New franchise regulations in Indonesia: A fine line between stimulating the local market and protectionism
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This article was first published in International Journal of Franchising Law - Volume 11 – Issue 1 – 2013
Indonesia's recent economic growth and the increasing wealth and size of the local market has seen a growing demand for foreign brands and a corresponding increase in international businesses entering the market through franchising. Franchising in Indonesia has been regulated since 1997. In recent years, foreign and domestic franchise systems have spread across a number of sectors, including retail, F&B, healthcare and the services sector. All foreign and domestic franchisors are required to register with the authorities for a franchising licence prior to appointing a local franchisee. However, recent changes to the franchise regulations contain some controversial and prima facie protectionist rules which may have an adverse impact on foreign brands wishing to do business in this important market.
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By Graeme Payne and Gordon Drakes, Field Fisher Waterhouse LLP, London