For many entrepreneurs, investing in a franchise business model provides a practical way to enter the market while minimising many of the uncertainties associated with launching a new business from scratch. By leveraging an established brand name, proven operational systems, and ongoing business support, franchisees can focus on growing their venture while benefiting from an already recognised reputation.
However, before commencing operation in Indonesia, businesses must comply with the country’s franchise regulations, including obtaining the appropriate licences through the Online Single Submission (OSS) system. One of the key requirements is securing the Surat Tanda Pendaftaran Waralaba (STPW), commonly referred to as the Franchise Registration Certificate.
This guide explains how the franchise business model works in Indonesia, the licences required, and how to obtain an STPW through OSS.
Franchise Business in Indonesia: A Business Model to Minimise Start-Up Risks
A franchise is a contractual business arrangement in which a franchisor grants another party the right to operate a business using its established brand, products, operational system, and intellectual property.
Rather than developing an entirely new concept, the franchisee purchases the right to use an existing business model, often by paying an initial franchise fee together with ongoing royalties or other agreed payments.
For entrepreneurs entering competitive industries such as food and beverage, education, retail, fitness, or hospitality, franchising offers a structured pathway to business ownership with the support of an experienced franchisor.
Understanding the Franchise Structure
| Party | Primary Role |
| Franchisor | Owns the business concept, trademark, operational system, and grants the right to use the brand name |
| Franchisee | Invests capital to operate the business under the franchisor’s system and complies with the agreed operational standards |
This mutually beneficial relationship enables franchisors to expand their market presence while allowing franchisees to operate under an established commercial framework.
Advantages of Running a Franchise Business Model
Choosing to invest in a franchise can significantly reduce many of the risks associated with launching an independent business.
Some of the key advantages include:
- Operating under a recognised brand name
- Access to a proven business model and operational guideline
- Lower market-entry risk than developing a new concept
- Ongoing training and business support
- National or international marketing assistance
- Established supplier and distribution networks
- Stronger customer trust through an existing trademark
- Faster business expansion opportunities
For many entrepreneurs, these advantages make franchising an attractive option, particularly in highly competitive consumer industries.
Franchisor vs Franchisee: Understanding Their Responsibilities
Although both parties share the objective of business growth, each has distinct responsibilities throughout the franchise relationship.
Franchisor Responsibilities
The franchisor is generally responsible for:
- Developing and protecting the business concept
- Maintaining the registered trademark
- Providing operational manuals and business guidelines
- Delivering training programmes
- Offering marketing and promotional support
- Supplying products or authorising distribution channels
- Monitoring quality and brand consistency
Franchisee Responsibilities
The franchisee is generally expected to:
- Pay the agreed franchise fee and royalties
- Operate the business according to the franchisor’s standards
- Maintain the reputation of the brand
- Follow operational procedures
- Report business performance where required
- Comply with Indonesian business regulations
Because the relationship is contractual, both parties are bound by the terms set out in the franchise agreement.
Licences Required for Franchising in Indonesia
Before commencing franchise operations, businesses should ensure they have obtained the appropriate business licences through Indonesia’s OSS system.
Depending on the nature of the business, franchise operators may require:
- Business Identification Number (NIB)
- Relevant sector-specific business licences
- Franchise Registration Certificate (STPW)
- Other operational licences depending on the industry
Obtaining these approvals helps ensure the business operates in compliance with Indonesian franchise regulations.
What Is the Franchise Registration Certificate (STPW/SPWT)?
The Surat Tanda Pendaftaran Waralaba (STPW) is the official Franchise Registration Certificate issued by the relevant licensing authority after verifying that a franchise arrangement complies with Indonesian regulations.
The certificate confirms that the franchise relationship has been properly registered and that the business has fulfilled the applicable franchise reporting requirements.
An STPW is generally required before a franchise business begins commercial operations in Indonesia.
How can you apply for an STPW?
You can apply for an STPW online through the Online Single Submission (OSS) system. The application process requires uploading two main documents to ensure a complete submission.
The required documents are:
- Franchisee Registration Form: This form must be downloaded from the OSS system and completed manually.
- Franchise Agreement: This is the formal written agreement between the franchisor and franchisee outlining the terms of the business relationship.
Which Authority Issues the STPW?
The authority to issue the Franchise Registration Certificate has been delegated to regional governments.
The certificate is issued by the Head of the Investment and One-Stop Integrated Services Office (DPMPTSP), acting on behalf of the relevant regional authority, including the business licensing office within Indonesia’s capital region where applicable.
The authority covers applications submitted by:
- Franchisees of domestic franchisors
- Sub-franchisees of foreign franchisors
- Sub-franchisees of domestic franchisors
How to Apply for an STPW Through OSS
Businesses can apply for an STPW electronically through Indonesia’s Online Single Submission (OSS) platform.
The application process is relatively straightforward but requires several supporting documents before submission.
Required Documents
Applicants are generally required to prepare:
| Document | Description |
| Franchisee Registration Form | Downloaded from OSS and completed by the applicant |
| Franchise Agreement | Formal agreement between the franchisor and franchisee |
| Franchise Disclosure Document | Information outlining the franchise system, operational history, intellectual property, and business model |
The Franchise Disclosure Document, sometimes referred to as the disclosure document, is particularly important because it provides prospective franchisees with detailed information regarding the franchise system before entering into the agreement.
What Must Be Included in the Franchise Agreement?
Indonesian regulations require every franchise agreement to contain several mandatory provisions before an STPW can be approved.
These typically include:
- Names and addresses of both parties
- Details of the registered trademark and intellectual property
- Description of the business activities
- Operational system and business guideline
- Rights and obligations of each party
- Training, marketing, and operational support
- Business territory
- Compensation provisions
- Duration of the agreement
- Royalty and franchise fee arrangements
- Ownership transfer provisions
- Dispute resolution mechanism
- Renewal and termination procedures
- Franchisor obligations
- Number of franchise outlets
Businesses operating within specialised sectors, such as education, may also require additional supporting licences before approval.
Government Verification Process
Following submission through OSS, applications undergo a two-stage verification process.
Stage One: Document Verification
The licensing authority reviews:
- Application completeness
- Supporting documentation
- Franchise agreement
- Franchise Disclosure Document
- Compliance with mandatory contractual provisions
Incomplete submissions are generally returned for revision.
Stage Two: Final Assessment
Once documentation is confirmed, authorities conduct a final review before issuing the STPW.
Successful applicants may then proceed with franchise operations in accordance with Indonesian regulations.
Processing Time for an STPW
Under current regulations, the Franchise Registration Certificate should generally be processed within five working days after a complete application has been received.
If the authority does not issue the certificate within this timeframe, the OSS submission receipt may temporarily function as evidence that the licensing process is underway, allowing the business owner to continue preparations for business operation while awaiting the official STPW.
Establish Your Franchise Business with LMI Consultancy
Expanding a franchise into Indonesia requires more than selecting the right location or business concept. Franchise operators must ensure that every legal, licensing, and corporate compliance requirement has been properly fulfilled before commencing operations.
At LMI Consultancy, we assist franchisors, franchisees, and entrepreneurs with end-to-end franchise establishment services, including:
- Franchise business licensing
- STPW registration through OSS
- Company incorporation (PT PMA and Local PT)
- Business licence applications
- Regulatory compliance reviews
- Corporate legal advisory
- Trademark and intellectual property guidance
Whether you are an international brand seeking to distribute your business model across Indonesia or a local business owner looking to invest in a proven franchise venture, our specialists can help you navigate Indonesia’s regulatory framework and establish your franchise with confidence.
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