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ndonesian franchisors are opting to develop their businesses within the country due to the large domestic market rather than expanding abroad.

“The Indonesian market with a population of almost 240 million is huge. We don’t have to be bothered with expansion abroad,” Thomas Lie, founder and director of PT My Salon International, said on the sidelines of the ninth Franchise and License Expo on Saturday.

He said, however, that My Salon already had shops overseas: one in Kuala Lumpur, one in Singapore and three in Shanghai.

“Our shops overseas are only for branding purposes,” he said, adding that My Salon aimed to open six more shops in Indonesia by the end of this year and 20 more in 2012.

He said that people who wanted to be franchisees of My Salon would have to invest about Rp 360 million (US$40,700) with a pay-back period of 40 months. Franchisees would see a net profit of about 20 percent of total turnover per month.

He claimed that expansion outside Jakarta and Java was very promising, citing an example of an outlet in Samarinda which had a monthly turnover of up to Rp 100 million.

Meanwhile, PT Baba Rafi Indonesia marketing manager, Erys Surveyatmini, shared a similar opinion.

She revealed that two Baba Rafi outlets in Abepura and Sorong, Papua, had daily turnovers of up to Rp 2 million per day, far higher than those of Jakarta outlets of some Rp 500,000.

“Perhaps, because there are only two outlets in Papua while in the Greater Jakarta there are about 300 outlets. People in Papua think the food we offer is unique,” Erys said.

Price difference might also contribute to the higher turnover. Baba Rafi, which offers kebabs, charges Rp 15,000 per meal, Rp 3,000 more than in Jakarta, to cover the delivery-cost of ingredients to Papua.

Erys said that Baba Rafi currently cooperated with 600 franchisees and only had 30 company-owned outlets out of 750 outlets nationwide, providing jobs for about 1,000 people.

She said that Baba Rafi had tried to expand business overseas and had been registered in Malaysia as Baba Rafi Malaysia Sdn. Bhd. since last year. However, Erys said that there were difficulties involving permission to open outlets and the mechanisms of ingredient-shipping, which hampered the plan. Baba Rafi faced similar difficulties in the Philippines.

Amir Karamoy, chairman of the national committee on franchise and license at the Indonesian Chamber of Commerce and Industry (Kadin), said that more franchisors would start business next year with a double-digit growth in the number of franchises.

“I can’t tell for sure, however, I estimate that franchise growth will be 11 to 12 percent this year. And will grow by about 15 percent next year,” Amir said, adding that Indonesian franchises needed to be more innovative and creative to face the 152 foreign franchises operating currently.

One foreign company interested in starting franchising in Indonesia is the US-based yogurt company Sweet Chills.

Sweet Chills representative Kyle Brockett said that the company would like to open in Indonesia because of a booming middle class.

“We’d like to have 40-50 outlets across Indonesia by the end of next year,” he said. (rcf)