The Company Franchise Agreement is a crucial document used when establishing a franchise business relationship in Indonesia, governed by Indonesian law and specifically complying with Government Regulation No. 42 of 2007 on Franchising. This agreement is essential when a business (franchisor) wishes to grant another entity (franchisee) the right to use its business system, intellectual property, and brand in Indonesia. The document must address mandatory provisions required by Indonesian law, including local content requirements, registration with the Ministry of Trade, protection of intellectual property rights, and specific operational standards. It needs to balance international franchise practices with local regulatory requirements, particularly regarding foreign ownership restrictions, mandatory local partnerships, and territorial rights. The agreement typically includes comprehensive details about operational procedures, quality control measures, financial obligations, and dispute resolution mechanisms tailored to the Indonesian legal context.
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1. Parties: Identification of the franchisor and franchisee, including complete legal names, registration numbers, and authorized representatives
2. Background: Context of the agreement, brief description of the franchise system, and the parties' intentions
3. Definitions: Comprehensive definitions of terms used throughout the agreement
4. Grant of Franchise: Explicit grant of franchise rights, territory definition, and exclusivity terms
5. Term and Renewal: Duration of the agreement and conditions for renewal
6. Franchise Fees: Initial franchise fee, ongoing royalties, advertising contributions, and payment terms
7. Franchisor's Obligations: Support, training, operations manual, marketing assistance, and ongoing support obligations
8. Franchisee's Obligations: Operational standards, compliance requirements, reporting obligations, and maintenance of standards
9. Intellectual Property: Usage rights and restrictions for trademarks, trade secrets, and other IP
10. Training and Support: Initial and ongoing training requirements, support services, and assistance programs
11. Quality Control: Quality standards, inspection rights, and compliance requirements
12. Marketing and Advertising: Marketing requirements, advertising fund contributions, and promotional guidelines
13. Confidentiality: Protection of confidential information and trade secrets
14. Non-Competition: Competition restrictions during and after the agreement term
15. Reporting and Records: Financial reporting requirements, record-keeping obligations, and audit rights
16. Transfer and Assignment: Conditions for transfer of franchise rights and change of ownership
17. Termination: Grounds for termination, procedures, and consequences
18. Post-Termination Obligations: Obligations and restrictions following agreement termination
19. Dispute Resolution: Procedures for resolving disputes, including mediation and arbitration provisions
20. Governing Law: Application of Indonesian law and jurisdiction
1. Local Content Requirements: Required when the franchise must comply with specific Indonesian local content regulations
2. Foreign Investment Provisions: Needed when the franchise involves foreign investment or international parties
3. Multiple Unit Rights: Included when the franchisee has rights to develop multiple units
4. Development Schedule: Used when the agreement includes specific timing for opening multiple locations
5. E-Commerce Rights: Required when online sales or digital platforms are part of the franchise system
6. Halal Certification: Necessary for food and beverage franchises requiring halal compliance
7. Import Provisions: Required when the franchise involves importing products or materials
8. Currency Provisions: Needed when payments involve foreign currency transactions
1. Territory Map and Description: Detailed description and visual representation of the franchised territory
2. Initial Franchise Fee and Royalty Schedule: Detailed breakdown of all fees, payment schedules, and calculation methods
3. Brand Standards Manual: Guidelines for brand usage, visual identity, and marketing standards
4. Operating Manual Summary: Key provisions and requirements from the operations manual
5. Required Equipment and Supplies: List of approved equipment, suppliers, and specifications
6. Initial Training Program: Details of required initial training, duration, location, and content
7. Approved Products and Services: Comprehensive list of authorized products and services
8. Key Performance Indicators: Specific performance metrics and targets
9. Insurance Requirements: Detailed insurance coverage requirements and minimum limits
10. Form of Confidentiality Agreement: Template for confidentiality agreements with employees
11. Local Content Compliance Plan: Strategy and timeline for meeting local content requirements
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