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Franchising Law - Indonesia

August 2010 - Corporate & Commercial. Legal Developments by DNC .

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Indonesia’s franchise industry has been significantly developing in recent years. Dominated by small and medium companies, in 2009, Indonesian franchise’s yearly turnover reached US$ 9.5 billion and the number is still increasing to date. Recent research has expected yearly turnover to exceed US$ 10 billion by the end of 2010. The research also records domination of domestic franchise over foreign franchise distribution.

Despite the fast growth of the franchise market, it is still deemed not significant enough in affecting the interest of the public. This is why it is still governed under a government regulation level, a regulation one level below an act, and therefore no parliament approval is deemed required. The regulation, known as Government Regulation Number 42/2007 regarding Franchising (the Franchise Regulation 2007), was promulgated in the second semester of 2007. Before the Franchise Regulation 2007 comes into force, the franchising business was regulated under the Government Regulation Number 16/1997 and the Regulation of Minister of Trade Number 12/M-DAG/PER/3/2006 regarding Guidelines and Procedure for Issuance of Letter of Franchise Business Registration (both regulations shall be referred as to the Former Franchise Regulation). Read more...

Sigit Ardianto and Ibrahim Senen

DNC Law Firm

Jakarta, Indonesia