Managing Delays in Opening Franchise Outlets

A business that is ready to franchise is not necessarily ready to open every outlet on time. Refurbishment work may fall behind, equipment may not arrive, or a franchisee’s paperwork may be incomplete. Before offering franchises, business owners need workable rules for handling opening delays. Clear arrangements help protect franchise relationships: franchisees understand their obligations, while franchisors avoid promising dates that depend on other parties’ work.

1. Separate opening targets from mandatory requirements

Do not use a single date for the entire opening process. Distinguish between estimated dates, deadlines for completing work and the agreed opening date. A marketing target does not establish that an outlet is authorised to operate.

The principal legal framework is Indonesian Government Regulation No. 35 of 2024 on Franchising, which replaced Government Regulation No. 42 of 2007. It provides that franchise activities must be based on an agreement between parties of equal legal standing and governed by Indonesian law.

The sequence of regulatory requirements also affects the timetable. A franchisor must hold a Franchise Registration Certificate, known locally as a Surat Tanda Pendaftaran Waralaba or STPW, before entering into a franchise agreement. A franchisee must hold one before starting business. The franchise offering prospectus must be provided to the prospective franchisee at least 14 calendar days before the agreement is signed.

Do not, therefore, draw up an opening timetable that can only be met by bypassing these obligations. An STPW does not replace other business requirements applicable to the outlet’s activities and location.

Create a pre-opening checklist covering, for example, the necessary legal requirements, premises readiness, equipment and staffing. Distinguish legal obligations from internal standards. This checklist is a tool for managing the opening process, not a justification for unilaterally adding obligations after the franchisee has signed the contract.

2. Build the timetable around task dependencies

A good timetable shows which tasks can begin only once others have been completed. Machinery delivery, for example, may depend on the electricity supply being ready and access to the building being available. Blaming a supplier without checking these dependencies can lead to poor decisions.

Use a tracking sheet with five elements for each task:

• Required deliverable: not simply “refurbishment complete”, but a condition that can be checked.
• Responsible party: the franchisor, franchisee or appointed third party.
• Prerequisites: documents, approvals, payments or preceding work.
• Deadline: the completion date, allowing time for inspection.
• Evidence of completion: photographs, completion records, inspection findings or other relevant documents.

Also specify who has authority to approve timetable changes. The sales team should not promise an earlier opening without confirmation from the opening team. Equally, the opening team needs to report promptly any obstacles that could affect commitments made to the franchisee.

Allow time for inspections and remedial work. Base that allowance on the business’s own experience and site conditions, rather than imposing the same fixed period on every outlet. Do not announce an opening date to customers until there is sufficient certainty about critical tasks.

3. Set rules for handling delays and allocating costs

The agreement needs to explain what happens when the timetable slips, rather than merely stating that the franchisee must open on time. Establish a written notification procedure covering the cause, affected work, expected duration and recovery measures.

Distinguish delays by their cause. Late payment by a franchisee is different from a design delay for which the franchisor is responsible. Obstacles involving a building manager or supplier also need to be assessed in light of who appointed that party and what its contractual obligations are.

Costs should be allocated according to responsibility, evidence and causation. Additional costs might include equipment storage, rescheduling trainers or changing service bookings. Do not automatically charge all costs to the franchisee simply because the outlet has not opened.

Also specify when recurring fees begin to accrue. If there is a minimum fee that does not depend on sales, explain how it will be treated while the outlet is not yet operating. These terms must be consistent with the offer and agreement, rather than appearing for the first time on an invoice.

Avoid describing every obstacle as force majeure. Ask a legal adviser to review the wording of the force majeure clause, notification obligations, evidence requirements and consequences. The timetable controls in this guide are management recommendations, not additional deadlines or penalties imposed by Government Regulation No. 35 of 2024.

4. Document approval to open

When a deadline is missed, draw up a recovery plan together. Record the outstanding work, responsible parties, revised timetable and agreed costs. Changes affecting contractual rights or obligations must be documented through a legally valid process for amending the agreement.

Before the outlet opens, carry out a final inspection and document the findings. Cosmetic defects may be resolved later if agreed, but shortcomings involving safety or legal obligations must not be treated as resolved simply to meet an opening-event deadline.

If the opening requirements have not been met, record the decision to postpone and the reasons for it. If they have been met, issue internal approval with clear limits on its authority; approval from the brand is not a substitute for government permits.

Practical takeaway: before recruiting franchisees, prepare an opening timetable annex, a delay-reporting procedure and a final inspection form. Together, these turn a promised date into responsibilities that can be evidenced.