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31 Jul 2013
Franchise Registration Under Indonesian Law

                               

Franchise Registration Under Indonesian Law

According to Article 1 Government Regulation Number 42 year 2007 regarding Franchise (“GR 42/2007”), Franchise means Special rights are owned by individual or business entity concerning the business system with characteristics of business to market the goods and or services that have been proven successful and can be used and / or used by other parties under the franchise agreement.

If the Franchisor as the owner of franchise intends to provide franchise to the Franchisee, then there would be certain process concerning register franchise that have to be followed. The first process would be submitted the franchise offering prospectus by Franchisor to Minister of Trade, and following by given the Franchise Registration Certificate / Surat Tanda Pendaftaran Waralaba (“FRC”) to Franchisor. After Franchisor received a FRC, then Franchisee shall submit the Franchise Agreement to Minister of trade, and following by given the FRC to Franchisee. Pursuant to GR 42/2007 and Minister of Trade Regulation Number 31/M-DAG/PER/8/2008 year 2008 regarding Franchise implementation (“MoTR Reg 31/2008”), the process to register franchise from Franchisor to the Franchisee, are as follows :

Franchisor will submit the application for FRC to Minister of Trade.

Before Franchisor will execute the Franchise Agreement with the Franchisee, Franchisor shall submit the application and franchise offering prospectus to Minister of Trade. Franchise offering prospectus means writing information from Franchisor, which at least explains as follows :

1.    Franchisor’s Identity

2.    Legality of business Franchisor

3.    History of business Franchisor

4.    Structure of Organization of Franchisor

5.    Financial Statement for last 2 years

6.    Number of business place Franchisor

7.    List of Franchisee

8.    Rights and obligation of Franchisor and Franchisee (Article 7 (2) GR 42/2007)

Franchisor shall give the franchise offering prospectus to the candidate of Franchisee while offering the franchise, within minimum 2 (two) weeks before the execution of Franchise Agreement (Article 7 (1) GR 42/2007 jo Article 4 MoTR Reg 31/2008). If the franchise offering prospectus writing in foreign language, then it should be translated to Bahasa Indonesia. For foreign franchisor, the franchise offering prospectus shall be legalized by Notary Public by attaching a letter from the Trade Attache Republic of Indonesia or authorized representative in the State of Origin franchisor. (Article 17 MoTR Reg 31/2008).

The application of FRC will submitted to Minister of Trade, through the Directorate General of Domestic Trade for foreign franchisor and to the Provincial Trade Office for domestic franchisor. The application should be signed by owner, manager, or authorized person of Franchisor. The application could be submitted by third parties as it proxy, with attach power of attorney form Franchisor. The document which should be attached with application is based on the origin state of Franchisor.



Foreign Franchisor, the application should be attach with :

         1)  Copy of Franchise Offering Prospectus

         2)  Copy of business legality of Franchisor



Foreign re-franchisor, the application should be attach with :

1) Copy of Technical License

2) Copy of Franchise Offering Prospectus

3) Copy of Company Registry Certificate / Tanda Daftar Perusahaan

4) Copy of FRC as Franchisee

5) Copy of Deed of Establishment and/ Article of Association which have been legalized and approved from authorized institution

6) Copy of Intellectual Property Certificate

7) Copy of Identity card of owner/ management Company

 

Domestic Franchisor, the application should be attach with :

1)  Copy of Technical License

2)  Copy of Franchise Offering Prospectus

3)  Copy of Company Registry Certificate / Tanda Daftar Perusahaan

4)  Copy of Deed of Establishment and/ Article of Association which have been legalized and approved from authorized institution

5)  Copy of Intellectual Property Certificate

6)  Copy of Identity card of owner/ management Company



Domestic Re-franchisor, the application should be attach with :

1)  Copy of Technical License

2)  Copy of Franchise Offering Prospectus

3)  Copy of Company Registry Certificate / Tanda Daftar Perusahaan

4)  Copy of FRC as Franchisee

5)  Copy of Deed of Establishment and/ Article of Association which have been legalized and approved from authorized institution

6)  Copy of Intellectual Property Certificate

7)  Copy of Identity card of owner/ management Company



Franchisee will submit the application for FRC to Minister of Trade.

Franchisee shall submit the application of FRC to Minister of Trade, after the execution of franchise agreement. Franchise Agreement means agreement between Franchisor and Franchisee. Franchise Agreement shall contain as follows (Article 5 GR 42/2007):

1. Name and address of Franchisor and Franchisee

2. Type of Intellectual Property

3. Business Activity

4. Rights and Obligation of Franchisor and Franchisee

5. Assistance, facilities, operational guidance, training, and marketing will be provided by the franchisor to the franchisee

6. Domicile of business

7. Period of Agreement

8. Procedure of benefits payment to Franchisor

9. Ownership, change of ownership, and it heirs

10. Dispute Settlement

11. Procedure to extend and termination agreement

If the franchise agreement has been executed in foreign language, then it should be translated into Bahasa Indonesia. The parties of franchise agreement have an equal legal status and subject to Indonesian Law. The Franchise Agreement should be deliver to Franchisee, within minimum 2 (two) weeks before the execution of franchise agreement. (Article 5 MoTR Reg 31/2008)

The application of FRC will be submitted to Minister of Trade, through the Directorate General of Domestic Trade for foreign Franchisee and to the Provincial Trade Office for domestic franchisee. The application should be signed by owner, manager, or authorized person of Franchisee. The application could be submitted by third parties as a proxy of Franchisee, with attach power of attorney from Franchisee. Documents which should be attached with application for foreign franchisor, foreign re-franchisor, and domestic franchisor as follow :

1)  Copy of Technical License

2)  Copy of Franchise Offering Prospectus from Franchisor

3)  Copy of Franchise Agreement

4)  Copy of Company Registry Certificate / Tanda Daftar Perusahaan

5)  Copy of FRC as Franchisor

6)  Copy of Deed of Establishment and/ Article of Association which have been legalized and approved from authorized institution

7)  Copy of Intellectual Property Certificate

8)  Copy of Identity card of owner/ management Company

Pursuant to Article 18 (1) MoTR 31/2008, the Minister of Trade trough Directorate General of Domestic Trade and Provincial Trade Office will issue FRC within 3 (three) working days since they received the application for FRC, and they consider that all application materials is complete and sufficient. But if the application materials are not completed and sufficient, then the Minister of Trade trough Directorate General of Domestic Trade and Provincial Trade Office will issue rejection letter to applicant (Franchisor or Franchisee) within 3 (three) working days since they received the application. The Applicant which it application of FRC has been rejected, could re apply the application of FRC. There would be no charge for register the FRC (Article 19 MoTR Reg 31/2008)


Here is chart of procedures to register franchise pursuant to GR 42/2007 jo MoTR Reg 31/2008:


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