Franchisor Franchisee Agreement Template for Indonesia

A Franchisor Franchisee Agreement is the foundational legal contract that establishes and governs the business relationship between a franchisor and franchisee in Indonesia. This comprehensive document outlines the terms under which a franchisor grants rights to operate under their business system, use their trademarks, and access their proven business model within Indonesian jurisdiction.

When do you need this document?

You need this agreement when expanding your business through franchising in Indonesia or when acquiring franchise rights from an established franchisor. This document is mandatory for any franchise operation in Indonesia, as Government Regulation No. 42 of 2007 requires all franchise agreements to be properly documented and registered with Indonesian authorities. The agreement is essential whether you're a foreign franchisor entering the Indonesian market, a local business seeking to franchise domestically, or an entrepreneur looking to acquire franchise rights. You'll also need this document when renewing existing franchise relationships, modifying territorial arrangements, or when investors require formal franchise documentation for financing purposes.

Key legal considerations

Critical provisions include the grant of franchise rights and territorial exclusivity, which must be clearly defined to prevent conflicts and ensure market protection. Fee structures covering initial franchise fees, ongoing royalties, and marketing contributions must comply with Indonesian regulations and be transparently documented. Intellectual property clauses are vital, addressing trademark usage rights, trade secret protection, and compliance with Law No. 20 of 2016 on Marks and Geographical Indications. The agreement must include specific performance standards, quality control measures, and operational guidelines that maintain brand consistency while respecting local business practices. Termination clauses require careful consideration, including grounds for termination, notice periods, and post-termination obligations such as non-compete restrictions and return of confidential information.

Legal requirements in Indonesia

Indonesian franchise law mandates specific requirements that must be incorporated into every franchise agreement. Under Government Regulation No. 42 of 2007, franchisors must obtain a Franchise Registration Certificate (STPW) before entering into franchise agreements, and this registration must be referenced in the contract. The agreement must include mandatory local content provisions, requiring franchisees to source specific percentages of goods or services from Indonesian suppliers. Ministry of Trade Regulation No. 71 of 2019 requires disclosure of financial information, business experience, and operational support details within the agreement. The contract must be executed in Indonesian language or include certified translations, and certain provisions require notarization. Foreign franchisors must comply with investment regulations and may need to establish local entities or partnerships. The agreement must also address dispute resolution mechanisms, preferably specifying Indonesian courts or arbitration under Indonesian law to ensure enforceability.