Buying a Franchise: Limit Unilateral SOP Changes in Your Contract

Buying a franchise means joining a system that may evolve, not simply buying a business package with fixed rules. Problems arise when the contract allows the franchisor to change all procedures without clear limits. Across a franchise network, standards do need updating to maintain consistent quality. However, prospective franchisees need to understand which changes they must adopt, how much time they will have to adjust and who will bear the financial consequences.

1. Identify the documents that can change your obligations

Do not read only the main agreement. Operational obligations are often spread across standard operating procedures (SOPs), manuals, technology schedules, circulars and terms published on the franchisee portal. The contract may state that all these documents are binding, including versions issued later.

Ask for a list of the documents referred to, their version numbers and their effective dates. If the full manual is confidential, offer to sign a non-disclosure agreement so you can still assess your obligations before committing. At a minimum, request a written summary of the rules affecting staffing requirements, opening hours, reporting and mandatory software.

Flag wording such as:

• “The franchisee must comply with all policies issued from time to time.”
• “The franchisor may amend the standards at its sole discretion.”
• “The franchisee shall bear all costs of implementing changes.”

Such wording does not automatically mean the contract is unlawful. However, when these provisions are combined without limits, it becomes difficult to assess the true extent of your commitment. Also ask which document takes precedence if an SOP conflicts with the main agreement. Propose that technical manuals cannot alter core commercial terms without both parties’ written consent.

2. Distinguish technical updates from commercial changes

Not every change needs the same approval process. Revising the sequence for cleaning tables is different from requiring longer opening hours or additional staff on every shift. Both may be described as SOP updates, but their effects on an outlet are very different.

Agree categories of changes with the franchisor. Routine technical updates might include refinements to work instructions that do not add a significant burden. Urgent changes may relate to safety, product recalls or compliance with legal obligations. Changes with a material impact, meanwhile, might include a requirement to use a new paid application or take on additional duties that require extra employees.

For this last category, propose a requirement to provide reasons, estimated costs, an implementation timetable and options for adapting. Define “material” in measurable terms in the contract, for example by reference to the type of obligation or an agreed spending threshold. Do not rely on the word “reasonable” without a way to assess it.

Ask for examples of previous SOP updates and how they were implemented. The aim is not to insist that the system never changes, but to find out whether changes are usually tested first and whether franchisees’ feedback is taken into account.

3. Use Indonesian law as a starting point, not a basis for assumptions

Franchising in Indonesia is specifically regulated by Government Regulation No. 35 of 2024 on Franchising, which replaced Government Regulation No. 42 of 2007. Regulation 35/2024 requires the franchise offering prospectus to be provided to prospective franchisees at least 14 calendar days before the franchise agreement is signed.

Use this period to compare the description of the business system with the clauses governing SOP changes. If the offer presents the operation as straightforward, but the contract allows unlimited additional obligations, request a written explanation before signing.

The agreement is also subject to the general provisions of contract law in the Indonesian Civil Code. Article 1320 sets out the requirements for a valid agreement, while Article 1338 establishes, among other things, that lawfully concluded agreements are binding and must be performed in good faith.

These provisions should not be read as giving you an automatic right to reject every SOP update. Equally, do not assume that every new instruction is necessarily binding simply because it comes from head office. The authority for the change, its substance and the relationship between the documents all need to be examined. Ask a legal adviser to assess the clauses; protections such as cost limits or specific consent requirements must be clearly drafted, rather than assumed to exist automatically.

4. Negotiate a workable change procedure

Useful protection means more than a sentence saying “changes must be fair”: it requires a procedure that outlet managers can put into practice. Propose that each change notice should state the SOP version, the reasons for the update, its effective date, training requirements and estimated expenditure.

For routine changes, agree a notice period that allows time to arrange staffing and adjust budgets. For urgent situations, establish a fast-track notification process, accompanied by a written explanation and a cost review after the initial action has been taken. Do not let the objection process become a reason to delay necessary safety measures.

Also specify who receives objections, when a response must be provided and whether phased implementation can be agreed. If several small updates are issued close together, request an assessment of their cumulative cost impact so that the overall burden is not hidden.

Before signing, test the clause against one scenario: head office requires a new application alongside additional reporting. Can you establish the costs, deadline, available support and objection process from the contract? The key point: accept that the system needs to evolve, but make sure the process for changing an outlet’s obligations is clear from the outset.