Indonesia is a crucial step. Here’s a simple guide to help you navigate the process.

Why Registering Your Franchise is Important

Franchise registration ensures compliance with Indonesian law, particularly Government Regulation No. 42 of 2007 on Franchising. Registration legitimizes your business, protects intellectual property, and builds trust with potential franchisees. It also helps you avoid legal penalties and operate smoothly in the market.

Steps to Register a Franchise in Indonesia

1. Prepare Your Franchise Offering Prospectus (FOP)

The FOP is a critical document that provides detailed information about your franchise. It includes:

Business description
Financial performance
Rights and obligations of the franchisor and franchisee
Franchise agreement details

Ensure the FOP complies with Indonesian legal requirements and is available in Bahasa Indonesia.

2. Obtain a Franchise Certificate of Registration (STPW)

The STPW (Surat Tanda Pendaftaran Waralaba) is mandatory for all franchise businesses in Indonesia. To apply for it, submit your FOP and other required documents to the Ministry of Trade.

Required documents:

FOP
Franchise agreement (draft or final version)
Business License (NIB)
Taxpayer Identification Number (NPWP)
Intellectual Property Rights certificates for trademarks and logos

3. Comply with Local Content Requirements

Indonesian law requires franchises to use locally sourced goods or services whenever possible. Ensure that at least 80% of your franchise materials are sourced locally to meet this requirement.

4. Draft a Franchise Agreement

Your franchise agreement should clearly define the terms and conditions of the partnership. It must include:

Duration of the franchise
Territorial rights
Fee structure
Training and operational support
Termination and dispute resolution mechanisms

The agreement must be written in Bahasa Indonesia and adhere to Indonesian laws.

5. Submit to the Online Single Submission (OSS) System

All business licenses and franchise registrations in Indonesia are now managed through the OSS system. Create an account, upload the necessary documents, and track the progress of your registration online.

6. Pay the Required Fees

While the exact fees may vary depending on your business size and type, ensure you’ve budgeted for the application and administrative costs.

7. Wait for Approval

Once all documents are submitted and the fees are paid, the Ministry of Trade will review your application. Upon approval, you’ll receive your STPW, which will allow you to operate your franchise legally.

Tips for a Smooth Registration Process

Hire a Local Consultant: Navigating Indonesian bureaucracy can be complex. A local consultant familiar with franchise laws can expedite the process.
Understand Tax Regulations: Ensure you comply with Indonesia’s taxation system, including VAT and income tax on franchise royalties.
Protect Your Intellectual Property: Register your brand, trademark, and other IP rights in Indonesia to prevent unauthorized use.