FRANCHISE BUSINESS GROWING RAPIDLY

Franchise business has recently become a trendsetter in Indonesian economic dynamics. Public interest in franchise business opportunity is very significant. This is reflected from two things, namely number of franchise buyers and number of businesses opportunities converted to franchise businesses. In the future, franchise business will be growing continually. Quoting data of Indonesian Franchise Association (AFI), total value of franchise business in 2011 reaches Rp 130 trillions, and it is predicted to reach Rp 160 trillions in 2012.

According to Chairman of AFI, Anang Sukandar, in Jakarta (Monday, 7/9/12), number of franchise business in Indonesia currently reaches 2,000 businesses. But, this number is dominated by prospective franchise businesses. To this day, around 40,000 franchise outlets have been spreading and have absorbed around one million workers. He said that franchise business will continue to grow rapidly reaching 2% - 3% a year, and franchise business opportunities could grow by 8% a year. Total investment for opening franchise business commonly starts from Rp 10-15 millions. “Regardless of the investment value, perseverance is an important factor”, he said.

Anang estimated that up to the end of the year, total sales turnover of national franchise business could at least reach Rp 220 trillions. Concerning franchise business development in the future, Anang mentioned some important factors, namely: firstly, franchise business is still growing; secondly, from the aspect of sales turnover, contribution of foreign franchisors is bigger; thirdly, foreign portion will be higher considering plan of new franchises from the United States and South Korea which will enter Indonesia. He reminded that Indonesia should not only become a fat market for foreign franchisors, but all local stakeholders must improve themselves as competition level is increasingly high.

Amir Karamoy, Chairman of Standing Committee for Franchise and Licensing of Indonesian Chamber of Commerce and Industry (Kadin Indonesia), said that a quite strong economic fundamental in the first 6 months of 2012 has supported franchise growth. He said that the most significant franchise growth is experienced by food and other culinary businesses. During school holiday, sales of food and beverage products increase quite significantly. According to him, growth in sales turnover is occurring proportionally, whether for foreign or local franchises. Based on Kadin Indonesia’s survey, local franchises show a positive development, and it can be seen from many reports regarding growth of franchise business.

Amir said that growth momentum of sales turnover will occur during the Ramadhan fasting month and Lebaran. During that time, consumption always increases if compared to normal days. And, expansion of foreign franchises will probably be slowing down awaiting amendment of Regulation of Trade Minister concerning franchises. Yet, however, foreign franchisors’ interest expanding their businesses in Indonesia is still high.

According to Amir, franchise growth is also supported by political and economic stability. Both are the key to national franchise growth. During 1^st semester of 2012, franchise business is going on very well, as seen from network expansion and appearance of new players. Four franchise businesses which are growing quite significantly are culinary, education, automotive, and travel businesses. While, by area Jakarta, Bogor, Depok, Tangerang and Bekasi are the largest contributors to franchise growth. “There are also franchise businesses which are growing in the region, and after they are developing, they expand their businesses to Jakarta” he said.

Business News - July 11, 2012