Buying a Franchise in Indonesia: Use the 14 Days to Review the Prospectus

Franchise offers often come with pressure to make a quick decision. Yet prospective franchisees need time to understand the information behind the offer. In franchising, openness before signing is the foundation of a healthy relationship. One important safeguard is the requirement to provide a prospectus before the agreement is signed. Here is how to use that time for a meaningful review, rather than simply waiting for the signing date.

1. Understand the 14-calendar-day rule

Indonesia’s Government Regulation No. 35 of 2024 on Franchising requires franchisors or sub-franchisors to provide a Franchise Offering Prospectus to prospective franchisees at least 14 calendar days before the Franchise Agreement is signed. This is now the main applicable regulation, replacing Government Regulation No. 42 of 2007 on Franchising.

This means the prospectus should not first be handed to you when you sit down to sign. Calendar days also differ from working days: weekends count. Agree a timetable with the franchisor so that the interval between delivery of the document and signing meets this requirement.

Do not treat this period as an automatic right to cancel the agreement after signing. The rule concerns disclosure before the agreement, not a subsequent cooling-off period allowing cancellation without consequences. If you need more time to review the documents, ask to postpone signing and obtain written confirmation.

The regulation also places the parties to a franchise agreement on an equal legal footing and makes Indonesian law applicable. Asking for an opportunity to understand the offer is therefore not being uncooperative; it is a normal part of preparing for a business relationship.

2. Make sure you have received an actual prospectus

Package brochures, sales presentations and conversations with sales staff do not automatically replace the Franchise Offering Prospectus. Ask for a document clearly identified as the prospectus, with a date or version identifier. Make sure the party offering the franchise is clearly named.

When you receive the document, carry out a few basic administrative checks:

• Keep the original file and the accompanying email or message.
• Record the date of receipt and the sender’s name.
• Check that every page can be opened and read.
• List any supporting documents mentioned but not yet provided.
• Ask for confirmation of which version applies to your offer.

Evidence of receipt helps establish the sequence of events. If you are asked to sign an acknowledgement of receipt, make sure it states only facts that are accurate. Do not agree to a backdated receipt or a statement that you have understood all the information if you have only just received the file.

Also distinguish between receiving a document and agreeing to its contents. If the acknowledgement includes a commitment to buy, a waiver of objections or an obligation to pay, seek an explanation and legal review first. A document’s title does not determine all its legal effects; the wording still needs to be checked.

3. Turn the review period into a list of questions

Set yourself a review schedule to avoid rushing. The following approach is a practical suggestion, not a sequence required by the regulation.

Start by reading the entire prospectus and marking anything unclear. Do not focus solely on the benefits or the package overview. Pay attention to who is granting the franchise rights, how their business experience is described, and the rights and obligations offered to prospective franchisees.

Next, create a table with four columns: the statement in the prospectus, supporting evidence, your question, and the written response. For example, if the document gives the number of business locations, ask when the figures were compiled and whether they distinguish between franchisor-owned and franchisee-owned outlets. The aim is not to assume something is wrong, but to understand the information you will use to make your decision.

Then compare the prospectus with the draft agreement. Do the obligations described in the offer carry the same meaning in the contract? If they differ, do not simply choose the more favourable explanation and assume it applies. Ask the franchisor to explain the discrepancy and amend the relevant documents as needed.

As you approach a decision, refer legal questions to a legal adviser and financial questions to an accountant where necessary. Give them the documents and a specific list of issues to help focus their review.

4. Delay your decision if disclosure remains inadequate

The fact that 14 days have passed does not mean the offer is worth accepting. The minimum disclosure period is separate from the quality of the information itself. You still need to assess whether the answers you have received are clear enough to support a decision.

Be wary of pressure to sign immediately while important questions remain unanswered, refusals to provide written clarification, or replacement documents supplied without an explanation of the changes. If there are material revisions, ask for a summary of the changes and additional review time. Do not assume that every revision automatically restarts the statutory period; seek advice on your particular circumstances.

Before agreeing a signing date, make sure the date of receipt is recorded, the document version is clear, and important issues have been resolved. Keep all correspondence as a record of your decision-making.

Practical takeaway: request the prospectus early, document its receipt, and use the time before signing to scrutinise and clarify the offer. Meeting the minimum disclosure period is not a reason to sign documents you do not yet understand.