Legal Protection for Recipients of Foreign Franchise Rights in Indonesia

Abstract

Due to gobalization, world trade has increased tremendously. Franchising having surged as one of the many business models has the potential to improve the economy of the community. Basically, franchising refers to a method of goods and services distribution to consumers. The party who owns the method is referred to as the franchisor, while the party given the right to use a method the franchisee. This article examines the legal issues that arise in granting license rights from foreign franchisors to franchisees, and how the laws in Indonesia provide protection for the rights and obligations of the parties. The research employed the normative juridical method or library research. Normative legal research examines the law as a positive norm as it is written in the book. In accordance with Article 1320 and 1338 of the Indonesian Civil Code, arrangements of franchising agreement in Indonesia are based on the agreement between the parties. To provide legal protection for recipients foreign franchise in Indonesia, the government has enacted the Government Regulation No. 42/2007 on Franchise and Trade Minister Regulation No. 53/2007 on the Implementation of Franchising. In principle, the settlement of the problems that occur in international franchising agreement would be resolved by consultation or negotiation. If consensus is not reached, the parties can take the dispute to international arbitration. In general, the dispute over the franchise business concept is mostly resolved through the general justice institution.