This document discusses online marketing channels for selling franchise businesses in Indonesia. It finds that most prospective Indonesian franchisees are interested in food and beverage businesses. While franchisors have websites and update them regularly, their priority of marketing channels is inappropriate as they should focus more on online marketing than exhibitions. Franchisors need to improve their online content to provide more comprehensive information about the franchise system based on what prospective franchisees are interested in.

1. Online Marketing Channel
in Selling Franchise Business
in Indonesia
Erwin Halim and Hendry Hartono
School of Business Management
Bina Nusantara University, INDONESIA

2. Introduction
 Franchise business gives more impact to the
economic growth in the United States compare to
non-franchise business based on the International
Franchise Association report (2013).
 In the year 2008 up to 2009 when the United States
experienced the economic crisis, franchise business
absorbed more employability compare to non-franchise
business.

3. Introduction ( cont’)
 In Indonesia, as well as in the US, franchise system is
used as business expansion strategy for Small Medium
Enterprises (SMEs).
 In 2012, there are 1.700 franchise-format companies.
(AFI, 2013).
 Franchisors are looking the appropriate marketing
channels
 The objective of this paper is to see the ways of online
marketing channel offer by franchisors are absorbed or
not by prospective franchisees or investors.

4. Literature Review
 Franchise Sectors Categories and Majority
 IFA (2014): Automotive, Business Services, Commercial and
Residential Services, Lodging, Personal Services, Quick
Service Restaurants, Table/Full Service Restaurants, Real
Estate, Retail Food and Retail Products and Services.
 Yodle (2013): Automotive, Business Services, Cleaning &
Maintenance, Education, Home Services, Medical, Retail and
Other. No F&B as one sector.
 Franchise Update (2013): Automotive, Baked Goods, Ice
Cream or Yogurt, Business Related, Child Related, Cleaning
& Maintenance, Education Related, Fast Food Restaurants,
Health & Fitness, Home Services, Restaurants (Dine in),
Retail Food, Retail Stores and Senior Care.

5. Criteria in Asia
 In Indonesia, 69.51% prospective franchisees are
looking for Food and Beverage or Culinary sector
(including: dine in restaurants, fast food restaurant,
retail food & beverages (booth), ice cream and
yogurt, and bakery).
 In Malaysia, Food and Beverage sector as majority
commands for more than 30 percent of the market
share and remains the franchise best prospect for
Malaysia. (Yeoh, 2009).

6. Online Marketing for Franchising
Pamecha (2008) found that more than 90 percents
customers are looking for franchisors websites.
 Yodle’s (2013) survey shown that 87% of
respondent agree that online marketing for
franchising are important
 89% of respondent agree the importance of
online marketing in choosing a franchise business.

7. Methodology
 A survey was conducted in Jakarta on December
2013 with 82 respondents of franchise exhibition
visitors (prospective franchisee) and 27 franchise
exhibitors (franchisors).
 t-test and qualitative comparison to compare the
answer from franchisors and franchisees.

8. Results
 86% of respondents from the franchisors use
information systems for most activities.
 92% of these respondents have websites
 96% of them update the websites.

9. Indonesia Franchise Business Sector
Fig.1. Percentage of Business Sector to Buy in
Indonesia (2013) by Prospective Franchisee

10. Source of information
Fig.2. Source of Franchise Information Gathered by
Prospective Franchisee

11. Fig.3. Franchise Information Channel Proposed by
Franchisor (Exhibitor)

12. Fig.4. Channel of Franchise Information on Internet use
by Prospective Franchisee

13. Fig.5. Channel of Franchise Information on Internet
Proposed by Franchisor

14. Information
Mean (1-7 Likert Scale)
Franchisee Franchisor
Franchise Fee 5.44 5.70
Royalty fee 5.01 5.22
Investment 5.44 6.44
Advertisement Fee 5.07 4.69
Contract Duration 4.89 5.59
Years Established 5.57 6.07
Years Franchised 5.37 6.04
Payback Period 5.80 6.44
Employee Support 5.76 6.00
Training Duration 5.37 5.48
Profit 5.90 6.30
Money guarantee 5.88 4.89
Site Selection Support 5.83 5.67
Self Operator 5.46 5.48
Open Same business after Contract 5.47 4.37
Own Supplier 5.10 4.30
Change Supplies 5.00 3.56
Run other Business 5.15 5.15
Use Own Building 5.79 6.11

15.  Prospective franchisee less need of information
compare to the willingness of franchisors to propose
information such as financial information, legal and
company profile legal
 Prospective franchisees are more interest relate to
the information of their rights open same business
after contract, own supplier, change supplies, site
selection support and money back guarantee.

16. Conclusions
Mostly Indonesia prospective franchisee seeks for
the Food & Beverages business sector (69% of
respondents), so it also a signal for foods and
beverages franchisors to follow a franchise
exhibition and give attention to the online
information content.
 Franchisors have inappropriate marketing channel
priority. They have to give more attention on online
marketing than exhibition or printed advertising.

17. Conclusions (cont’)
 Franchisors have to make digital advertisement on
search engine and on online portal beside social media.
 Franchisors should give attention to the online
information of franchise: the system quality, information
quality and service quality (DeLon Model - DeLon et al,
2003)
 Further research will be related to the franchise
information systems proposed by franchisor, which is
already confirmed by the prospective franchisees as
comprehensive model.