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Advances in Social Science, Education and Humanities Research, volume 499 2nd International Conference on Law, Governance and Social Justice (ICOLGAS 2020) Legal Protection Of The Parties In The Franchise Agreement 1 2 Dharu Triasih , Dewi Tuti Muryati 1,2 University of Semarang, Semarang - Indonesia E-mail: dharutriasih.fhusm@yahoo.co.id./dewitutimuryati@yahoo.com Abstract - Franchise agreements are based on the agreement made by both parties, this causes legal principles of contractual freedom set out in Article 1338 protection as well as obligations and rights for the of the Civil Code. However, the implementation on this franchisee in implementation of franchise business basis needs to pay attention to the requirements mentioned in Article 1320 of the Civil Code which is agreements. about the legal conditions of an agreement. One of the Article 1338 of the Civil Code encourages the causes of problems in the Franchise Agreement is the applicability of all legally established agreements as existence of a standard contract or standard contract based on freedom of contract contained in the Civil Code. laws to those who make them. An agreement cannot How is the legal protection for the parties in the be revoked as long as it is agreed upon by both Franchise Agreement during the pandemic? What are the parties or for reasons reasoned by law to be sufficient legal consequences of not registering a Franchise? The approach method is the normative juridical method. for that purpose. An agreement must be executed in Specifications This research is analytical descriptive. good faith. Based on the provisions contained in Data collection used is library studies, document studies. Article 1338 of the Civil Code, it will be known the Analytical descriptive data analysis. In connection with the covid-19 pandemic period, the pandemic condition basics - the principle of freedom of contract that is which qualifies as force majeure has implications for the everyone is free to make an agreement or free to franchise agreement made by the parties. Franchisors determine the content of an original agreement is not cannot be declared in default because the contractual obligations are not fulfilled not because of intent or contrary to the Law and public order. negligence but because of the Covid-19 pandemic. A franchise agreement is an agreement Regents according to their authority can each impose between the franchisee and franchisor, which gives administrative sanctions in the form of written warning; fine; STPW revocation. the franchisor the right to manufacture or sell goods Keywords- Agreement; Franchise; Legal Protection (products) and/or services within a certain time and place decided by the franchisor. While the franchisee I. INTRODUCTION pays a certain amount of money to the franchisor for The presence of a standard contact or freedom the right he has acquired, such as buying and selling; of contract is found in the Criminal Code. Therefore, renting, and so on. Therefore, the provisions of the the State gives the basic limitation of good faith as agreement law that apply to a franchise contract are stated in Article 1338 Paragraph (3) of the Criminal generally only the provisions in the general section of Code as an effort to protect the law against the parties the agreement, namely those contained in Article involved in the Franchise Agreement. Especially the 1233-1456 Civil Code, for example, the validity of franchisee whose position is weaker than the the provisions regarding the validity of the franchisor. The position of the franchisee is indeed agreement, regarding the termination of the weaker compared to the franchisor. Because the agreement and so on. This is what led to the idea of franchisee only runs the business of the franchisor and conducting this research activity. expands its business locally or elsewhere. Therefore, the franchisee in conducting its business must comply II. PROBLEMS with the content of the standard contract agreement First, how is the legal protection of the parties in the made by the franchisor, because the franchisee does not Franchise agreement? And second, What are the legal have the right to determine the content of the consequences for the Franchise not being registered? Copyright © 2020 The Authors. Published by Atlantis Press SARL. This is an open access article distributed under the CC BY-NC 4.0 license -http://creativecommons.org/licenses/by-nc/4.0/. 418 Advances in Social Science, Education and Humanities Research, volume 499 Advances in Social Science, Education and Humanities Research, volume 499 Franchisees or franchise recipients are III RESEARCH METHOD business entities or individuals who are given the right to utilize and/or use intellectual property rights The type of research used is normative legal or inventions or the characteristics of the franchise research or commonly known as doctrinal research, giver. which is research conducted by examining library A franchise agreement is an agreement that materials or secondary data consisting of primary the franchisor holds with the franchisee, the legal materials, secondary legal materials, and franchisor grants the franchisee the right to produce tertiary legal materials. According to Peter Mahmud or market goods (products) and/or services (services) Marzuki, all research related to law (legal research) is within a certain time and place agreed by the always normative [1] This research is descriptive- franchisor, while the franchisee pays a certain analytical using the statute approach and the case amount of money to the franchisor for the rights he approach. The source of this research uses primary has acquired. . The definition of the franchise and secondary legal materials related to the legal agreement as referred to above, can be seen several issues raised. The data collection technique used in elements of the franchise agreement, are: [2] this research is library research. 1. The existence of an agreed-upon agreement. Franchise agreements are made by the parties, IV. DISCUSSION namely franchisors and franchisees, both of whom are qualified as legal subjects, either as legal 1. Legal Protection For The Parties To The Franchise entities or only as individuals. Agreement 2.There is a right from the franchisor to the The definition of Franchise according to Article franchisee to produce or market goods and or 1 of Government Regulation Number 42 of 2007 services. With this franchise agreement, the right to concerning Franchising, states that: Franchising is a use the franchise system is granted. Granting rights special right that is owned by an individual or under the franchise name from the franchisor to this business entity against a business system that is franchisee, then the rights given need to be business in nature to market goods and/or services regulated in the franchise agreement. that have been proven successful and can be used 3.Granting of these rights is limited to a certain time and/or used by other parties based on a franchise and place. In this case, the franchisor gives the agreement. [2] franchisee the right to use the name, trademark, and The franchise is a form of the business format logo of his business to the franchisee limited to the in which the first party called the Franchise provider place and time that has been agreed in the franchise (franchisor) grants the right to the second party called agreement. the Franchise recipient (franchisee) to distribute 4.There is a payment of a certain amount of money goods/services within a geographic area and a certain from the franchisee to the franchisor. Some period by using a brand, logo, and an operating financial compensation must be submitted by the system that is owned and developed by the franchisee to the franchisor so that the relationship franchisor. The granting of these rights is stated in can be a franchise relationship. Although it is not the form of a franchise agreement. [3] absolutely a payment of money. Such compensation In addition to the definition of a franchise, it is is usually included in the categories' initial money, necessary to explain the meaning of the franchisor royalties, and other money of an occasional or and franchisee. recurring nature. Franchisor or franchisor is a business entity or According to Government Regulation No. individual that gives rights to other parties to utilize 42/2007. Article 4 concerning Franchise A Franchise and or use intellectual property rights or inventions or Agreement must at least contain clauses regarding the business characteristics that they own. following: 1. Identity of each party; 419 Advances in Social Science, Education and Humanities Research, volume 499 Advances in Social Science, Education and Humanities Research, volume 499 2. Identity and position of each party parties from harming other parties, including in authorized to sign the Profit Wara providing legal protection for IPR. This is because Agreement; the agreement can be a strong legal basis to enforce 3. A description of intellectual property rights legal protection for the parties involved in the or inventions or characteristics of products Franchise system. If one of the parties violates the and / or services that are the object of the contents of the agreement, then the other party can franchise; sue the violating party by applicable law. As with the 4. The rights and obligations of each party as Franchise Agreement above, it can be seen that the well as the support and facilities provided to Agreement has specifically regulated IPR protection, the Franchise recipient; namely by agreeing on certain limitations that must 5. The marketing area. in this case, the be obeyed by the franchisee, which is directly or franchisor can determine whether the indirectly aimed at protecting the intellectual marketing area covers all or part of property rights of the Franchise giver. Government Indonesia; Regulation on Article 5 about Franchise, in the 6. The term of the Franchise Agreement (which Franchise Agreement, contains clauses at least: is at least for 5 years along with the a. Name and address of the parties; procedures and requirements for the b. Types of Intellectual Property Rights; extension of the Agreement; c. Business activities; 7. Procedures for dispute resolution; d. Rights and obligations of the parties; 8. Matters that may result in termination or e. Assistance, facilities, operational termination of the Franchise Agreement; guidance, training, and marketing 9. Compensation in the event of termination of provided by the Franchise Giver to the Franchise Agreement; the Franchise Recipient; 10. Method of payment; f. Business area; 11. The use of products or materials produced in g. Duration of the agreement; the country as long as they meet the h. Procedure for payment of rewards stipulated quality standard requirements; and i. Ownership, change of ownership and 12. Coaching, training, and guidance for rights of heirs; Franchise Recipients. [4] PP 42/2007 For the j. Dispute resolution; and Government, rule of law is a responsibility k. Procedure for extension, termination. that must be realized to provide legal [5] services and justice for its citizens to create However, the unilateral contract termination order and harmony in life. After all, legal makes the franchisee's position as a weak party. In protection is a right for every citizen the Franchise Agreement, the principle of freedom of wherever they are and the Government has a contract is applied, it's called the freedom of the big responsibility to enforce the law for the franchisor to determine or choose a business partner implementation of legal protection for its as a franchisee because the freedom to determine the citizens without any discrimination. contents and form of the agreement no longer exists For the Government, rule of law is a with the pouring of the Franchise Agreement in the responsibility that must be realized to provide legal form of a standard agreement services and justice for its citizens to create order and A franchise agreement is a standard agreement, harmony in life. After all, legal protection is a right where the franchisor has prepared terms that have for every citizen wherever they are and the been printed in an agreement form which is then Government has a big responsibility to enforce the submitted to the franchisee. This standard agreement law for the implementation of legal protection for its is commonly made because the franchisor can save citizens without any discrimination. Franchise more money and time. However, agreements like this agreements are one aspect of legal protection for are often burdensome to franchisees because they are 420 Advances in Social Science, Education and Humanities Research, volume 499 Advances in Social Science, Education and Humanities Research, volume 499 dominated by the interests of the franchisor. This 1. General provisions standard agreement can also be called an agreement 2. Conditions precedents to accept or reject (take it or leave it) because one of 3. Franchise Grant the parties cannot carry out negotiations or the terms 4. Restrictions on the use of franchise contained in the agreement. This agreement opposes rights (limited of franchise / the principle in the agreement, namely the principle intellectual property protection) of freedom of contract because it appears that this 5. Franchise price and payment terms franchise agreement only focuses on the interests of 6. Services by the franchisor the franchisor. The principle of freedom of contract 7. Uniformity as the basis for forming a franchise agreement, in 8. Promotion (marketing and advertising practice is often misused by strong parties so that it campaign) often causes irregularities in the formulation of rights 9. Training and obligations by strong parties, thus harming the 10. Exclusivity weak. [6] 11. Terms of the agreement Based on Article 1338 paragraph (1) that in the 12. Location selection (premises) making of an agreement there is a principle of 13. Right of inspection and audit freedom of contract where this principle gives 14. Report procedures (report freedom to any person or business entity to make any procedures) agreement without violating provisions prohibited by 15. The principle of non-competition law or statutory regulations, the agreement is valid (non-competition) according to law. 16. Product or system confidentiality Article 1338 paragraph (2), that is, if an (non-disclosure) agreement has been made and it has been agreed that 17. Administrative licensing it is valid, then one of the parties cannot withdraw or (government approval) cancel the agreement without an agreement from both 18. Employees and labor parties agreeing. 19. Insurance Article 1338 paragraph (3) of the Civil Code is 20. Guarantee against lawsuits and losses about the principle of good faith in agreeing. This (indemnification) means that a business agreement is based on bad 21. Taxes faith, for example, based on fraud, then the business 22. Transfer of rights (assignment) agreement is considered invalid and can be canceled 23. Stand-alone position (independent according to law. Thus the principle of good faith contractors / no - agency) implies that freedom in making a business agreement 24. Default (event of default / non- cannot be realized on the will of one of the parties performance) 25. Extension without being limited by good faith. With the agreement principle of good faith, each party agreeing will carry 25. Extension agreement out the obligations and rights arising from the 26. Termination or termination of the agreement. agreement In agreeing the parties must comply with the 27. Choice of forums and legal provisions of Article 1320 of the Civil Code jurisdiction (forum and governing) regarding the validity of an agreement: 28. Amendments to the agreement and 1) There is an agreement between the parties; waiver of rights (modification and 2) The competence of the parties; waiter) 3) A certain thing. 29. Damages The following are the clauses that are commonly 30. Force Majeure agreed upon in a franchise contract, both 31. Several abilities of provisions international and domestic, such as: 421
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