Presenting Outlet Data in a Franchise Prospectus

The number of outlets is often a key consideration for prospective franchisees assessing a franchise offer. However, that figure can be misleading if it combines company-owned outlets, franchisee-operated outlets and locations that have not yet opened. For business owners looking to build a franchise network, presenting network data is not simply a marketing exercise. The information should help prospective franchisees understand the business’s actual operating experience, rather than just its growth plans.

1. Understand the purpose of outlet data in the prospectus

Indonesia’s Government Regulation No. 35 of 2024 on Franchising provides the specific regulatory framework for franchising in Indonesia, replacing Government Regulation No. 42 of 2007. Its provisions on franchise offering prospectuses require information including the number of franchise outlets or business premises, as well as a list of franchisees or sub-franchisees.

These are two different types of information. The outlet count describes business locations, while the list of franchisees identifies the parties involved in franchise relationships. One franchisee may operate more than one outlet. The number of franchisees therefore does not necessarily equal the number of outlets.

The regulation also requires franchisors to provide the prospectus to prospective franchisees at least 14 calendar days before the franchise agreement is signed. Network data should be clear enough to review during that period, rather than only being explained verbally at the signing.

For businesses offering franchises for the first time, state the actual position. If all outlets are still company-operated and there are no franchisees yet, say so. Do not relabel company-owned outlets as franchisee-operated outlets to create the impression that the franchise model has already been tested.

2. Define the categories before counting

Start with a single master list of all business locations. As a data management practice, distinguish locations by their operator and operational status. The following categories help prevent double-counting:

• Company-owned outlets: operated by the business owner or the franchisor’s business entity.
• Franchisee-operated outlets: run by franchisees under a franchise relationship.
• Outlets in preparation: locations that have been agreed or are under construction but are not yet serving customers.
• Temporarily closed outlets: locations that are temporarily out of operation, with the reasons recorded.
• Permanently closed outlets: locations where trading has ceased permanently.

These are suggested presentation categories, not a mandatory list specifically prescribed by the regulation. Their purpose is to ensure that readers do not assume every location is an active outlet.

Also decide how to treat special formats. A kitchen serving several brands, for example, does not automatically count as several physical business premises. Temporary outlets at events should not simply be grouped with permanent outlets either. Explain the counting method if the business uses a range of formats.

When an outlet moves, retain its internal identifier and record the relocation. Do not count the old and new addresses as two active outlets. This simple discipline makes the data easier to reconcile with operational records.

3. Match each location to supporting evidence and its operator

Create a working table with columns for the outlet identifier, address, business format, operator, opening date, status and date last checked. Add references to internal supporting evidence so that staff can trace the source of each entry without relying on the owner’s memory.

Supporting evidence may include opening records, transaction reports, documents relating to use of the premises and franchise agreements for franchisee-operated outlets. Not all of this evidence needs to appear in the prospectus; its main purpose is to verify the accuracy of the information presented.

Cross-check the records as follows:

1. Ask the operations team to confirm which locations are actually trading.
2. Ask the staff responsible for agreement administration to match franchisee-operated outlets to their franchisees.
3. Check whether the same franchisee has been listed more than once under different trading names, personal names or business entity names.
4. Resolve discrepancies before approving the figures for the prospectus.

Use the name of the party in the agreement as the basis for matching entries in the franchisee list. The outlet name familiar to customers may be added for clarity, but should not replace that party’s identity.

Restrict access to supporting documents containing personal data. The need to verify the network does not mean that all copies of identity documents or personal contact numbers should be circulated to prospective franchisees.

4. Present the figures with clear limits on what they mean

In the prospectus, clearly show the date to which the data relates and distinguish between categories in an easy-to-read format. If there are no franchised outlets yet, the following wording can be adapted: “As at this date, all active outlets are company-operated. There are currently no franchisees. Locations still in preparation are shown separately and are not included in the active outlet count.”

Do not equate a large outlet count with evidence of profitability or a guarantee of success for prospective franchisees. Network data shows the scale of operations; assessing financial performance requires separate information.

If presenting a history of growth, use a consistent counting method. Explain openings, closures or changes in status where necessary to avoid misleading comparisons. Do not highlight new openings while omitting closures from the account of network growth.

Practical step: before offering franchises, prepare a single master list of outlets, separate active locations from planned openings, and match each franchisee-operated outlet to the party named in its agreement. Traceable figures are more useful to prospective franchisees than large numbers whose meaning is unclear.