Buying a Franchise: Check the Wording in Bilingual Contracts

Foreign franchise brands and networks using international documentation may offer contracts in two languages. A side-by-side layout does not guarantee equivalent terms: a single word can turn permission into an obligation or widen your liability. Clear wording helps both parties in a franchise relationship understand the commitments they are making. Before signing, check that the Indonesian version genuinely reflects the agreement rather than simply serving as an administrative formality.

1. Understand the role of Indonesian in the agreement

Indonesia specifically regulates franchising through Government Regulation No. 35 of 2024 on Franchising, which replaced Government Regulation No. 42 of 2007. This regulation provides for franchises to operate under agreements between parties of equal legal standing, governed by Indonesian law. Franchise agreements must be drawn up in Indonesian.

Alongside these franchise-specific rules, Article 31 of Law No. 24 of 2009 on the Flag, Language, State Emblem and National Anthem requires Indonesian to be used in agreements involving, among others, Indonesian private institutions or Indonesian citizens. Where a foreign party is involved, the agreement must also be written in that party’s national language and/or English.

Do not assume that a foreign-language contract is sufficient simply because the brand comes from overseas. Equally, an Indonesian translation does not automatically resolve every issue if the two versions differ in meaning.

If the franchisor asks you to sign the foreign-language version first and promises a translation later, ask for all versions to be finalised before signing. Do not draw your own conclusions about the legal consequences of shortcomings in the language arrangements; ask a legal adviser to assess the documents and the specific circumstances.

2. Compare terms that affect rights and obligations

Review the contract clause by clause rather than reading each language version separately. Create a simple table showing the clause number, the Indonesian wording, the foreign-language wording, any difference in meaning and the correction requested.

Prioritise the following:

• Obligations and options. Wording that means “must” should not become “may”, or vice versa.
• Time limits. Make sure “calendar days” has not been translated as “working days”. Also check whether deadlines run from the date a notice is sent or received.
• Consent. “Prior written consent” is different from notification after an action has been taken.
• Efforts and outcomes. A promise to endeavour to provide support is different from an obligation to ensure that support is actually provided.
• Exceptions. Phrases such as “except”, “to the extent that” and “provided that” can restrict rights that otherwise appear broad.

As a hypothetical example, the Indonesian version might say that the franchisee “may” take part in a particular programme, while the foreign-language version makes participation compulsory. That is more than a stylistic difference: it could lead to additional expenditure.

Also check the terms defined at the beginning of the contract. If a term covers both physical outlets and online sales in one version, but only physical outlets in the other, every clause using that term needs to be reviewed.

3. Agree how differences in meaning will be resolved

A bilingual contract should explain the status of each version and how discrepancies will be reconciled. However, a clause stating that one language takes precedence should not be treated as a shortcut for ignoring the requirement to use Indonesian or other applicable legal provisions.

Ask a legal adviser to check whether the language clause is appropriate for the transaction structure and complies with Indonesian rules. Do not accept a verbal explanation that “this version is only a translation” if the document you are being asked to sign states that both versions are equally binding.

Points worth requesting during negotiations include:

• Translation errors are corrected through a written document agreed by both parties.
• Corrections to the wording are distinguished from changes to commercial rights or obligations.
• Neither party may amend the wording unilaterally on the grounds that it is correcting a translation.
• All subsequent contract amendments are prepared in the required languages and checked for consistency.

These are safeguards to negotiate, not automatic rights whose every detail is already prescribed by law. The aim is to establish a clear process for resolving language differences before they affect the operation of your outlet.

4. Manage the translation process through to signing

Ask who prepared the translation, which source version they used and who checked the legal terminology. A professional translator helps ensure linguistic accuracy, while a legal adviser assesses the implications of the wording. Their roles are different: a fluent translation will not necessarily protect your interests.

Request files that allow the versions to be compared, along with a record of changes. After revisions, recheck clause numbering, cross-references, figures, dates, party names and signature blocks. Make sure corrections in one language are carried through to the other version.

Also check the language requirements for formal notices during the franchise relationship. If requests for consent must be submitted in a particular language, put internal procedures in place so that important communications do not take place solely through informal conversations.

Keep the final signed copies of both versions, together with any agreed correction documents. Do not rely solely on the initial translation sent during the sales process.

Practical step: before signing, draw up a list of differences in meaning and ask for every item to be resolved in writing. A bilingual contract is useful only if both parties genuinely agree to the same obligations.