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Zantara AI
AI Business Advisor
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Zantara AI
AI Business Advisor
Bali Zero handles visas, company setup, tax and property compliance in Indonesia. Ask us directly on WhatsApp.
Chat with Bali Zero on WhatsAppFranchising is a popular business model in Indonesia. Here's what you need to know whether you're buying or selling franchises.
Franchises must be registered:
Operating without registration is illegal.
| Regulation | Covers |
|---|---|
| Gov Reg 42/2007 | Franchise definition, requirements |
| Minister Reg 71/2019 | Registration procedures |
| Trade Minister | Ongoing oversight |
What's popular in Indonesia
| Feature | F&B / Restaurant Food & Beverage | Retail Consumer goods | Education Learning centers | Services Various services |
|---|---|---|---|---|
| Investment | IDR 100M - 2B+ | IDR 200M - 1B+ | IDR 100M - 500M | IDR 50M - 500M |
| Popularity | Very high | High | High | Growing |
| Margins | Medium | Low-Medium | Medium-High | High |
| Examples | Cafes, fast food, bakeries | Convenience, specialty | Language, tutoring | Laundry, cleaning |
Requirements for foreign brands:
Foreign franchisors must adapt to Indonesian regulations.
| Requirement | Details |
|---|---|
| Local products | 80% for certain F&B items |
| Local partnership | May be required for some sectors |
| Local management | Indonesian involvement |
| Registration | In Indonesia |
| Factor | Check |
|---|---|
| Franchisor track record | Years in business, success rate |
| Financial requirements | Total investment, working capital |
| Territory rights | Exclusive? Protected? |
| Fees | Initial, ongoing royalties |
| Support provided | Training, marketing, operations |
| Exit options | Can you sell? Transfer? |
| Fee Type | Typical Range |
|---|---|
| Franchise fee | IDR 50M - 500M+ |
| Royalty | 3-8% of revenue |
| Marketing fee | 1-3% of revenue |
| Equipment | Variable |
| Initial inventory | Variable |
| Working capital | 3-6 months operating costs |
| Business Size | Recommended Structure |
|---|---|
| Single outlet | Can be individual or PT |
| Multiple outlets | PT recommended |
| Foreign franchisee | PT PMA required |
| Document | Purpose |
|---|---|
| Franchise Agreement | Main contract |
| Area Development | Multiple outlet rights |
| Sublicense | If sub-franchising |
| Lease | For premises |
| Supply agreements | Product sourcing |
| Step | Duration |
|---|---|
| Prepare documents | 2-4 weeks |
| Submit application | 1 week |
| Review by Trade Ministry | 2-4 weeks |
| STPW issued | Upon approval |
| Valid for | 5 years |
| Document | Details |
|---|---|
| Franchise prospectus | Business details |
| Franchise agreement | Sample contract |
| Proof of IP ownership | Trademark certificates |
| Company documents | Legal status |
| Operational manuals | System documentation |
What makes franchises work:
| Mistake | Consequence |
|---|---|
| Insufficient research | Wrong franchise choice |
| Undercapitalization | Cash flow problems |
| Ignoring location | Poor performance |
| Not following system | Inconsistent quality |
| Skipping registration | Legal issues |
| Poor staff training | Service problems |
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