Finding suitable premises for a business in Bali is not easy. Many factors need to align - a convenient location, favorable rental conditions, and most importantly, the ability to obtain all necessary permits and licenses at the required address. It's even harder to maintain all this if the contract is poorly drafted. Boris's story shows how one missing line in a contract can make a business unprofitable.
Boris is an entrepreneur who has lived in Bali for four years. Tired of the local cuisine and missing familiar homemade food, he decided to start a sausage production business on the island. Together with partners, he rented a small 30-square-meter space from a local resident. The owner warned he was more interested in selling, but they agreed on a rental of 25 million rupiahs per month. The entrepreneur signed a standard contract with the owner and began preparing the business.
A significant sum was spent on renovating and equipping the premises. Everything needed to be in order to meet the requirements for obtaining a food production license. Ultimately, the permit was obtained, and the sausage production process was launched.
But before the business could become profitable, problems began. The owner of the premises changed, and the new owner issued an ultimatum: 'Either pay 50 million rupiahs for rent or leave'.
The rental price doubled, but the entrepreneurs couldn't refuse. All permits and licenses were obtained for this address. Moving meant starting all over again. Tenants were essentially trapped and had to agree and sign a new contract.
Formally, the price didn't strongly deviate from the market, but the location wasn't busy, and the business's profitability plummeted under new conditions. Interacting with other entrepreneurs, Boris learned that many projects would have to close due to such rent as they couldn't handle such a steep cost increase. It's a paradox: production capabilities are there, the license is there, but the business's economics collapse because of one contract.
What was the main mistake? Two key points weren't secured in the first contract. The first - a fixed rental price for several years. The second - maintaining the conditions in case of a change of ownership. As a result, the tenant was left defenseless: the new owner had the right to dictate their terms.
Such stories are not uncommon in Bali. The standard rental contracts offered by owners are usually written to protect them only. They don't provide guarantees for tenants, especially those investing in repairs and equipment.
Working with lawyers helps avoid these risks. Experts at Legal Indonesia specialize in reviewing and drafting contracts for businesses and individuals.
What do lawyers do:
- review the contract offered by the owner and indicate where risks are hidden for the tenant;
- add provisions on price, terms, and obligations that protect the tenant;
- specify that if the owner changes, the lease continues under the same conditions;
- remove ambiguous wording that could later work against the client;
- explain the contract text in simple language - in Russian or English.
Work duration - 2-3 days. Cost - from 1.5 million rupiahs. For businesses, this amount is incomparable to the losses that arise from document errors.
Legal Indonesia works remotely. Just send the document by email or messenger to receive a contract that truly protects the tenant's interests in a few days.
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