You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

March 9, 2015

Franchise Agreement Registration in Indonesia

Subscribe to Updates
Informed Counsel

With the biggest economy in ASEAN and the fourth-largest population in the world, Indonesia is an attractive location for franchisors. In this article, we will examine the process for registering franchise agreements in Indonesia, in order to provide guidance to those operating or planning to operate in this lucrative and highly competitive market.

The Governing Law

Government Regulation No. 42 of 2007 on Franchising, together with a few other regulations issued by the Ministry of Trade, set out the requirements to establish a franchise in Indonesia. For a business to be qualified as a franchise, it must have:

  1. specific business characteristics;
  2. proven records of profitability for at least two years; and
  3. written standards of the offered goods and/or services (franchise-offering prospectus).

In addition, business conduct must be teachable and capable of being applied by the franchisee, and the franchisor must be available for continuous support and must have registered any related intellectual property rights with Indonesia’s Directorate General of Intellectual Property. All relevant franchise agreements must also be completed and registered.

Franchise Agreement Registration

Upon entering into a franchise agreement, the franchisor must provide the franchisee with a franchise-offering prospectus (detailed disclosure). The franchise-offering prospectus must contain, among other details on the business and the franchising parties, a history of business activities, financial statements, lists of franchisees, and the rights and obligations of the franchisor and the franchisee.

The franchise-offering prospectus and the franchise agreement must be registered with the Ministry of Trade in order to obtain a franchise registration certificate (Surat Tanda Pendaftaran Waralaba/STPW). A franchisor (or an authorized proxy) must first submit a draft franchise agreement to the Ministry of Trade for its review. If the draft franchise agreement does not violate any local laws or regulations, the franchisor may proceed to file an application and register their franchise-offering prospectus in the Indonesian language with the Ministry of Trade. If the franchisor is a foreign entity, the prospectus must be legalized in the country of origin prior to registration in Indonesia and must be submitted together with a sworn translation. The prospectus must be filed at least two weeks before entering into an agreement with a franchisee.

Once the prospectus is registered, the franchisor and franchisee can enter into a franchise agreement. Franchise agreements, among other requirements, must be registered by each franchisee (or an authorized proxy) with the Ministry of Trade.

A franchise agreement must be executed on the basis of a written agreement between a franchisor and a franchisee, it must comply with Indonesia’s law, and it must be drawn up in the Indonesian language. Thus, if a franchise agreement is drafted in a foreign language, an Indonesian translation of the agreement must be provided alongside the original. In case of a dispute arising over the agreement, the Indonesian version shall prevail.

If everything is in order, the Ministry of Trade will issue a franchise registration certificate, which shall be valid for five years and extendable for another five years, subject to the period that the franchise agreement is effective. If the application is rejected, applicants are entitled to resubmit the application.

Sanctions for Failing to Comply

Government authorities can impose administrative sanctions on franchisors or franchisees in the following cases:

  • The franchisor fails to foster training, operational counseling of management, offerings, research and development, and the sustainability of a franchisee.
  • Either the franchisor or the franchisee fails to register the franchise-offering prospectus or the franchise agreement.

Administrative sanctions can be made in the following forms:

  1. Written Warnings: A warning in writing can be made once every two weeks for a total of three times, starting from the date of issuance of the previous warning.
  2. Fine: After the third written warning has been issued, a fine shall be imposed on franchisors that do not register the franchise-offering prospectus or on franchisees that do not register the franchise agreement. The maximum fine is IDR 100 million (approximately USD 8,333).
  3. Revocation of the Franchise’s Certificate of Registration: After the third written warning has been issued, the certificate of registration of the franchise shall be revoked from a franchisor if it is not fostering its franchisees.

Franchise Logo

An additional obligation under the law is that the franchise logo must be used at the location of the head office and outlets of the domestic franchisor. Franchisors and franchisees who have franchise registration certificates must use a franchise logo—otherwise, they may face sanctions from written warnings, leading up to suspensions and a revocation of the franchise registration certificate.

In addition to the overview provided above, there are numerous other factors and requirements involved in starting and operating a franchise business in Indonesia. Franchisors and franchisees need to have a clear understanding of the various steps in the process and their compliance requirements, as the responsible government authorities are keeping a watchful eye on this growing sector.

Download Full Article
Related Professionals

Practices

Corporate/M&A

Intellectual Property

Location

RELATED INSIGHTS​ 

July 6, 2026
Indonesia’s regulation on reporting online intellectual property (IP) infringement provides comprehensive procedural guidance for IP rights holders and their licensees in reporting online infringement complaints. Issued in December 2025 by the Ministry of Law as Regulation No. 47 of 2025 regarding Handling of Intellectual Property Infringement Reports in Electronic Systems, this regulation covers all types of IP rights. It also specifies documentation when reporting infringement, and lays out the procedures for examination, verification, and enforcement actions. Submission of Complaints Complainants may submit reports through the online system of the Directorate General of Intellectual Property (DGIP) or in person at the DGIP office. Complaints may also be filed through an authorized proxy. Under the regulation, complainants are required to provide the following information and documents: Personal details of the complainant; Brief description of the protected work or subject matter (i.e., type of IP and name or address of the infringing website, portal, account, or application, or a link to the location of the infringing content); Complete description of the alleged infringement; Certificate of registration or recordal of the relevant IP; Recordal of IP license agreement, if any; and Other supporting evidence. Verification and Examination Process Upon receiving a complaint, the responsible formality officer may request clarification or additional supporting documents. In the latter case, the complainant must then submit the necessary administrative documents within 14 days of the notification date. Once the documentation is deemed complete and sufficient, the case will be formally registered. Subsequently, the DGIP will establish a verification team to handle online IP violations, which will include the Civil Servant Investigator (PPNS), the Ministry of Communication and Digital Affairs, experts with relevant expertise in IP, and representatives from related associations such as AVISI (Indonesian Video Streaming Association). After examining the report, the team will prepare the Minutes
Read More
June 30, 2026
Customs recordation is an enforcement mechanism in Myanmar that enables intellectual property (IP) rights holders to seek prevention of the cross-border movement of infringing goods. The enactment of Myanmar’s IP laws in 2019 has enabled customs recordation for registered marks and copyrights under the Trademark Law 2019 and the Copyright Law 2019. By contrast, the Patent Law 2019 and the Industrial Design Law 2019 do not provide a practical framework for customs recordation, and accordingly such rights are not subject to the customs recordation regime. Under the Trademark Law 2019, rights holders may apply for customs recordation and may also ask the Customs Department to suspend the release of goods suspected of bearing counterfeit marks. Likewise, the Copyright Law 2019 allows for customs intervention in relation to pirated works. These provisions reflect Myanmar’s gradual alignment with international standards on border measures, although the implementation framework remains at a relatively early stage of development. Customs Recordation Pursuant to the Trademark Law 2019 and the Copyright Law 2019, the relevant authorities have issued customs rules concerning the protection of registered marks and copyrights. In practice, the process generally begins with the submission of an application to the Customs Department together with supporting documentation. This typically includes proof of registration in Myanmar; details of the rights holder, applicant, and any authorized representative; and a comprehensive description of the genuine goods. Product identification materials—such as photographs, packaging samples, and distinguishing features—are particularly important in helping customs officers identify suspected infringing goods. A recordation remains valid for two years from the date of approval. It may be renewed for additional two-year terms, provided that the renewal application is filed within the thirty days prior to expiry for marks and up to thirty days in advance of the expiry date for copyrights, in accordance with
Read More
June 24, 2026
Patent enablement requirements are provided under Article 102 of Vietnam’s Law on Intellectual Property (IP Law). In particular, a patent specification must “fully and clearly disclose the nature of the invention to such an extent that, based on the specification, a person having ordinary skill in the relevant art can implement the invention.” In pharmaceutical and biotechnology patents, this requirement is more complicated and subject to more rigorous assessment. The Patent Examination Guidelines (Guidelines) of the Intellectual Property Office of Vietnam (IP Office) were amended in March 2026 to introduce Annexes III and IV for the pharmaceutical and biotechnology sectors, in which Annex III provides detailed guidelines on the assessment of specification requirements. These amendments were made under a project for strengthening capacity in industrial property examination between the Japan International Cooperation Agency (JICA) and the IP Office. Annex III provides detailed instructions on how examiners assess enablement in a pharmaceutical or biotechnology application, and offers examples of acceptable and unacceptable descriptions with regard to the enablement aspect. Enablement Requirements in Pharma and Biotech Patents Article 12.7 of Circular 10/2026/TT-BKHCN (Circular 10) adds to the requirements of Article 102 of the IP Law that the description must demonstrate the novelty, inventive step, and industrial applicability of the technical solution. For pharmaceutical composition subject matters, Article 12.9 of Circular 10 sets out that the description must present the results of clinical trials and/or the pharmacological effects of the claimed pharmaceutical composition, and must include at least the following information: Substance/mixture used. Testing method (system) employed. Information on the test results. Correlation between the pharmacological effects obtained from the tests and the application of the pharmaceutical product in the prevention, diagnosis, and treatment of diseases. The Guidelines note that pharmacological study results should be presented in a quantified manner, and pharmacological
Read More
June 23, 2026
Thailand’s Board of Investment (BOI) has significantly revised its post-approval compliance framework for projects that receive investment promotion incentives, replacing the previous semiannual reporting system for project progress with a new quarterly reporting regime. The initial report is due by July 30, 2026, covering the second-quarter reporting period of April to June 2026. The new requirements—implemented through BOI Announcement No. 8/2569 and Office of the BOI Notification No. Por. 8/2569, both of which became effective on March 30, 2026—apply both to newly promoted projects and to existing promoted projects that remain in the implementation stage. Background Under the previous reporting framework, BOI-promoted companies that had not yet commenced full operations were generally required to submit reports on project progress to the BOI twice a year (February and July) through the BOI’s e-Monitoring system. By adopting a quarterly reporting regime, the BOI seeks to strengthen monitoring and evaluation of investment progress and project implementation. Reporting Requirements Under the new regulations, BOI-promoted companies must submit project progress reports on a quarterly basis during the implementation phase of a promoted project. The reporting periods and submission deadlines are: Q1 (January–March): April 30 Q2 (April–June): July 30 Q3 (July–September): October 30 Q4 (October–December): January 30 of the following year The quarterly reporting obligation runs from the date the BOI promotion certificate is issued until the BOI grants approval for commencement of full operations. For newly promoted projects, no quarterly report is required for the quarter in which the BOI promotion certificate is issued—the first reporting obligation arises in the immediately following reporting period. All project progress reports must be submitted electronically through the BOI’s e-Monitoring system. The existing annual reporting requirement also remains in effect, requiring promoted companies to submit an annual operating results report through the e-Monitoring system by July 31 of
Read More