Have a Franchise Business Idea but No Capital? Here’s the Solution

“Wow, that’s an amazing brand, XYZ. They don’t even have a single outlet as an example, yet they’re already selling partnership opportunities at a franchise exhibition. And apparently, there are people interested,” a friend once told me.

“If it’s a franchise, it should be proven and already demonstrated to be profitable. A Business Opportunity, however, doesn’t necessarily have to be,” said another friend when discussing the growing number of businesses operating under the BO (Business Opportunity) label, a term that has recently shifted toward the more popular term “partnership.”

Using Other People’s Money

In my personal opinion, if you are using other people’s money—whether through a franchise model or a partnership opportunity—then, from an ethical standpoint, the business should already be proven and capable of generating sufficient and reasonable profits.

If the business has not yet been proven, at the very least, there should be complete transparency. Nothing should be concealed or deliberately withheld. This allows investors to understand the risks associated with their investment.

Unfortunately, what often happens at franchise exhibitions is the opposite. “Promises of heaven” are offered everywhere: a return on investment in less than one year, money-back guarantees, or even fixed annual returns of 10% to 12% of the total investment.

“That’s what selling is all about,” my friends often joke when reacting to the figures presented in brochures, which can sometimes be misleading or even deceptive.

Angel Investors

In the startup world, there is a term known as an angel investor. These “angel investors” are typically individuals who are interested in helping business owners prove that their business ideas are more than just empty promises. Of course, these “angels” must first be convinced.

Once convinced, an angel investor may provide funding to develop a prototype or turn the entrepreneur’s business concept into a tangible operation.

Who could become an angel investor? It could be a family member, a relative, a friend, or even a friend of a friend who shares similar visions and values.

Crowdfunding

If the amount of capital required is substantial and a single investor is unable to provide enough funding, a group of individuals can come together to finance the business concept through what is known as crowdfunding.

Transparency is crucial for both business owners and potential investors. It is not uncommon for entrepreneurs to present their personal backgrounds, introduce their team members, explain their team's experience, and provide references from other parties to build greater confidence among potential crowdfunding investors.

What happens at franchise exhibitions is, in some ways, similar to crowdfunding. The key difference is the lack of transparency and the limited financial literacy among many visitors when it comes to evaluating the opportunities and risks associated with a business concept that has not yet been proven.

The lack of government involvement in establishing clear transparency and disclosure requirements for franchise and partnership exhibitions has effectively created a “red carpet” for opportunists who promote nothing more than business concepts, as well as those who take advantage of the growing trend of building multiple brands in recent years.

There is almost no government institution that considers itself responsible for business offerings that are not officially recognized as franchises and do not hold an STPW (Surat Tanda Pendaftaran Waralaba), or Franchise Registration Certificate.

In Indonesia, the Ministry of Trade is generally involved in mediation when disputes arise involving business brands that have obtained an STPW.

The “Brand Farming” Phenomenon

As a closing thought, I would like to once again highlight the phenomenon of “brand farming.”

This trend, which has become increasingly visible in recent years, has attracted many people, particularly young entrepreneurs. Some of those involved have even encouraged other young people to join, promoting the idea that this is an inexpensive way to become wealthy or escape from an existing business that has failed to perform as expected.

What Is Brand Farming?

Brand farming is a phenomenon in which an individual attempts to own as many business brands as possible and then offers those brands at franchise exhibitions or through communities that actively seek businesses promising passive income.

The marketing gimmicks often include claims such as:

• “Autopilot business”

• “Return on investment in less than one year”

• “Affordable investment”

• “Starting from tens of millions of rupiah to around IDR 500 million”

There is nothing inherently wrong with owning multiple brands. Examples include established Indonesian business groups such as Ismaya Group and Boga Group.

However, problems arise when there is a tendency to abandon or “bury” brands that were previously heavily promoted or made popular, particularly when those brands were built using other people's capital. In such cases, offering new partnership opportunities to the public can raise serious questions about business ethics and professional standards.

The term “burying” here can simply mean removing an underperforming brand from the list of brands officially displayed on the company's own website, even though the brand may still operate in several locations.

While those brands are being quietly phased out, new brands are launched—sometimes based on concepts that are remarkably similar to the businesses that were previously abandoned.

Isn't that ironic?