The
second franchise regulation has just been published on October 29, 2012 is
about “Franchise for Modern Shop” (Permendag
no. 68/2012). This regulation specifies on the retail modern shop which may
only have 150 companies owned and operated by the franchisor or master
franchise. The rest should be franchised
and owned (and operated) by another party or public.
For
example, when the franchisor of the modern retail shop, before the regulation
is published have already 500 companies owned stores, then the rest (350 stores)
should be converted to franchise stores in the next 5 years.
According
to the International Franchise Association (IFA), a regulation limiting number
of company owned units is the first to be practiced in Indonesia. In my book titled “Successful Business through
Franchising” (Sukses Usaha Lewat Waralaba)
which was published in 1996 (page 153), I had written about the need of
limiting the growth of company owned units in franchising. To avoid a dominant
position by one or two companies that could potentially dictate the market as
well as inclining anti-competition. Therefore, violating the law on prohibiting
unfair competition.
The
issuance of this limitation, bring to the local franchise retails the most
disadvantage, such as Alfa Mart and Indo Mart. As regard to my professional advice,
the regulation should not be applied retroactively. But unfortunately was
rejected by the Ministry of Trade for unclear reason. However, the foreign franchises, e.g. 7
Eleven, Circle K, Lotte, Giant, Carrefour and others will not come to any harmed.
The
next regulation which will be issued soon by the government is about the “Restaurant
and Café/Tavern Franchise”. In this upcoming regulation the restriction on the
number of company owned will also be applied.
Most
likely the number of restaurant and café/tavern owned companies will be limited
to 150 or 200.
When
the restriction is applied, then that foreign franchise restaurants and café/tavern
such as McDonalds, KFC, Starbucks and others will be most affected.
I
wonder if the foreign franchise will bring this matter to the Supreme Court for
judicial review.
Jakarta,
1st December 2012
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