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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 ...

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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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...Advances in social science education and humanities research volume nd international conference on law governance justice icolgas legal protection of the parties franchise agreement dharu triasih dewi tuti muryati university semarang indonesia e mail dharutriasih fhusm yahoo co id dewitutimuryati com abstract agreements are based made by both this causes principles contractual freedom set out article as well obligations rights for civil code however implementation franchisee business basis needs to pay attention requirements mentioned which is about conditions an one encourages problems applicability all legally established existence a standard contract or contained laws those who make them cannot how be revoked long it agreed upon during pandemic what reasons reasoned sufficient consequences not registering approach method normative juridical that purpose must executed specifications analytical descriptive good faith provisions data collection used library studies document will known ...

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