What Compliance Should Franchise Businesses Manage in Indonesia?

Under Indonesia's mandatory halal certification programme, imported food, beverage and cosmetic products must be certified by 17 October 2026. For food and beverage franchises, missing it can mean a best-selling item being withdrawn from sale.

In this blog, we discuss franchise compliance Indonesia requirements. We cover the franchise regulations Indonesia enforces, the franchise license requirements brands must satisfy before launch, and the tax, corporate and reporting duties that keep a franchise network in good standing through 2026.

Which Laws Govern Franchise Regulations in Indonesia?

Franchising in Indonesia is governed by Government Regulation No. 35 of 2024, supported by current STPW procedures, the national language law and sector regulations.

Indonesia does not regulate franchising through a single statute. The core framework is Government Regulation No. 35 of 2024 on Franchise, which replaced Government Regulation No. 42 of 2007. It defines a franchise as a special right over a business system that has proven successful and may be used by another party under a franchise agreement.

Franchise registration uses the OSS system. Government Regulation No. 35 of 2024 requires franchisors, franchisees and their master-franchise equivalents to obtain an STPW. Minister of Trade Regulation No. 25 of 2025 sets procedures for regional governments to issue STPWs in the categories within their authority.

Several national laws complete the picture:

• Law No. 24 of 2009 requires franchise agreements to be executed in the Indonesian language alongside any foreign-language version.
• Law No. 40 of 2007 (the Company Law) applies where the franchisor or franchisee operates through a limited liability company.
• Law No. 27 of 2022 on Personal Data Protection is now fully enforced and reaches loyalty programmes and point-of-sale systems.
• Ministry of Finance Regulation PMK No. 131 of 2024 sets the current VAT framework.

The table below summarises the instruments a franchise compliance calendar should reference.

What Are the Indonesia Franchise License Requirements Before Launch?

Franchisors and franchisees must register through the OSS platform, deliver a prospectus at least 14 days before signing, and execute a written agreement in Indonesian.

The Ministry of Trade administers franchise registration, and the requirements below apply before any outlet opens its doors. Both franchisor and each franchisee register through the Online Single Submission (OSS) platform, so the obligations sit at both ends of the network.

The current framework requires a business system that has proven successful. The prospectus must include two years of financial statements and evidence of intellectual-property protection.

1. Registration Through the OSS Platform

Both the franchisor and every franchisee must apply for an STPW through the OSS system. The franchisor must hold it before entering the franchise agreement, while the franchisee must hold it before starting operations. Operating without the required STPW exposes the business to administrative sanctions.

2. The Franchise Prospectus

The franchisor must give every prospective franchisee a prospectus — the Penawaran Pemilikan Waralaba (PPW) — at least 14 days before the agreement is signed. The document sets out the franchisor's track record, fees, support obligations and the franchisee's duties. The waiting period gives candidates time for independent review before committing.

3. The Written Franchise Agreement

The agreement must be in writing and executed in the Indonesian language; bilingual versions are standard practice, with the Indonesian text generally treated as controlling. It must cover the intellectual property licence, training, operational guidance, supply arrangements and payment terms. A clear agreement is also the baseline document for royalty withholding.

4. Foreign Franchisor Requirements

A foreign brand can enter by licensing to an Indonesian franchisee or by incorporating a foreign-owned company (PT PMA). Under Minister of Investment and Downstreaming/Head of BKPM Regulation No. 5 of 2025, a PT PMA requires minimum issued and paid-up capital of IDR 2.5 billion; the minimum total investment must exceed IDR 10 billion, subject to sector-specific rules. Total investment normally must exceed IDR 10 billion excluding land and buildings per five-digit KBLI and project location, although Regulation No. 5 of 2025 sets different calculation units for wholesale trade, food and beverage services, construction and certain industries.

What Company-Level Compliance Must a Franchise Entity Maintain?

Franchise compliance Indonesia requires an NIB, an NPWP, PKP status above the VAT threshold and annual corporate filings.

Beyond franchise-specific rules, the company behind the brand carries standard corporate obligations. After incorporation through the OSS-RBA system, the entity receives its Business Identification Number (NIB) and must complete tax registrations in the correct order. Getting the NPWP first and PKP status second matters for VAT invoicing from day one. Our article on tax registration after company registration in Indonesia explains the sequence.

Registered PT PMA entities must also file a quarterly Investment Activity Report (LKPM) through OSS in January, April, July and October. Combined with annual general meeting and reporting duties, these filings are typically managed through corporate secretarial services in Indonesia. Entity setup itself is covered in our 2026 guide to company registration in Indonesia.

What Tax Duties Apply to Franchise Royalties and Operations?

Royalties attract 15% withholding domestically, corporate income tax stands at 22% in 2026, and most franchise sales carry VAT at an effective 11%.

Domestic royalty payments from franchisee to franchisor are subject to PPh 23 withholding at 15% of the gross amount. The franchisee withholds, reports and remits the tax, and the franchisor credits it against the annual corporate income tax liability.

Payments to a non-resident franchisor fall under PPh 26, with a default withholding rate of 20% on gross royalties. Where a tax treaty applies, the franchisee can apply the reduced treaty rate. It must obtain a certificate of domicile — the Form DGT — from the foreign franchisor before payment. Networks with both local and cross-border flows should track the two regimes separately.

The standard corporate income tax rate is 22% in 2026. Calendar-year entities must submit their annual corporate income-tax return, with supporting financial information, by 30 April through the tax portal. The statutory VAT rate is 12% under PMK No. 131 of 2024. Most business-to-business transactions are billed at an effective 11%, while the higher rate is reserved for luxury goods and certain sectors. Entities registered as PKPs must complete all mandatory fields on every faktur pajak to protect VAT credits. The Direktorat Jenderal Pajak enforces this through e-Faktur.

Which Sector-Specific Rules Affect Franchise Brands in Indonesia?

Food franchises face mandatory halal certification, while all brands must manage local content, data protection and trademark registration.

Beyond the core franchise and tax framework, several sector rules decide whether a brand can lawfully sell in Indonesia. These are the obligations we see franchise networks underestimate most often.

1. Halal Certification for Food and Beverage Franchises

Under Law No. 33 of 2014 and its implementing rules, halal certification is being phased in by product category and business size. Imported food, beverage and cosmetic products must be certified by 17 October 2026. For a restaurant or retail franchise, an uncertified best-seller can be pulled from sale after the deadline, so certification timelines belong in every rollout plan.

2. Local Content and Supplier Requirements

Government Regulation No. 35 of 2024 requires franchisors and master franchisors to prioritise Indonesian goods and services. It also requires local SME supplier cooperation, while franchisees must do so when goods and services meet the franchisor's standards. Sector-specific TKDN local content rules may also apply to franchised goods. Franchisors importing ingredients should document their supplier strategy before registration.

3. Customer Data and Digital Channels

The Personal Data Protection Law (Law No. 27 of 2022) is fully enforced in 2026 and applies to loyalty apps, point-of-sale databases and delivery platforms. Franchises selling online should also follow how Indonesia collects digital tax from foreign companies, as platform obligations continue to evolve.

4. Trademark Registration Before Franchising

The franchisor's brand assets must be protected before any licence is granted. Trademarks are registered with the Directorate General of Intellectual Property (DJKI), and that registration underpins both the franchise agreement and the Ministry of Trade registration file.

How Can Franchise Owners Keep Compliance on Track in 2026?

A single compliance calendar — covering registration, filings, withholding and sector deadlines — is the most effective control a franchise network can run.

In practice, franchise compliance in Indonesia works best when every obligation sits on one calendar, owned by one team. We help clients register their franchise systems, build the disclosure file for new franchisees, and map each withholding and filing date to the entity that owns it.

Networks with multiple outlets consolidate these duties at head office, so a missed halal deadline or royalty remittance in one city never stalls the brand nationally. Where internal teams are lean, delegating to a Corporate Services Provider keeps statutory registers, LKPM filings and tax dates current. The starting point is a short review of your structure through our contact page.

Conclusion

Franchise compliance in Indonesia spans three layers: registration and disclosure under Government Regulation No. 35 of 2024, entity-level filings such as the NIB, LKPM and annual reports, and a tax calendar covering PPh 23 royalty withholding, VAT and the 22% corporate rate in 2026. Sector rules — from the 17 October 2026 halal deadline to data protection — sit on top of this baseline.

Keeping every date and document current is what turns a licence into a durable business. 3E Accounting Indonesia is a Corporate Services Provider supporting franchise brands with registration, corporate secretarial, tax and advisory services. You can grow the network while the compliance calendar runs smoothly. Talk to our team to map the obligations for your brand.

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