Publication
International Restructuring Newswire
Welcome to the Q2 2024 edition of the Norton Rose Fulbright International Restructuring Newswire.
Author:
Indonesia | Publication | 23 October 2019
The issuance of Minister of Trade Regulation No. 71 of 2019 on Franchise (MoTR 71/2019) revokes all previous regulations on franchise businesses.
Particularly, the new regulation amends provisions related to common control restriction, the allowed maximum number of outlets, requirements related to the use of locally-sourced raw materials, equipment or products, as well as the prevailing regulation governing franchise agreements.
Prior to MoTR 71/2019, franchise regulations were spread over several regulations, namely: (a) regulation on franchise business (MoTR No. 53/M-DAG/PER/8/2012 and its amendment), (b) regulation on franchise for modern shop business (MoTR No. 68/M-DAG/PER/10/2012), (c) regulation on the development of partnership in franchises for food and beverages (MoTR No. 07/M-DAG/PER/2/2013 and its amendment) (d) regulation on franchise logo (MoTR No. 60/M-DAG/PER/9/2013).
Previously, franchisors could not appoint a franchisee involved in a common control relationship with the franchisor. Common control relationships usually occur when a company controls or is controlled by another entity.
With the new regulation, a franchisor could now enter into a franchise agreement with its own subsidiary.
MoTR 71/2019 removes the existing requirements on the maximum number of outlets. In the previous regulation, the maximum number of outlets by a franchisor was 150 outlets for what is categorized in the regulation as modern shop businesses and 250 for food and beverage businesses.
The new regulation eliminates previous requirements on the use of 80% locally-sourced raw materials, equipment or products, now only obliging franchisor to “prioritize the use of local goods and services”.
However, MoTR No. 47/M-DAG/PER/6/2016 still requires retailers to have at least 80% domestic products out of overall inventories.
In implementation, this means retailer-type franchisors must still comply with the requirement of 80% locally-sourced products.
The new regulation emphasise that franchise agreements must be governed by Indonesian law. The previous regulations was unclear on this particular aspect.
In general, MoTR 71/2019 is less restrictive compared to previous regulations governing franchise businesses, presenting an opportunity for incoming or current franchisors and franchisees to adjust their business models and supply chain relationship in accordance with each party’s long-term commercial objectives.
Publication
Welcome to the Q2 2024 edition of the Norton Rose Fulbright International Restructuring Newswire.
Publication
The Canadian Federal Budget 2024 proposes to broaden the scope of certain powers allowing CRA to request information from taxpayers, and sets out new consequences for non-compliant taxpayers.
Publication
The alternative minimum tax is an additional income tax imposed under the Income Tax Act on individuals and certain trusts who would otherwise be able to reduce their ordinary Canadian federal income tax through the use of certain deductions, exemptions or credits.
Subscribe and stay up to date with the latest legal news, information and events . . .
© Norton Rose Fulbright LLP 2023