Foreign franchising booming in Indonesia

Foreign franchising booming in Indonesia

JAKARTA (JP): The foreign franchise business in Indonesia enjoyed an average growth of 445.8 percent per annum in the last four years while local franchisers grew only by 5.9 percent, AK & Partners, a franchise consulting firm said.

The firm said Wednesday that the number of foreign franchises operating in Indonesia (excluding hotel chains) increased to 113 in 1995 from six in 1991, while domestic franchises only rose from 21 to 26 in the same period.

"In terms of real business, local franchising is at a standstill," said the company, adding that only a few of the 26 domestic franchisers (27 percent) run purely franchising business.

Food and beverage franchisers ranked first with 46.15 percent local franchisers and 55.75 percent foreign franchisers, followed by non-food retail, training and consulting, laundry, fitness and body care and other products.

The consulting firm added that the United States is the largest exporter of franchises to Indonesia with 76.11 percent of the franchises already set up in the country, followed by Japan, Australia, British, Singapore, the Philippines, France and Italy.

Based on a survey of clients in 1995, AK & Partners concluded that 50.6 percent of those interested in franchising are women who want to be franchisees of foreign companies.

The company concluded that most domestic small and medium enterprises are eager to expand their franchises while large enterprises are more interested in buying foreign franchises, particularly those that are already well-known.

The consulting firm predicted that foreign franchises will continue to expand with an annual growth of 31.8 percent.

"The growth of foreign franchising in Indonesia will increase employment and transfer of technology. However, they will also cause the outflow of foreign exchange," the firm said. (kod))