In 2014, about 30 to 40 foreign franchise holders (mostly from Singapore and the USA) intend to enter Indonesia as the country's franchise business expands about 20 percent per year. Levina Supit, Chairman of the Indonesian Franchising and Licensing Association (Wali), said that Indonesia's franchise business is currently dominated by the food and drinks and services sector. The new foreign market participants will focus on these two sectors as prospects are promising due to Indonesia's rapidly expanding middle class.

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Attracted by the promising prospects of Indonesia's domestic consumption (with per capita GDP rising strongly), a total of about 100 foreign franchises will enter the Indonesian market in 2013. The most popular investment destination of these franchises is Indonesia's culinary sector. The majority of franchises originate from the United States. Others include those from South Korea, Japan, Australia and Europe. In 2013 so far, more than 170 foreign franchises received approval from the government.

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Indonesia Investments added financial highlights to the company profile of Mitra Adiperkasa (MAPI). The company is an Indonesian retail company with a diversified portfolio that includes department stores, fashion, sports equipment, food & beverages, supermarkets and lifestyle products. It has 1588 retail outlets, that contain more than 100 brands, in 56 cities throughout Indonesia. The company is franchise holder of various and numerous well-known global brands such as Starbucks, Zara and Nine West.

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The franchise model is a popular business model in Indonesia as it holds a number of advantages compared to starting a business from scratch. When walking inside a shopping mall or on the busy streets of Indonesian urban and suburban areas one can see various examples of the franchise model in action.

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An important change will be made to the ministerial regulation that deals with the franchise businesses and traditional markets in Indonesia. Indonesian Trade Minister Muhammad Lutfi said that the government plans to adjust a retroactive clause formulated in Ministry of Trade Regulation No. 7 Year 2013 on Partnership Development in Franchise Business Services for Food and Beverages (Permendag Nomor 7). Initially this clause limited franchise ownership to a maximum of 250 outlets, forcing big franchisees to confirm to new requirement.

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Last February, the Indonesian government, through its Ministry of Trade, issued new rules with regard to Indonesia's franchise sector. This new regulatory framework - formulated in Ministry of Trade Regulation No. 7 Year 2013 on Partnership Development in Franchise Business Services for Food and Beverages (Permendag Nomor 7) - will have an impact on Indonesia's food and beverage services as limitations are set on the amount of outlets.

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