Master Franchise License Template for Indonesia

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Key Requirements PROMPT example:

Master Franchise License

"I need a Master Franchise License Agreement for an international coffee shop chain expanding into Indonesia, with rights to develop 50 locations across Java and Sumatra by January 2025, including sub-franchising rights and specific provisions for halal certification requirements."

Document background
The Master Franchise License Agreement is a crucial document for international franchisors seeking to expand their business into Indonesia through a master franchisee structure. This agreement type is particularly relevant when foreign companies want to establish their franchise system in Indonesia while complying with local regulations and market requirements. The document must adhere to Indonesian franchise laws, including Government Regulation No. 42 of 2007 and various Ministry of Trade regulations, which mandate specific local content requirements and registration procedures. The agreement covers comprehensive aspects of the franchise relationship, including territorial rights, development obligations, sub-franchising procedures, quality control measures, and operational standards. It's essential for establishing clear guidelines for brand protection, system development, and maintaining consistent standards across the franchise network within Indonesia.
Suggested Sections

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

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

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

4. Grant of Rights: Scope of master franchise rights, territory definition, and exclusivity provisions

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

6. Master Franchisee Development Obligations: Development schedule, minimum performance requirements, and territory development obligations

7. Sub-Franchising Rights and Obligations: Rights and procedures for granting sub-franchises, including approval processes and requirements

8. Fees and Payments: Initial fees, ongoing royalties, sub-franchising fees, and payment terms

9. Intellectual Property Rights: Usage of trademarks, trade secrets, and other intellectual property

10. Training and Support: Training obligations, ongoing support, and assistance requirements

11. Quality Control and Standards: Maintenance of brand standards, inspection rights, and compliance requirements

12. Marketing and Advertising: Marketing obligations, advertising requirements, and brand promotion

13. Confidentiality: Protection of confidential information and trade secrets

14. Non-Competition: Competition restrictions during and after the agreement term

15. Reporting and Audit Rights: Financial reporting requirements and audit provisions

16. Default and Termination: Events of default, termination rights, and consequences of termination

17. Post-Termination Obligations: Obligations and restrictions following agreement termination

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 assignment

Optional Sections

1. Currency and Exchange Rate Provisions: Required when dealing with international payments and currency fluctuations

2. Local Content Requirements: Specific section needed if the franchise involves retail or food service operations subject to Indonesian local content requirements

3. E-Commerce Rights: Required when online sales or digital platforms are part of the franchise system

4. Supply Chain Requirements: Needed when specific supplier relationships or product sourcing requirements exist

5. Data Protection and Privacy: Required when the franchise system involves significant customer data collection and processing

6. Environmental Compliance: Needed for franchises with significant environmental impact or specific environmental requirements

7. Halal Certification: Required for food and beverage franchises or products requiring Halal certification in Indonesia

Suggested Schedules

1. Territory Map and Description: Detailed description and visual representation of the granted territory

2. Development Schedule: Timeline and targets for opening sub-franchised units

3. Initial and Ongoing Fees: Detailed breakdown of all applicable fees and payment structures

4. Trademark Schedule: List of all registered and pending trademarks covered by the agreement

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

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

7. Operating Manual Table of Contents: Overview of the operating manual contents (full manual provided separately)

8. Form of Sub-Franchise Agreement: Template agreement to be used with sub-franchisees

9. Quality Control Standards: Detailed quality control and operational standards

10. Approved Suppliers: List of approved suppliers and products

11. Insurance Requirements: Detailed insurance coverage requirements and minimum limits

12. Initial Investment Schedule: Breakdown of required initial investment and working capital

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 & Beverage

Retail

Hospitality

Education & Training

Healthcare Services

Automotive Services

Fashion & Apparel

Beauty & Wellness

Home Services

Technology & Software

Entertainment & Recreation

Professional Services

Relevant Teams

Legal

Operations

Finance

Business Development

Compliance

International Business

Brand Management

Quality Assurance

Training

Commercial

Intellectual Property

Relevant Roles

Chief Executive Officer

Chief Operating Officer

Franchise Development Director

Legal Counsel

Commercial Director

Operations Manager

Business Development Manager

Compliance Officer

Brand Manager

Finance Director

International Business Director

Franchise Operations Manager

Quality Assurance Manager

Training and Development Manager

Intellectual Property Manager

Industries
Government Regulation No. 42 of 2007 on Franchising: The primary regulation governing franchise businesses in Indonesia, covering franchise registration requirements, obligations of franchisors and franchisees, and operational requirements
Minister of Trade Regulation No. 71 of 2019: Specific regulation on franchise implementation, including requirements for STPW (Franchise Registration Certificate) and mandatory local content requirements
Law No. 20 of 2016 on Marks and Geographical Indications: Governs trademark protection and registration, crucial for protecting the franchise's intellectual property rights
Indonesian Civil Code (KUHPerdata): Provides the basic framework for contract law and commercial relationships in Indonesia
Law No. 24 of 2019 on Creative Economy: Relevant for franchise businesses involving creative works and intellectual property
Law No. 5 of 1999 on Competition: Anti-monopoly and fair competition law that affects territorial restrictions and market division in franchise agreements
Law No. 25 of 2007 on Investment: Regulates foreign investment in Indonesian businesses, including franchise operations
Minister of Trade Regulation No. 57 of 2014: Regulates the use of letters of intent in franchise agreements and preliminary agreements
Law No. 13 of 2003 on Labor: Governs employment relationships and worker rights, relevant for operational requirements in franchise agreements
Law No. 40 of 2007 on Limited Liability Companies: Regulates corporate structures and governance for franchise entities operating as limited liability companies
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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