Preparing a Franchisor’s Organisational Structure

When a business first starts franchising, the owner often remains at the centre of every decision. The organisational structure should reflect this honestly, rather than disguise it with numerous unfilled roles. In Indonesia’s franchise market, an organisational structure helps prospective franchisees understand who manages the business system and how decisions are made. Here is how to prepare one as part of a franchise offering prospectus that stands up to scrutiny.

1. Understand the role of the organisational structure in the prospectus

Indonesia’s Government Regulation No. 35 of 2024 on Franchising includes the organisational structure among the minimum information required in a Franchise Offering Prospectus. An organisation chart is therefore more than an addition to a sales presentation. It forms part of the business information provided to prospective franchisees before they make a decision.

The regulation also requires franchisors to provide the prospectus to prospective franchisees at least 14 calendar days before the franchise agreement is signed. The organisational structure must therefore be prepared before signing, not drawn up only after a franchisee has joined.

Distinguish between legal requirements and presentation choices. Including the organisational structure is mandatory; using a colour-coded chart, a responsibility matrix or role summaries is a practical way to make the information clearer. Do not describe these internal formats as government requirements.

The main aim is simple: prospective franchisees should be able to see the organisation as it actually exists. A concise but accurate chart is more useful than a seemingly comprehensive set of roles that does not reflect day-to-day operations.

2. Map the organisation currently in place

Start with the entity that will act as the franchisor. Record its management, business functions and reporting lines as they currently stand. If the business has several companies operating under the same brand, do not automatically use the group’s chart as the franchisor’s organisation chart.

Clearly distinguish between these three groups:

• The franchisor’s organisation: management and teams within the franchisor’s own organisation.
• Shared functions: teams from affiliated companies that provide support under specific arrangements.
• External service providers: outside parties, such as accountants, legal advisers or technology providers.

This distinction prevents prospective franchisees from assuming that all the group’s resources are part of the franchisor’s in-house workforce. For shared functions or external services, briefly explain the relationship and scope of work without disclosing unnecessary confidential information.

Next, check the chart against internal records. Use management appointment documents, current staff lists, job descriptions and relevant service agreements. This is a practical verification step, not a list of mandatory attachments to the prospectus.

If the owner also handles operations and finance, show that overlap. There is no need to imply that every function already has its own team. Equally, planned positions should be labelled as such, rather than presented as though they have already been filled.

3. Explain the responsibilities behind each box

Job titles alone do not explain how an organisation works. Add a brief summary of the roles involved in managing the franchise system. Use language that prospective franchisees can easily understand, rather than internal abbreviations known only to employees.

For each key function, answer four questions:

1. What is its main task?
2. Who does it report to?
3. What decisions can it make?
4. Who takes over when the person responsible is unavailable?

For example, the person responsible for operations may check that outlets comply with standards, while approval for additional spending remains with senior management. An administrator may receive documents from prospective franchisees, but that does not automatically authorise them to promise exceptions to the terms of the franchise arrangement.

These distinctions reduce the risk of verbal promises being made by people without decision-making authority. However, an organisational structure does not replace the franchise agreement or documents granting authority. Do not assume that someone’s name on the chart automatically gives them the right to sign contracts.

For a business with a small team, prepare a simple supporting table showing each function, the person responsible and their deputy or stand-in. If no cover is available, record that gap as something to address before expanding franchise recruitment. The aim is not to increase headcount, but to identify dependencies that have previously gone unnoticed.

4. Check consistency before providing the prospectus

Cross-check the organisation chart against the description of the business system and the explanation of rights and obligations in the prospectus. If the document refers to an operational oversight function, it should be clear who performs it and where it sits within the organisation.

Review franchise sales presentations as well. Avoid terms such as “dedicated team” if the owner is still carrying out the work alongside other duties. If an external party performs a function, explain this consistently in all communications with prospective franchisees.

Assign one person to confirm the chart’s accuracy before the prospectus is provided. The review should cover filled positions, reporting lines, overlapping duties and the use of external personnel. Dating the internal review helps the team see when the information was last verified.

Ask someone who was not involved in preparing the chart to read it. If they cannot explain who is responsible for the main functions, simplify the presentation.

Practical takeaway: show the organisation as it really is, explain how responsibilities are divided and clearly identify plans for development. A structure supported by evidence is more valuable to prospective franchisees than an elaborate chart that does not yet reflect reality.