Key Takeaways<\/p>\n
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- Franchising in Indonesia is now governed by Government Regulation No. 35 of 2024, which replaced the older PP 42\/2007, with Permendag 71\/2019 still setting out the detailed registration procedure.<\/li>\n
- Your trademark must be registered (or at least filed) with DJKI before you can apply for the STPW. Franchising an unregistered brand in a first-to-file country is a direct path to losing it.<\/li>\n
- You have two legal routes to operate: set up your own PT PMA, or license your brand to a local master franchisee. Both still require the STPW.<\/li>\n
- Once registered, franchisors and franchisees owe an annual activity report through OSS, generally due by June 30 each year.<\/li>\n<\/ul>\n<\/div>\n
What Counts as a Franchise Under Indonesian Law?<\/h2>\n
![\"How](\"http:\/\/investinasia.id\/blog\/wp-content\/uploads\/2023\/07\/food-franchise.jpg\")
How to Register and Operate a Foreign Franchise Brand in Indonesia (pexels)<\/figcaption><\/figure>\n Under Government Regulation No. 35 of 2024 on Franchising, a franchise (waralaba) is a special right held by an individual or business entity over a business system with a distinctive characteristic, proven to succeed, and made available to another party for use under a Franchise Agreement. That “distinctive characteristic” (ciri khas usaha) is the legal test: your business format needs something a competitor cannot easily copy, and a customer base that specifically seeks it out, whether that is a menu, a training system, or a way of operating outlets.<\/p>\n
PP 35\/2024, issued on September 2, 2024, replaced Government Regulation No. 42 of 2007, which had governed franchising for 17 years. This matters because a fair amount of guidance still online treats PP 42\/2007 as current, and it is not. What survived the change is Minister of Trade Regulation No. 71 of 2019 (Permendag 71\/2019), which sits underneath the new PP and still handles the practical registration mechanics: the prospectus content, the STPW process, and reporting obligations. If your legal advisor is quoting the 2007 regulation as your primary authority, that is worth flagging.<\/p>\n
Also Read:<\/strong> What Is a Franchise Business: Definition and How It Works<\/a><\/p>\n
Do You Need a PT PMA, or Can a Local Master Franchisee Operate Your Brand?<\/h2>\n
Foreign franchisors have two workable structures under Indonesian law, and the choice shapes everything downstream: capital commitment, control, and how fast you can move.<\/p>\n
Setting Up Your Own PT PMA<\/h3>\n
A PT PMA (foreign-owned limited liability company) lets you own and operate franchise outlets directly, hire your own staff, and hold the STPW in your own name as either the franchisor or as a Pemberi Waralaba Lanjutan (continuing franchisor) if you are the master licensee of a global brand entering through Indonesia. It requires a minimum paid-up capital of IDR 2.5 billion under BKPM Regulation No. 5 of 2025, at least two shareholders, and a KBLI code that sits within a sector open to foreign ownership under the Positive Investment List. This route gives you the most control, and it is the standard path when the brand owner wants direct oversight of quality standards in a new market.<\/p>\n
Also Read:<\/strong> What Is a PT PMA? Indonesia’s Foreign-Owned Company Explained for Investors<\/a> and the Indonesia Positive Investment List<\/a> to confirm your sector is open to full foreign ownership.<\/p>\n
Licensing to a Local Master Franchisee<\/h3>\n
Alternatively, you can license your brand to an Indonesian company that becomes your master franchisee, taking on the right to operate and sub-franchise your concept within Indonesia. This lowers your upfront capital exposure, since the Indonesian partner funds the local entity, but it means you are relying on that partner’s execution and reputation. Whichever direction you go, the franchisor’s obligations under Permendag 71\/2019 (the prospectus, the written agreement, the IP registration) do not change. Only who is executing them locally changes.<\/p>\n
\nNotes from InvestinAsia Consultants<\/p>\n
Foreign brand owners often default to a master franchisee structure because it looks cheaper on paper. In practice, we see this decision made too quickly, before anyone has checked whether the target sector is actually open to full foreign ownership or capped. If your category allows 100% foreign ownership, a PT PMA usually gives you more long-term protection over your brand standards than handing full local operating control to a partner you have not worked with before.<\/p>\n<\/div>\n
Why Your Trademark Must Be Registered Before You File for an STPW<\/h2>\n
Indonesia runs on a first-to-file trademark system, not first-to-use. That means someone else can register your brand name in Indonesia before you do, and legally hold the rights to it, regardless of how long you have used it elsewhere. Permendag 71\/2019 requires franchisors to show proof of ownership or lawful use of the intellectual property being franchised, and that proof, in practice, is your Indonesian trademark filing or registration.<\/p>\n
Filing through DJKI takes roughly three months for an uncontested application under Minister of Law Regulation No. 5 of 2026, though contested filings run considerably longer. Because franchising exposes your brand name publicly through a prospectus, marketing, and outlet signage well before that registration completes, the practical rule is to file for trademark protection as early in your Indonesia planning as possible, ideally before you approach any prospective franchisee or master licensee.<\/p>\n
Also Read:<\/strong> How to Register a Trademark in Indonesia: Guide to Protect Your Brand as a Foreign Business<\/a><\/p>\n
What Are the STPW Requirements for a Foreign Franchisor?<\/h2>\n
The Franchise Registration Certificate (STPW) is the document that makes your franchise legal to offer or operate in Indonesia, and it applies equally to local and foreign franchisors, franchisees, and any sub-franchisors in the chain. To obtain one, a foreign franchisor generally needs to show:<\/p>\n
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- A proven, profitable business system, with a track record of successful operation.<\/li>\n
- Clear ownership or licensed use of the brand’s intellectual property, meaning your trademark filing or registration.<\/li>\n
- A Franchise Offering Prospectus disclosing the business model, financial history, obligations, and any existing franchisee network.<\/li>\n
- A written Franchise Agreement governed by Indonesian law.<\/li>\n<\/ul>\n
The exact length of operating history required has changed with the new regulation. Under PP 42\/2007, franchisors generally needed around five years of documented experience. PP 35\/2024 simplified this criterion, and some current guidance on F&B franchises puts the bar closer to three years of profitable operation. Because this figure sits inside implementing guidance that can shift, confirm the current threshold with OSS or your legal advisor at the time you file, rather than relying on a fixed number from an older article.<\/p>\n
The prospectus must reach your prospective franchisee at least two weeks before the Franchise Agreement is signed, and if it is originally drafted in a foreign language, it needs an official Indonesian translation. The STPW itself is filed through OSS: for a foreign franchisor, the application processes directly in the OSS system; for local franchisees receiving a foreign brand, the application routes through Inatrade for verification by the Ministry of Trade.<\/p>\n
Which KBLI Code Applies to a Franchise Business?<\/h2>\n
Every business activity registered in Indonesia needs a KBLI code (Klasifikasi Baku Lapangan Usaha Indonesia), and a franchise typically needs two: one for the licensing activity itself, and one for the underlying business you actually operate. The licensing side is commonly classified under the code covering the granting of rights to use trademarks and business systems (KBLI 77400 under the 2020 classification). Your operating business gets its own code based on what it actually does: a restaurant franchise uses a food-service code such as 56101, a retail franchise uses a retail code, and so on.<\/p>\n
This matters more than it looks. As of December 18, 2025, Indonesia’s active classification framework is KBLI 2025, introduced under BPS Regulation No. 7 of 2025. Companies still registered under KBLI 2020 codes have until June 18, 2026, to update, and several codes commonly used by foreign investors have been split, renamed, or removed entirely in the new system. Registering under a stale code creates the same problem whether you are franchising or not: your OSS filing gets flagged, your NIB is delayed, or your licensing does not match what your Articles of Association actually authorize you to do.<\/p>\n
Also Read:<\/strong> Indonesia KBLI Codes: How to Choose the Right One for Your PT PMA<\/a><\/p>\n
\nNotes from InvestinAsia Consultants<\/p>\n
We regularly see franchise applicants pick a KBLI code that describes the underlying business, like the restaurant code, and skip the separate licensing code entirely. OSS does not reject this outright, but it creates a mismatch when the Ministry of Trade later reviews the STPW application, because the system does not see a registered activity that matches “franchising” as such. Getting both codes right at incorporation saves a deed amendment later.<\/p>\n<\/div>\n
\nNot Sure Whether You Need a PT PMA or a Master Franchisee?<\/p>\n
InvestinAsia reviews your sector, brand, and target structure before you file anything.<\/p>\n
See Franchise Registration Services<\/a><\/div>\n<\/div>\nOr chat with our team on WhatsApp<\/a><\/div>\n<\/div>\nWhat Has to Be in the Franchise Agreement and Prospectus?<\/h2>\n
Permendag 71\/2019 sets specific content requirements for both documents. The Franchise Agreement must be written in Indonesian and made between parties on equal legal footing, subject to Indonesian law. It typically covers the scope of rights granted, territory, term, operating standards, training, royalty structure, supply arrangements, audit rights, and termination conditions.<\/p>\n
The prospectus, meanwhile, has to disclose enough for a prospective franchisee to make an informed decision: the franchisor’s identity and business history, intellectual property status, financial condition, the existing franchise network, and the rights and obligations of both parties. If the source document exists in English or another language first, which is common for a foreign brand, it needs official translation into Indonesian, and that translated version is what gets filed.<\/p>\n
One detail that trips up first-time foreign franchisors: because the prospectus must reach the prospective franchisee at least two weeks before signing, and the trademark ideally needs to already be filed by that point, the realistic sequence is trademark first, then entity or partner structure, then prospectus and agreement drafting, then STPW filing. Trying to compress that timeline usually means redoing paperwork.<\/p>\n