Franchise Agreements from a Commercial Law Perspective

Abstract

The dynamic development of the business world has encouraged the emergence of various business partnership models to accelerate market expansion, one of which is through the franchise system. However, in practice, this legal relationship often triggers asymmetric bargaining positions and potential disputes due to the blurring of the rights and obligations of the parties within the scope of business law. This study aims to analyze the legal standing and validity of franchise agreements within the Indonesian commercial law system, as well as to examine the ideal form of legal protection for franchisors and franchisees to minimize the risk of default. The research method used is normative juridical with a statute approach and a conceptual approach. Secondary data obtained through literature review was analyzed qualitatively using deductive reasoning. The results indicate that a franchise agreement is a valid, anonymous agreement based on the principle of freedom of contract (Article 1338 paragraph 1 of the Civil Code) and the requirements for a valid agreement (Article 1320 of the Civil Code). From a commercial law perspective, formal validity requires compliance with specific regulations (lex specialis) in the form of a written contract in Indonesian, the issuance of a prospectus, and possession of a Franchise Registration Certificate (STPW). Ideal legal protection for franchisors rests on Intellectual Property Rights (IPR) protection through a confidentiality agreement (NDA) and a non-compete clause. Conversely, protection for franchisees is realized through the right to validity of prospectus data, territorial exclusivity (territorial protection), and the right to receive cure notice before contract termination. In the event of a business dispute, a choice of forum clause through an Arbitration Institution is the most ideal mechanism due to its confidentiality, efficiency, and final and binding decision.