Franchise Forum | Indonesia: Growth Limits on Food and Beverage Franchises

 


On February 15, 2013, the Ministry of Trade of Indonesia issued a new regulation limiting the growth of food and beverage franchises in the country. The Minister of Trade Regulation No. 07/M-DAG/PER/2/2013 on the Development of Partnership in Food and Beverages Franchise Business aims to prevent monopolies in the market and to encourage the growth of small- and medium-size enterprises (SMEs).

Under the new regulation, a single master franchisee will be limited to owning 250 operating outlets. Those master franchisees, currently with more than 250 operating outlets, must comply with the regulation within 5 years. In order to expand beyond this cap, they must either agree to open an outlet in certain remote locations to be determined later, or to invite a local third-party to become a partner and acquire an equity stake of 40 percent of a restaurant outlet worth less than or equal to Rp 10 billion (US $1.03 million), or 30 percent of an outlet worth more than Rp 10 billion.

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