On 18 June 1997, the Indonesian Government issued Government Regulation No. 16/1997, which relates specifically to franchising. This Regulation requires disclosure and the registration of both the franchise agreement and the disclosed information with the Ministry of Industry and Trade. Implementing regulations were adopted in July that same year by the Minister of Industry and Trade.1 Many of the provisions of the Decree take up the same issues as the Regulation, but in more detail. On 29 March 2006 a new Regulation, which revokes the 1997 Decree, was adopted. The 1997 Regulation is still in force.2
In addition to the disclosure requirements that are specified in Article 5 of Regulation 12 of 2006 and the further specification of the clauses that a franchise agreement must include contained in Article 6, the Regulation provides that a foreign franchisor must possess legal evidence from an authorised government agency in its country of origin,3 and this legal evidence must be acknowledged by the local official of the representative office of the Republic of Indonesia.4 Similarly, a domestic franchisor must possess a business licence issued by the relevant technical department or institution.5 The Regulation also establishes the procedure for the franchisee’s registration of the franchise agreement and the issuing on the part of the Government of a Franchise Business Registration Certificate6 (Articles 11 to 15). The Regulation specifically states that those of its provisions that relate to the franchisor shall apply also to the sub-franchisor.7 A desire to promote local business may be seen in the provision that registration is conducted in the interest of franchise development,8 and in the entitlement of a STPUW holder to specified Government services such as consultancy assistance.9
1 Decree of the Minister of Industry and Trade Concerning the Provisions on and the Procedure for the Implementation of Franchised Business Registration, Decree of the Minister of Industry and Trade No. 259/MPP/Kep/7/1997, of 30 July 1997. For an English version, see CCH, Business Franchise Guide, at ¶ 7145.
2 Regulation of the Minister of Trade No. l2/M-DAG/PER/3/2006 of 29 March 2006 regarding the Provisions and Procedures for the Issuance of a Franchise Business Registration Certificate.