Indonesia Limits Restaurant Outlets to 250 for Franchise Owners

Indonesia will limit restaurant franchise holders to operating 250 outlets in the country, with certain exceptions, in a bid to protect small- and medium-size businesses, Trade Minister Gita Wirjawan said.

Companies can operate more than 250 outlets either by selling partnership stakes, or agreeing to open them in certain remote locations, to be determined later, Wirjawan said at a press briefing in Jakarta today. They will have five years to comply, he said.

The regulation affects companies such as PT Fastfood Indonesia, which operates more than 400 Yum! Brands Inc. KFC restaurants in Indonesia. Yum also owns the Pizza Hut dining chain. The rule applies to all food-mart franchisers and franchisees, including public companies, Wirjawan said.

“I have sat with KFC management, which has more than 400 outlets,” Wirjawan said. “They seem to agree to follow the rule. We said to them that we are open to adjusting the rule, if there are conditions that require more time in divesting.”

To contact the reporter on this story: Widya Utami in Jakarta at wutami@bloomberg.net

To contact the editor responsible for this story: Greg Ahlstrand at gahlstrand@bloomberg.net