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Franchise Contract Agreement

Franchise Contract Agreement Template for Indonesia

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Key Requirements PROMPT example:

Franchise Contract Agreement

"I need a Franchise Contract Agreement for my international coffee shop chain expanding into Indonesia, with provisions for halal certification requirements and rights to open 10 locations in Jakarta by March 2025."

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Document background
The Franchise Contract Agreement is a crucial legal document used when establishing a franchise business relationship in Indonesia. This agreement is specifically designed to comply with Indonesian franchise regulations, particularly Government Regulation No. 42 of 2007 and Minister of Trade Regulation No. 71/M-DAG/PER/8/2019. It is essential when a business owner (franchisor) wishes to grant rights to another party (franchisee) to use their business system, intellectual property, and operational methods in Indonesia. The document must address mandatory provisions required by Indonesian law, including local content requirements, language requirements, and specific protections for both parties. It's particularly important that the agreement includes provisions for regulatory compliance, registration with the Ministry of Trade, and adherence to Indonesian business practices while protecting the franchisor's intellectual property rights and maintaining operational standards.
Suggested Sections

1. Parties: Identification of the Franchisor and Franchisee with complete legal details

2. Background: Context of the franchise arrangement, brief description of the business concept, and acknowledgment of Franchisor's ownership rights

3. Definitions: Detailed definitions of key terms used throughout the agreement

4. Grant of Franchise: Specific rights being granted, territory limitations, and exclusivity provisions

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. Intellectual Property Rights: Usage rights for trademarks, patents, copyrights, and trade secrets

8. Training and Support: Initial and ongoing training obligations, operational support requirements

9. Operations Standards: Required operating procedures, quality standards, and compliance requirements

10. Supply Chain Requirements: Approved suppliers, local content requirements, and procurement procedures

11. Marketing and Advertising: Marketing obligations, advertising standards, and brand protection measures

12. Reporting and Inspection: Financial reporting requirements, audit rights, and inspection procedures

13. Confidentiality: Protection of confidential information and trade secrets

14. Non-Competition: Restrictions during and after the franchise relationship

15. Default and Termination: Events of default, remedies, and termination procedures

16. Post-Termination Obligations: Obligations and restrictions after agreement termination

17. Governing Law and Dispute Resolution: Choice of law, jurisdiction, and dispute resolution mechanisms

18. General Provisions: Standard boilerplate clauses including force majeure, notices, and amendments

Optional Sections

1. Master Franchise Rights: Include when granting rights to sub-franchise within specified territories

2. Development Schedule: Include when the agreement includes multiple unit development rights

3. E-commerce Rights: Include when online sales channels are part of the franchise arrangement

4. International Operations: Include for cross-border franchise arrangements

5. Language Requirements: Include specific section when agreement needs dual-language provisions

6. Religious Compliance: Include for businesses requiring halal certification or specific religious compliance

7. Data Protection: Include detailed provisions when franchise involves significant customer data handling

8. Environmental Compliance: Include when franchise operations have significant environmental impact

Suggested Schedules

1. Schedule 1: Franchise Territory: Detailed description and/or maps of the granted territory

2. Schedule 2: Initial Fees and Ongoing Payments: Comprehensive breakdown of all financial obligations

3. Schedule 3: Operating Manual Table of Contents: Overview of the operating manual contents without revealing confidential details

4. Schedule 4: Brand Standards: Specifications for use of trademarks, logos, and brand elements

5. Schedule 5: Initial Training Program: Details of required initial training curriculum and duration

6. Schedule 6: Approved Suppliers: List of approved suppliers and products

7. Schedule 7: Required Equipment and Specifications: Detailed list of required equipment and technical specifications

8. Schedule 8: Local Content Requirements: Specification of mandatory local content percentages and sources

9. Appendix A: Form of Confidentiality Agreement: Standard form for confidentiality agreements with employees

10. Appendix B: Personal Guarantee: Form of personal guarantee if required from Franchisee's principals

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Affiliate
Approved Suppliers
Approved Location
Business Day
Confidential Information
Commencement Date
Competing Business
Effective Date
Force Majeure
Franchise
Franchise System
Franchise Fee
Franchise Territory
Franchise Manual
Gross Sales
Intellectual Property Rights
Initial Term
Local Content Requirements
Licensed Marks
Marketing Fund
Operating Standards
Products
Proprietary Information
Renewal Term
Royalty Fee
Services
System Standards
Trade Secrets
Training Program
Territory
Term
Working Days
Operating Manual
Quality Standards
Registered Marks
Reporting Period
Required Equipment
Trade Dress
Termination Date
Transfer
Units
Brand Standards
Permitted Use
Governmental Authority
Marketing Materials
Initial Training
Ongoing Training
Approved Advertising
Competitive Business
Cure Period
Clauses
Recitals
Definitions
Grant of Rights
Territory
Term and Renewal
Fees and Payments
Training
Quality Control
Intellectual Property
Confidentiality
Non-Competition
Local Content Requirements
Supply Chain
Operations Standards
Brand Standards
Marketing and Advertising
Reporting Requirements
Audit Rights
Insurance
Indemnification
Assignment and Transfer
Termination
Post-Termination Obligations
Force Majeure
Dispute Resolution
Governing Law
Language Requirements
Notices
Entire Agreement
Severability
Amendment
Waiver
Third Party Rights
Relationship of Parties
Compliance with Laws
Anti-Corruption
Data Protection
Environmental Compliance
Religious Compliance
Labor Requirements
Representations and Warranties
Relevant Industries

Food and Beverage

Retail

Education and Training

Healthcare Services

Hospitality

Personal Services

Automotive Services

Fashion and Apparel

Technology and Electronics

Beauty and Wellness

Professional Services

Entertainment and Recreation

Relevant Teams

Legal

Operations

Finance

Business Development

Compliance

Brand Management

Training and Development

Supply Chain

Quality Assurance

International Business

Commercial

Relevant Roles

Chief Executive Officer

Managing Director

Legal Counsel

Franchise Development Manager

Operations Director

Business Development Manager

Compliance Officer

Commercial Director

Chief Financial Officer

Intellectual Property Manager

Training Manager

Quality Assurance Manager

Supply Chain Manager

Brand Manager

Regional Director

Industries
Government Regulation No. 42 of 2007 on Franchising: The primary regulation governing franchise businesses in Indonesia, covering registration requirements, obligations of franchisors and franchisees, and mandatory provisions in franchise agreements
Minister of Trade Regulation No. 71/M-DAG/PER/8/2019: Regulation on the Implementation of Franchising, detailing operational requirements, registration procedures, and reporting obligations for franchise businesses
Indonesian Civil Code (KUHPerdata): Provides the general legal framework for contracts and agreements, including basic principles of contract formation, validity, and enforcement
Law No. 20 of 2008 on Micro, Small and Medium Enterprises: Relevant for partnership provisions and local business development requirements in franchise arrangements
Law No. 5 of 1999 on Competition: Anti-monopoly and unfair business competition law that affects territorial restrictions and exclusive dealing arrangements in franchise agreements
Law No. 20 of 2016 on Trademarks and Geographical Indications: Crucial for protecting intellectual property rights in franchise arrangements, including trademarks and trade secrets
Minister of Trade Regulation No. 60/M-DAG/PER/9/2013: Regulation on Local Content Requirements, mandating the use of domestic products in franchise businesses
Law No. 24 of 2009 on National Flag, Language, Emblem and Anthem: Requires franchise agreements to be drafted in Indonesian language when involving Indonesian parties
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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