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Master Franchise Agreement

Master Franchise Agreement Template for Indonesia

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Key Requirements PROMPT example:

Master Franchise Agreement

"I need a Master Franchise Agreement for our international coffee shop chain expanding into Indonesia, with rights for the master franchisee to develop 50 locations by 2025 and authority to grant sub-franchises across Java and Sumatra islands, ensuring compliance with local halal requirements."

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Document background
The Master Franchise Agreement serves as the foundational document for international franchisors entering the Indonesian market through a master franchisee structure. This agreement type is particularly crucial in Indonesia due to specific regulatory requirements under Government Regulation No. 42 of 2007 and Minister of Trade regulations governing franchise businesses. The document must be drafted in both Indonesian and any foreign language used, with the Indonesian version prevailing in case of conflict. The agreement comprehensively covers the rights and obligations of both parties, including territory development rights, sub-franchising authorities, fee structures, training requirements, and quality control measures. It also addresses specific Indonesian market requirements such as local content rules and mandatory franchise registration with the Ministry of Trade. The Master Franchise Agreement is essential for businesses seeking to expand their franchise operations in Indonesia while maintaining brand consistency and legal compliance.
Suggested Sections

1. Parties: Identification of the contracting parties - the master franchisor and master franchisee

2. Background: Context of the agreement, description of the business system, and brief history of the franchise

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

4. Grant of Rights: Scope of master franchise rights, territorial exclusivity, and sub-franchising rights

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

6. Fees and Payments: Initial fees, ongoing royalties, sub-franchising revenue sharing, and payment terms

7. Development Schedule: Minimum development obligations and timeline for opening units

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

9. Quality Control: Standards maintenance, inspection rights, and compliance requirements

10. Intellectual Property: Usage of trademarks, trade secrets, and other IP rights

11. Confidentiality: Protection of confidential information and trade secrets

12. Sub-Franchising: Rights and obligations regarding sub-franchise agreements

13. Reports and Records: Financial reporting requirements and record-keeping obligations

14. Marketing and Advertising: Marketing obligations, advertising funds, and promotional requirements

15. Insurance: Required insurance coverage and minimum limits

16. Transfer and Assignment: Conditions for transfer of rights and change of control

17. Termination: Grounds for termination and post-termination obligations

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

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

Optional Sections

1. Local Content Requirements: Section addressing Indonesian local content requirements - include if the franchise involves retail or product distribution

2. Currency and Exchange Rate: Specific provisions for handling currency fluctuations - important if fees are set in foreign currency

3. E-commerce Rights: Online sales and digital platform rights - include if relevant to the business model

4. Supply Chain Requirements: Specific provisions for product sourcing and supply chain - include for product-based franchises

5. Multi-Brand Operations: Provisions regarding operation of other brands - include if the master franchisee operates other businesses

6. Technical Support: Detailed IT and systems support provisions - include for technology-dependent franchises

7. Religious/Cultural Compliance: Specific provisions for ensuring compliance with Indonesian religious and cultural requirements - include for food/beverage or lifestyle businesses

Suggested Schedules

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

2. Development Schedule: Detailed timeline and targets for unit development

3. Initial and Ongoing Fees: Comprehensive fee structure including all applicable fees and calculations

4. Operations Manual Table of Contents: List of contents of the confidential operations manual

5. Brand Standards: Detailed specifications for brand usage and quality standards

6. Training Programs: Description of required initial and ongoing training programs

7. Approved Suppliers: List of approved suppliers and products

8. Form of Sub-Franchise Agreement: Template agreement for use with sub-franchisees

9. Required Insurance: Detailed insurance requirements and minimum coverage amounts

10. Financial Reporting Forms: Templates for required financial reports

11. Registered Trademarks: List of trademarks and their registration status in Indonesia

12. Initial Investment Summary: Breakdown of estimated initial investment requirements

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
Affiliate
Approved Products
Approved Suppliers
Business Day
Business System
Confidential Information
Development Schedule
Development Territory
Effective Date
Force Majeure Event
Franchise
Franchise Agreement
Franchise Business
Franchise Fee
Franchise Location
Franchise System
Gross Sales
Initial Fee
Initial Training
Intellectual Property Rights
Know-How
Local Content
Manual
Marketing Materials
Marketing Fund
Marks
Master Franchise
Master Franchise Rights
Master Franchisee
Master Franchisor
Master Territory
Minimum Performance Requirements
Net Revenue
Operating Standards
Operations Manual
Premises
Products
Proprietary Information
Quality Standards
Reporting Period
Royalty Fee
Services
Sub-Franchisee
Sub-Franchise Agreement
Sub-Franchise Fee
Sub-Franchise Rights
System Standards
Term
Territory
Trade Secrets
Training Program
Transfer
Unit
Working Day (Hari Kerja)
Year
Clauses
Grant of Rights
Territory
Term and Renewal
Fees and Payments
Development Obligations
Training
Quality Control
Intellectual Property
Confidentiality
Sub-Franchising Rights
Support Services
Marketing and Advertising
Supply Chain
Compliance
Records and Reporting
Audit Rights
Insurance
Non-Competition
Non-Solicitation
Transfer and Assignment
Change of Control
Default
Termination
Post-Termination
Force Majeure
Indemnification
Representations and Warranties
Local Content Requirements
Language Requirements
Registration Requirements
Dispute Resolution
Governing Law
Notices
Amendment
Severability
Entire Agreement
Waiver
Assignment
Third Party Rights
Counterparts
Relevant Industries

Food and Beverage

Retail

Hospitality

Education and Training

Healthcare Services

Automotive Services

Fashion and Apparel

Beauty and Wellness

Real Estate Services

Technology Services

Professional Services

Entertainment and Recreation

Relevant Teams

Legal

Finance

Operations

International Development

Commercial

Compliance

Brand Management

Training

Business Development

Intellectual Property

Relevant Roles

Chief Executive Officer

Chief Legal Officer

Chief Financial Officer

Head of International Development

Franchise Development Director

Legal Counsel

Commercial Director

Operations Director

Business Development Manager

Franchise Operations Manager

International Expansion Manager

Compliance Officer

Brand Manager

Training Manager

Finance Manager

Intellectual Property 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, local content requirements, and operational guidelines
Law No. 20 of 2016 on Marks and Geographical Indications: Governs trademark protection and licensing, crucial for protecting the franchise's intellectual property rights
Law No. 30 of 2000 on Trade Secrets: Protects confidential business information and know-how, essential for franchise operations and training materials
Law No. 5 of 1999 on Competition: Anti-monopoly and unfair business competition law, relevant for territorial restrictions and pricing policies in franchise agreements
Law No. 24 of 2009 on National Flag, Language, Emblem and Anthem: Requires agreements involving Indonesian parties to be drafted in Indonesian language alongside any foreign language version
Indonesian Civil Code (KUHPerdata): Provides the basic framework for contract law and obligations between parties
Law No. 25 of 2007 on Capital Investment: Regulates foreign investment in Indonesia, including restrictions and requirements for foreign franchisors
Law No. 7 of 2014 on Trade: General trade law affecting business operations and commercial relationships
Law No. 13 of 2003 on Employment: Labor law relevant for employment aspects within the franchise system and training requirements
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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