Franchise License Agreement Template for Indonesia

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Key Requirements PROMPT example:

Franchise License Agreement

"I need a Franchise License Agreement for my Indonesian food and beverage business, granting exclusive rights to operate in Jakarta and Surabaya, with a planned launch in March 2025 and including specific provisions for local ingredient sourcing and halal certification requirements."

Document background
The Franchise License Agreement serves as the foundational document for establishing a franchise business relationship in Indonesia. It is essential when a business owner (franchisor) wishes to expand their business through franchising, granting rights to another party (franchisee) to use their business system, trademarks, and operational methods. The agreement must comply with Indonesian franchise regulations, particularly Government Regulation No. 42 of 2007 and related ministerial regulations, which require specific provisions regarding local content, franchise registration (STPW), and mandatory use of the Indonesian language. This document details all aspects of the franchise relationship, including intellectual property rights, operational standards, territory rights, fees, and ongoing obligations of both parties. The Franchise License Agreement is crucial for protecting both parties' interests while ensuring regulatory compliance in the Indonesian market.
Suggested Sections

1. Parties: Identification of the franchisor and franchisee, including complete legal names, registration details, and addresses

2. Background: Introduction to the franchise system, brief history, and context of the agreement

3. Definitions: Comprehensive definitions of terms used throughout the agreement

4. Grant of Franchise: Specific rights granted to the franchisee, including territory and exclusivity provisions

5. Term and Renewal: Duration of the agreement and conditions for renewal

6. Franchise Fees and Payments: Initial franchise fee, ongoing royalties, advertising contributions, and payment terms

7. Intellectual Property Rights: Use of trademarks, trade secrets, and other intellectual property

8. Training and Support: Franchisor's obligations regarding initial and ongoing training and support

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

10. Marketing and Advertising: Marketing obligations, advertising requirements, and brand standards

11. Supply of Products and Equipment: Requirements for purchasing products, equipment, and supplies

12. Records and Reporting: Record-keeping requirements and reporting obligations

13. Inspection and Audit Rights: Franchisor's rights to inspect and audit the franchise operation

14. Confidentiality: Protection of confidential information and trade secrets

15. Non-Competition: Restrictions on competitive activities during and after the agreement

16. Transfer and Assignment: Conditions for transfer of franchise rights or ownership

17. Termination: Grounds for termination and termination procedures

18. Post-Termination Obligations: Obligations of both parties after termination

19. Dispute Resolution: Procedures for resolving disputes, including jurisdiction and venue

20. General Provisions: Standard legal provisions including notices, amendments, and governing law

Optional Sections

1. Development Schedule: Used when the franchise agreement includes multiple unit development rights or specific timeline requirements

2. Local Content Requirements: Required when the franchise must comply with specific Indonesian local content regulations

3. Currency and Exchange Rate Provisions: Important for international franchises dealing with multiple currencies

4. Force Majeure: Detailed force majeure provisions, particularly relevant in light of recent global events

5. Insurance Requirements: Detailed insurance obligations beyond standard operational requirements

6. Environmental Compliance: Required for franchises with significant environmental impact

7. Employee Training Standards: Detailed employee training requirements for complex operations

8. Digital Rights and E-Commerce: For franchises with significant online operations or digital components

Suggested Schedules

1. Schedule 1 - Territory Description: Detailed description of the granted territory including maps and boundaries

2. Schedule 2 - Initial Franchise Fee and Ongoing Payments: Detailed breakdown of all fees, royalties, and payment schedules

3. Schedule 3 - Marks and Intellectual Property: List of all trademarks, patents, and other intellectual property included in the franchise

4. Schedule 4 - Operating Manual Table of Contents: Overview of the operating manual contents (without disclosing confidential details)

5. Schedule 5 - Initial Training Program: Details of the initial training program, duration, and content

6. Schedule 6 - Equipment and Inventory Requirements: Specifications for required equipment and initial inventory

7. Schedule 7 - Approved Suppliers: List of approved suppliers and products

8. Schedule 8 - Insurance Requirements: Detailed insurance coverage requirements and minimum limits

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

10. Appendix B - Personal Guarantee Form: Standard form for personal guarantees if required

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

Relevant legal definitions
Clauses
Relevant Industries

Food and Beverage

Retail

Education and Training

Healthcare Services

Automotive Services

Hospitality

Personal Services

Business Services

Fashion and Apparel

Technology and Electronics

Fitness and Wellness

Entertainment and Recreation

Professional Services

Home Services

Relevant Teams

Legal

Operations

Business Development

Finance

Compliance

Brand Management

Training and Development

Quality Assurance

Commercial

Intellectual Property

International Business

Franchise Relations

Relevant Roles

Chief Executive Officer

Chief Operating Officer

Franchise Development Manager

Legal Counsel

Business Development Director

Operations Manager

Compliance Officer

Commercial Director

Brand Manager

Training Manager

Finance Director

Intellectual Property Manager

Regional Development Manager

Quality Assurance Manager

Franchise Relations Manager

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 general franchising principles
Minister of Trade Regulation No. 71 of 2019: Specific regulation on franchise implementation, including requirements for franchise registration (STPW), reporting obligations, and local content requirements
Indonesian Civil Code (KUHPerdata): Provides the basic legal framework for contracts and agreements in Indonesia, including formation, validity, and enforcement of contracts
Law No. 20 of 2016 on Marks and Geographical Indications: Governs trademark protection and licensing, crucial for franchise agreements involving brand and trademark usage
Law No. 30 of 2000 on Trade Secrets: Protects confidential business information and know-how, essential for franchise agreements involving proprietary information
Law No. 5 of 1999 on Competition: Regulates business competition and prohibits monopolistic practices, relevant for territorial restrictions and exclusivity clauses in franchise agreements
Law No. 24 of 2009 on National Flag, Language, Emblem and Anthem: Requires agreements involving Indonesian entities to be drafted in Indonesian language (bilingual versions permitted)
Minister of Trade Regulation No. 57 of 2014: Regulates the use of letters of intent in franchise agreements and preliminary agreements
Law No. 25 of 2007 on Investment: Relevant for foreign franchisors, governing foreign investment and business ownership in Indonesia
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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