Buying a Franchise: Check How Hands-On the Owner Must Be

Buying a franchise does not necessarily mean buying a business you can leave to run while you work elsewhere. Even a standardised system needs someone to make decisions, oversee cash handling and deal with staffing problems. Whether a franchise relationship is workable depends on how well the brand’s management requirements match the prospective franchisee’s available time. Before choosing a brand, establish exactly how involved the owner must be in running the outlet.

1. Turn promises of a business that “runs itself” into specific tasks

Phrases such as “autopilot”, “just review the reports” or “ideal as a side business” are not job descriptions. Ask the franchisor to explain who is responsible for each essential activity, rather than simply assuring you that procedures are in place for everything.

Divide the tasks into three groups:

• Daily: opening and closing the outlet, checking cash, managing shift changes, receiving deliveries and handling customer complaints.
• Periodic: taking stock, reviewing staff performance, drawing up rotas and checking expenditure.
• Exceptional situations: dealing with a manager’s resignation, missing stock, damage to premises or equipment, or several employees being absent at once.

For each task, record who carries it out, who authorises it and who provides cover when the usual person is unavailable. Distinguish between the responsibilities of the franchisor, the outlet manager and the owner. Visits from head office supervisors do not automatically replace day-to-day management responsibilities.

Also ask whether the owner must attend training in person, be present for the opening or take part in regular reviews. Include travel time and administrative work done away from the outlet. The owner’s workload involves more than the hours spent behind the counter.

2. Check those obligations in the documents

Indonesia specifically regulates franchising through Government Regulation No. 35 of 2024 on Franchising, which replaced Government Regulation No. 42 of 2007. This framework covers matters including franchise criteria, the franchise offering prospectus, franchise agreements and registration through the Franchise Registration Certificate, known locally as the STPW. The existence of a business system and an agreement does not automatically mean a franchisee may be a passive owner.

Review the draft agreement and any operating manuals it refers to. Look for provisions covering the owner’s personal involvement, the appointment of a person in charge, opening hours, compulsory training and approval of managers. Do not rely on a sales summary if the contractual documents impose wider obligations.

Ask the following questions in writing:

• Must the owner be physically present, and how is that requirement measured?
• Can management be delegated to a manager employed and paid by the franchisee?
• Does appointing or replacing a manager require head office approval?
• What must the owner do if the manager leaves or is unable to work?
• Are there restrictions on owners who remain in employment or run another business?

If an answer is crucial to your buying decision, ask for the agreed position to be reflected in binding documents. A statement that something is “usually allowed” does not provide certainty for your circumstances. Have a legal adviser review any discrepancies between the seller’s explanations and the draft contract before you sign.

3. Test the reality by speaking to other franchisees

Speaking to existing franchisees helps establish whether the proposed division of responsibilities works in practice. With their consent, contact several owners with different management arrangements: those who run their outlets themselves, those who employ managers and those who still have a main job elsewhere.

Avoid broad questions such as “Is the business easy to run?” Instead, ask them to describe their most recent working week. When did they need to visit the outlet? Which decisions could the manager not resolve? Which problems most often interrupted their personal time?

Distinguish between their experience during the opening period and conditions once the outlet was established. Owners may work very intensively at the start, then reduce their involvement once a team is in place. Conversely, staff turnover can force an owner to resume day-to-day duties.

Where possible, arrange an observation visit with the operator’s permission. Watch shift changes and closing procedures, rather than only observing service during quiet periods. Do not request employees’ personal data or confidential documents. The aim is to understand the workload, not to audit someone else’s business.

4. Factor the owner’s time into the buying decision

Prepare two cost projections: one for an outlet you manage yourself and another for an outlet run by a manager. In the second, include the manager’s salary, relevant employment-related obligations, training for replacements and oversight costs. Avoid treating your own work as free labour when you actually need to maintain income from another job.

Prepare a cover plan as well. If the manager suddenly becomes unavailable, who has authority to organise rotas and approve spending? Could you take over without breaching your obligations to your main employer? Do not assume family members will help unless their willingness and ability are clear.

Set your limits before paying: how much time you can give, what management staffing costs you can afford and which obligations you cannot meet. If the brand’s requirements exceed those limits, choose another brand or postpone the purchase.

Practical takeaway: choose a franchise based on the work you will actually have to do, not promises that the business will run itself. Check that the tasks, contractual terms, other owners’ experiences and management budget all align before you commit.