Franchise in Indonesia is undergoing explosive growth, driven by a rising middle class, increasing disposable income, and rapid urbanization across major cities like Jakarta, Surabaya, Bali, and Medan. As local consumers seek modern experiences in food, retail, education, and health, both global and regional franchise brands are racing to capture market share.
From Korean dessert bars and boutique fitness studios to international coffee chains and language schools, franchise in Indonesia spans nearly every lifestyle segment. For foreign investors, the country presents both opportunity and complexity. While demand is high, the right business structure—PT PMA (foreign-owned company) vs. local nominee structure—can make or break long-term success.
Choosing the wrong setup could expose you to compliance issues, limited control, or missed market potential. This article dives into the legal and practical differences between PT PMA and local company setups, giving you a step-by-step framework for entering Indonesia’s booming franchise sector the right way—from registering with OSS to obtaining your STPW license.
Whether you're planning a master franchise or a single outlet, it pays to understand what structure aligns with your goals—and what risks to avoid.
To operate a franchise in Indonesia, understanding the legal foundation is crucial. The core regulation is Government Regulation No. 42/2007 on Franchising, which outlines the obligations of franchisors and franchisees, including foreign-owned PT PMAs. This regulation is further enforced through Minister of Trade Regulation No. 71/2019, which governs the implementation of the franchise registration process.
Key terms defined under the regulation include:
A critical requirement for any franchise in Indonesia is the STPW (Surat Tanda Pendaftaran Waralaba), or Franchise Registration Certificate. Whether you are a local entity or a PT PMA, this certificate is mandatory before offering or advertising a franchise. It must be obtained from the Ministry of Trade, and it confirms that your franchise meets all Indonesian regulatory standards.
The registration process includes submitting a Franchise Offering Prospectus (disclosure document), proof of operational success (typically shown via audited financials and standard operating procedures), and a copy of the franchise agreement. Foreign franchisors must have their documents legalized and translated into Bahasa Indonesia.
Complying with these requirements protects both franchisors and franchisees, and ensures your franchise in Indonesia operates lawfully from day one.
Choosing the right business structure is a critical step when entering the franchise in Indonesia market. The two most common options for foreign investors are establishing a PT PMA (foreign-owned company) or partnering with a local Indonesian company.
A PT PMA (Perseroan Terbatas Penanaman Modal Asing) allows foreign investors to hold shares in an Indonesian company. This structure is suitable for foreign franchisors or master franchisees who want direct control over their operations. However, investment in a franchise in Indonesia through a PT PMA is subject to the current Risk-Based Approach (RBA) implemented via the OSS (Online Single Submission) system, which replaced the old Negative Investment List.
While many franchise sectors, such as education, fitness, and retail, are open to full or majority foreign ownership, others—particularly in the food and beverage (F&B) sector—may have restrictions. For example, certain F&B sub-sectors require joint ventures, with a maximum of 67% foreign ownership depending on the risk classification and capital requirements. These policies are dynamic and must be verified on the OSS portal or with legal advisors.
On the other hand, a local company, which is 100% Indonesian-owned, offers another route to operate a franchise in Indonesia. Many foreign brands choose to grant a master franchise to a local partner, who then operates or sub-franchises the business under licensing agreements. This approach enables market access without establishing a PT PMA and often benefits from smoother compliance and local market understanding.
Each model has its trade-offs. PT PMA offers control and direct ownership but comes with more complex licensing, capital requirements, and potential limitations. A local partner arrangement, while less direct, can accelerate growth and mitigate regulatory risk.
Ultimately, the best approach depends on your business goals, industry, and risk appetite. Either way, knowing the legal landscape is essential for a successful franchise in Indonesia.
Operating a franchise in Indonesia—whether through a local company or a PT PMA—requires compliance with specific legal and licensing regulations. The key instrument governing franchise operations is the STPW (Surat Tanda Pendaftaran Waralaba), or Franchise Registration Certificate, issued by the Ministry of Trade.
Both Indonesian-owned companies and PT PMAs must obtain an STPW before they can legally offer or operate a franchise in Indonesia. This applies to all sectors—F&B, retail, education, and others—regardless of whether the franchisor is foreign or local.
One of the main requirements for STPW registration is the submission of a Franchise Disclosure Document (FDD). This document outlines detailed information about the franchise system, obligations, fees, training, and operational standards. It must be officially translated into Bahasa Indonesia and legalized by a public notary. Without a properly submitted FDD, an STPW application cannot proceed.
If the franchise in Indonesia involves a foreign brand, the Intellectual Property (IP) license agreement must also be notarized and translated. This agreement confirms that the local entity—whether a PT PMA or local company—has the right to use the franchisor’s trademarks and proprietary systems in Indonesia. This is essential for brand protection and legal operation under the franchise law.
All registrations are now handled digitally through the OSS (Online Single Submission) system and the Ministry of Trade portals. This centralized process streamlines licensing but also demands accuracy, as errors or incomplete documents can delay approvals.
Additionally, PT PMAs are subject to LKPM (Laporan Kegiatan Penanaman Modal)—regular investment activity reports submitted quarterly or semi-annually. This is a critical compliance step under the Risk-Based Licensing framework. Failing to submit LKPM can result in administrative sanctions or even suspension of business licenses.
In summary, starting a franchise in Indonesia involves more than just a brand name—it requires robust legal preparation, accurate documentation, and timely reporting to maintain compliance and avoid penalties.
Foreign entrepreneurs exploring franchise in Indonesia through a PT PMA (foreign-owned company) will find a range of high-potential sectors, particularly in lifestyle, F&B, and services. These industries not only align with consumer demand but are also generally open to foreign ownership under the current Risk-Based Business Licensing system.
F&B (Food & Beverage) remains the most active and competitive franchise segment. International café chains, bubble tea brands, ice cream kiosks, and fast-casual dining concepts have seen massive growth. Demand is high in urban centers like Jakarta and Bali, but even more promising in emerging markets such as Lombok, Surabaya, and Makassar—where consumers are seeking modern lifestyle experiences.
In the beauty & wellness sector, hair salons, skincare clinics, and aesthetic treatment centers are expanding rapidly. These businesses offer strong brand loyalty and repeat visits, making them ideal for foreign franchisors seeking reliable revenue streams in Indonesia.
The education sector is also gaining traction, especially for franchises offering language learning, early childhood enrichment, and digital literacy (e.g., coding and STEM classes). With Indonesia’s young population and emphasis on education, this is an attractive space for PT PMA investors.
Fitness & lifestyle franchises—including gyms, boutique fitness studios, and yoga centers—are tapping into growing wellness awareness among Indonesia’s middle class. Foreign-owned fitness brands have a unique appeal and are welcome in malls and high-traffic commercial hubs.
Most of these franchise in Indonesia opportunities are fully or partially open to foreign investors through a PT PMA structure. Choosing the right sector and location can make a substantial difference in profitability—especially when targeting untapped secondary cities with growing disposable incomes.
Investing in a franchise in Indonesia through a PT PMA offers strong potential, but foreign investors must approach it with caution and strategic risk management. Several key areas require careful attention to avoid legal and financial pitfalls.
Due diligence is essential before entering any franchise agreement. Always verify the franchisor’s legal status, STPW (Franchise Registration Certificate), and track record. An unregistered or unverified franchisor could result in non-compliance issues, delays, or legal disputes. Review their Franchise Disclosure Document (FDD) thoroughly and confirm its accuracy with local authorities.
Beware of exclusivity traps in master franchise agreements. While exclusivity can provide market protection, overly restrictive clauses may hinder future growth, limit flexibility, or trap the investor in underperforming partnerships. All franchise contracts should be reviewed by a legal expert experienced in franchise in Indonesia.
Local partnerships are often necessary—especially if a foreign investor uses a nominee structure or collaborates with an Indonesian-owned entity. However, without clear contractual safeguards, there is a risk of losing brand control, profit share, or decision-making authority. Protecting intellectual property and ensuring performance clauses are clearly outlined is vital.
Tax and compliance obligations must also be respected. A PT PMA franchise in Indonesia is required to submit monthly tax reports—even during inactive months. Late filings can result in significant penalties. Ensuring timely and accurate compliance is non-negotiable.
To manage all of these risks effectively, foreign investors should work with a qualified legal and tax advisor familiar with franchise regulations, investment law, and the OSS (Online Single Submission) system.
Solid preparation and professional guidance are key to a secure and successful franchise in Indonesia investment journey.
Setting up a franchise in Indonesia through a PT PMA requires navigating several legal and administrative steps. A clear roadmap helps ensure full compliance with Indonesian laws and a smooth market entry.
1. Define Your Business Activity Classification (KBLI)
The process begins with selecting the correct KBLI code (Klasifikasi Baku Lapangan Usaha Indonesia) via the OSS (Online Single Submission) system. This determines whether your business activity is open to foreign investment and what ownership limits apply.
2. Prepare Your Franchise Disclosure Document (FDD)
Your franchisor must provide a complete and legalized FDD in Bahasa Indonesia. This document outlines the franchise structure, obligations, fees, and financial projections. It's a mandatory requirement for registering a franchise in Indonesia.
3. Secure Your STPW and IP Licensing
Apply for the Surat Tanda Pendaftaran Waralaba (STPW) from the Ministry of Trade. If the brand is foreign-owned, you must also notarize and translate the intellectual property license agreement into Indonesian.
4. Establish Your PT PMA via Notarial Deed
Work with a notary to create the Deed of Establishment and Articles of Association for your PT PMA. Submit the documents through the OSS system to receive your NIB (Business Identification Number) and formal PT PMA status.
5. Fulfill Tax and Compliance Obligations
Once established, open a corporate bank account, register for a tax number (NPWP), and apply for other operational licenses through OSS. Your PT PMA is required to submit monthly franchise in Indonesia tax filings and LKPM (Investment Activity Reports), even during inactive months.
6. Recruit Staff and Meet Employment Requirements
Hire local or foreign employees based on manpower regulations. Register all employees for BPJS Kesehatan (health insurance), BPJS Ketenagakerjaan (employment insurance), and ensure accurate PPh 21 (employee income tax) deductions and filings.
7. Launch and Monitor Compliance
After setup, begin operations and monitor all obligations regularly. Engage a business consultant to avoid missing critical updates in licensing or compliance.
A properly established PT PMA ensures your franchise in Indonesia is legally protected, tax-compliant, and ready for scalable success.
Choosing between a PT PMA and a local company for your franchise in Indonesia depends on your long-term goals and risk appetite. If speed and simplicity are your priorities, setting up a local company with an Indonesian partner can be quicker and require less paperwork. However, it comes with trade-offs—most notably, limited foreign ownership and potential restrictions on brand control.
In contrast, a PT PMA allows full or majority foreign ownership, giving you greater control over brand standards, revenue, and expansion plans. It also ensures that your franchise rights are legally recognized under your own entity. The trade-off? You’ll face more rigorous compliance requirements, mandatory monthly tax reports, and a higher initial capital investment.
There is no one-size-fits-all solution. If you plan to build a long-term, scalable franchise in Indonesia, and want to maintain strong control over operations and brand identity, a PT PMA is often worth the extra effort.
Consulting with experienced legal, tax, and franchise advisors will help you avoid costly missteps during setup. Whether you choose a PT PMA or a local partnership, informed planning is the key to sustainable success in Indonesia’s dynamic franchise market.