The Franchise Letter of Intent is a crucial preliminary document used in Indonesian franchise transactions to establish the foundation for negotiations between potential franchisors and franchisees. It serves as a roadmap for the franchise relationship while parties conduct due diligence and negotiate final terms. This document is particularly important in the Indonesian context, where franchise relationships are heavily regulated under Government Regulation No. 42 of 2007 and require specific registrations and disclosures. The LOI typically precedes the more comprehensive Franchise Agreement and helps parties align their expectations while maintaining confidentiality and exclusivity during negotiations. It should be drafted with consideration of both Indonesian civil law principles and specific franchise regulations, particularly regarding registration requirements and mandatory provisions.
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1. Parties: Identification of the prospective franchisor and franchisee, including complete legal names and addresses
2. Background: Brief introduction of the franchisor's business, brand recognition, and the parties' intention to explore a franchise relationship
3. Definitions: Key terms used in the letter of intent
4. Proposed Business Relationship: Overview of the contemplated franchise arrangement, including territory and business model
5. Due Diligence Process: Outline of the evaluation period and due diligence requirements from both parties
6. Preliminary Terms: Key commercial terms including proposed fees, royalties, and general obligations
7. Confidentiality: Binding provisions regarding the confidentiality of disclosed information
8. Exclusivity Period: Timeline during which parties agree not to negotiate with other potential partners
9. Good Faith Negotiations: Commitment to negotiate the final agreement in good faith
10. Non-Binding Nature: Clear statement that the LOI is non-binding except for specified provisions
11. Governing Law: Specification of Indonesian law as the governing law
12. Termination: Conditions and process for terminating the LOI
13. Signatures: Execution block for both parties
1. Break Fee: Optional provision for a fee if either party terminates negotiations without justified cause
2. Dispute Resolution: Optional section specifying preliminary dispute resolution mechanisms
3. Costs and Expenses: Optional section detailing how preliminary costs will be borne
4. Language: Optional section specifying language requirements if document is bilingual
5. Regulatory Compliance: Optional section addressing specific Indonesian franchise registration requirements if relevant at LOI stage
1. Schedule A - Initial Business Terms: Preliminary outline of key commercial terms and conditions
2. Schedule B - Due Diligence Requirements: List of documents and information required for due diligence
3. Schedule C - Timeline: Proposed timeline for negotiation, due diligence, and execution of final agreements
4. Appendix 1 - Confidentiality Terms: Detailed confidentiality provisions and requirements
5. Appendix 2 - Required Disclosures: Preliminary list of disclosures required under Indonesian franchise regulations
Authors
Relevant legal definitions
Clauses
Relevant Industries
Food and Beverage
Retail
Education and Training
Healthcare Services
Hospitality
Personal Services
Fashion and Accessories
Automotive Services
Technology and Software
Entertainment
Fitness and Wellness
Professional Services
Relevant Teams
Legal
Business Development
Commercial
Operations
Finance
Compliance
Corporate Secretariat
Strategy
International Business
Mergers and Acquisitions
Relevant Roles
Chief Executive Officer
Managing Director
Business Development Manager
Legal Counsel
Franchise Development Director
Commercial Director
Operations Manager
Chief Financial Officer
Compliance Officer
Contract Manager
Business Owner
General Manager
Corporate Lawyer
Franchise Manager
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