Indonesia - Country Commercial Guide
Franchising

This is a best prospect industry sector for this country.  Includes a market overview and trade data.

Last published date: 2021-09-09

 

2015

2016

2017

2018

2019 (est.)

Total Franchise

1,100

1,155

1,212

1,272

1,335

Local

580

609

639

670

703

Foreign

520

546

573

601

631

Data Source: Indonesian Franchise Association

 

2012 – May 2016

Additional franchises

105

Local

44

Foreign

61

Source: Indonesia’s Ministry of Trade

Overview

Indonesia has strong long-term potential for franchise businesses.  The franchise industry began to enjoy widespread popularity in the early 1990s when many well-known U.S. franchises arrived in Indonesia.  The Indonesian restaurant and food franchise sectors have consistently shown growth over the past decade due to increasing disposable income levels and greater interest in socializing beyond traditional family and workplaces.  Some Indonesians visit restaurants while they wait for Indonesia’s late afternoon and evening traffic jams to dissipate. 

Most Indonesian franchise seekers are interested in well-established and innovative food and beverage business concepts such as fine-dining restaurants, Quick Service Restaurants, pizza chains, hamburger chains, coffee shop chains, and ice cream shops. Most famous U.S. F&B brands are here in Indonesia such as Kentucky Fried Chicken, Domino Pizza, Pizza Hut, McDonalds, Burger King, Carl’s Jr.  Starbucks, Dunkin Donuts, and Baskin Robbins. Other best prospects include health and fitness centers, education, and retail or special convenience stores. 

Rising disposable incomes and large young population make Indonesia an attractive market opportunity. Demand for cafes, restaurants, and bars continue to increase in the major Indonesian cities.  Indonesia’s growing middle-class communities are seeking international cuisine, convenience and after-hours venues for socializing.

Local investors are receptive to well-known, established U.S. franchises.  Quality, brand recognition, and innovation all play a big part in the success of U.S. franchises with Indonesian investors. In addition to product pricing, U.S. franchisors must consider adapting to local tastes to guarantee success in the Indonesian market.

Recent discussions with Indonesian investor groups have indicated increased reticence toward partnering with new foreign brands and a preference for strengthening their existing brands.  One factor contributing is the depreciation of the rupiah relative to the US dollar.  However, new investor groups are starting to show interest starting their first franchising chains. Despite the relative lack of experience of these groups, they may be suitable option to for U.S. franchises hoping to enter the Indonesian market.

As the pandemic goes on in magnitude and duration, this adding more consideration for Indonesian companies to be more receptive to new brands. The social restriction policy has impacts on businesses. Most of the franchise business such as F&B, gym, courses, hair saloon, and children playgrounds in Indonesia are located at the malls. The GOI has decided to impose restriction on community activities in Java and Bali from time to time and one of the impacts is the closing of the malls. The F&B franchise will have to rely on the food delivery service during the restriction time and have to compete head on with local F&B brands.

The annual Franchise & License Expo Indonesia will be held in September 10-12, 2021 in Jakarta, Indonesia. For more information visit: http://franchise-expo.co.id.

Interested parties may contact Commercial Specialist Fidhiza Purisma at Fidhiza.Purisma@trade.gov