Growing Franchise

Chairman of the National Committee of Franchising and Licensing Division, Indonesian Chamber of Commerce and Industry, Amir Karamoy, saying business growth franchise stores this year to reach 12-15 percent. "The growth of franchise business in Indonesia, including large compared to the growth of the world. But deep compared with the United States," he said in Jakarta yesterday.

According to Amir, currently there are 1,000 franchisees and about 10 thousand franchises throughout Indonesia. About 60 percent of franchisees in the country belong to the national entrepreneurs and the rest overseas franchisees. Despite fairly rapid growth in franchise stores, the growth of the brand or franchise holder is not high enough.

6-7 percent growth predicted franchisees. Indonesia is the largest franchise in Asia. About 40 percent of franchisees relating to the field of culinary, food and beverages. The rest of education and beauty. But high growth do not guarantee the existence of the franchisee. Level failures, especially Indonesian franchisee who opened the business in foreign countries, somewhat higher.

While the failure rate of franchised businesses in the U.S. only 8 per cent, in Indonesia, the failure rate could touch 40 percent. Most franchisees that expand abroad can last no more than two years. "They always think easy to run franchises. In fact there are rules and agreements that must be met," said Amir.

The main cause of failure was due to the national franchise does not understand foreign markets and tend to equate the rule of overseas markets with the Indonesian market. Amir pointed out, many franchisees who did not consider the price of labor and rental property abroad are far more expensive.

Franchise Indonesia is also reluctant to hire legal counsel to assist them when starting a business. Whereas a consultant is needed to ensure the position of entrepreneurs in business agreements. "They think hiring expensive consultants. It's not expensive compared to the potential for greater losses in the future," said Amir.

One of the local franchisees who will soon expand to widen the neighboring country is Sour Sally. Restaurants seller yogurt was planning to open two licensed stores in Singapore and Malaysia. Franchise Manager Sour Sally, Ermeyta Mansour, said it took the two partners to open a store Yogu Buzz, one of the brand Sour Sally, in the next year.

Investment required for one booth Yogu Buzz reached USD 380 million. While many overseas partners who are interested in purchasing the license Sour Sally and Yogu Buzz, Ermeyta said it is very selective. Management decided to select two partners for two stores only. "We were reluctant hasty though many enthusiasts," he said. (Kartika Candra - Koran Tempo)