Buying a Franchise: Make Sure Contract Annexes Are Complete and Binding

When buying a franchise, do not stop at the contract’s signature page. Package details, fee schedules or outlet specifications may appear in separate annexes. If those documents are unavailable or their versions are unclear, it can be difficult to establish exactly what you are agreeing to. In franchising, keeping documents in order helps both parties build a transparent relationship from the outset.

1. Map out every document referred to in the contract

Start by reading the draft agreement and highlighting every reference to another document. Look for phrases such as “as set out in the annex”, “in accordance with the current list”, “as stated in the proposal” or “forms an integral part of this agreement”. Every reference should lead to a document you can identify and read.

Create a simple checklist with columns for the document name, version number or date, page count, whether it has been received, and the contract section that refers to it. Your list may include:

• Details of the investment package and items to be supplied.
• The payment schedule and payment recipient’s details.
• Drawings and specifications for the outlet fit-out.
• A list of services or facilities included in the package.
• Order forms, formal records and supplementary agreements.

Simply mentioning a document does not necessarily make its contents clearly agreed. If the contract refers to “Annex B”, but the documents supplied contain only Annex A, ask for the missing annex before proceeding.

Also check whether the annexes refer to further documents. An equipment list, for example, may refer to a supplier’s catalogue. Without the correct catalogue, the specifications of the items you are agreeing to buy may remain unclear.

2. Distinguish legal obligations from document safeguards

Indonesia has specific franchise legislation: Government Regulation No. 35 of 2024 on Franchising, which replaced Government Regulation No. 42 of 2007. It requires the Franchise Offering Prospectus to be provided to prospective franchisees at least 14 calendar days before the Franchise Agreement is signed.

However, do not assume that receiving the prospectus means you have automatically received or approved every contract annex. The prospectus provides information about the offering, while the agreement and the documents incorporated into it define the details of the parties’ relationship. Review them separately, then cross-check them.

Agreements are also generally subject to the Indonesian Civil Code. Article 1320 sets out the requirements for a valid agreement: consent, legal capacity, a specific subject matter and a lawful cause. Clearly defining the subject matter and obligations in the annexes helps reduce uncertainty about what has been agreed.

Version numbering, initialling each page or storing files with digital identifiers are safeguards the parties can agree to adopt. They should not be confused with universal legal requirements that automatically determine whether every contract is valid. If an important annex is blank, unavailable or inconsistent with the main contract, seek a legal adviser’s review before signing.

3. Resolve inconsistencies before agreeing to the package

Compare the main contract, annexes, proposal and written offer side by side. Focus on differences affecting the goods, services, payments or your responsibilities. Checking that the total price appears to match is not enough.

For example, the proposal might state that the package includes all outlet equipment, while an annex excludes installation and delivery. The main contract might then state that the buyer must cover any costs not expressly listed. The issue is not simply the package price, but which document determines the scope of the purchase.

Ask for a written resolution in three steps:

1. Correct the content. Align conflicting details rather than accepting a verbal assurance that everything is included.
2. Set an order of precedence. Agree which document takes priority if a conflict remains. A particular technical annex may need to take precedence for specifications, while the main contract governs general terms.
3. Record any special exceptions. If you are offered benefits that differ from the standard package, include them in a document agreed by both parties.

Also look for a clause stating that the contract supersedes all previous discussions or offers. If there is one, make sure important promises made in conversations or emails have been incorporated into the agreed documents. Keeping messages is still useful, but it is no substitute for clearly setting out your rights.

4. Fix the final version and keep a complete set

Before signing, request a final set containing the contract and all its annexes. Compare it with the latest version you reviewed. Do not check only the signature page: changes may be tucked away in tables, footnotes or lists of exclusions.

For electronic documents, avoid annexes consisting solely of links to files that can be replaced without a trace. Request a fixed copy with a date or version number clearly identified in the agreement. Make sure the signing process covers the same set of documents for both parties.

For printed documents, check that page numbers run consecutively and that any material blank spaces have been completed or crossed out as agreed. After signing, keep a complete copy approved by both parties, together with the correspondence resolving any inconsistencies. Also record who is responsible for keeping the originals.

The bottom line: do not agree to annexes you have not seen. Before buying, make sure every document is available, its version is clear, its contents are consistent and its status within the contract is defined.