Indonesia gets tough on franchising rules
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A highly anticipated regulation that will end the monopoly in the franchising industry is set to be introduced next week, as well as another regulation that aims to centralise franchising legal permits, an Indonesian government official said.
The ministry’s domestic trade director-general Gunaryo said on Friday that the first regulation was aimed at encouraging healthy competition by requiring foreign franchisors to have more than one local
franchisee. “Over and over again, foreign franchisors appoint only one franchisee and thus prohibit them from opening sub-franchises. It shows a monopoly, and thus deviates from the concept of a franchise itself,” he said.
Gunaryo highlighted the operation of Japanese brands 7-Eleven and Lawson in Indonesia. He said PT Modern Putra Indonesia, a subsidiary of publicly listed PT Modern Internasional, the local franchise holder for 7-Eleven and publicly listed PT Midi Utama Indonesia, which operates Lawson convenience stores, had violated regulations because the outlets were registered as restaurants, but operating as convenience stores.
