Indonesia To End Franchise Business Monopoly

By Ahmad Fuad Yahya JAKARTA, Feb 15 (Bernama) -- Foreign franchising companies will soon be required to have more than one local partner in Indonesia under a new regulation which will come into effect sometime this month. The regulation, among others, requires foreign franchisors not to restrict their master franchisees and not to build their own outlets to avoid market monopolies and encourage more competition. Franchisees of foreign companies are currently controlled by a single "master franchisee", resulting in a monopoly, The Jakarta Post quoted Indonesian Trade Ministry domestic trade director-general, Gunaryo, as saying Wednesday. Gunaryo said the new regulation would also be applied to local franchises. Currently, many local franchises, such as convenience stores, still operate by building their own outlets and do not solely sell their trademarks to other parties. The report said the new regulation also centralises registration and issuance of franchise licences for both local and foreign businesses by the Trade Ministry. Currently, licences for local franchises are issued by local administrations, with permits for foreign franchises approved by the central government. The Indonesian Committee for Franchises and Licences data showed there were 1,114 local and foreign franchises in Indonesia as of late last year. The number is estimated to rise by 15 per cent this year, higher than 11 per cent annual average growth due to potential entrance of several foreign franchises from the United States, Malaysia, South Korea, China, Japan and Australia. -- BERNAMA