Legal Analysis of the Franchise Agreement as a Partnership Program for Medium Small Micro Enterprises (MSME)

Abstract

Franchising is an exclusive right that is owned by an individual or business entity to a business system with specific characteristics to offer goods and/or services that have been proven successful and can be used by other parties based on a franchise agreement. Now days, the growth and development of the franchise business in Indonesia has been going very well in terms of the number of business actors and the number of new brands that have enlivened the market. Based on Director General of Domestic Trade, Ministry of Trade, in 2016 in Indonesia there are 698 Franchises with 24.400 stalls which consist of 63% of local franchise and 37% of foreign franchise. The turnover of franchise business reached 172 Trillion Rupiahs. Franchise business is a form of a partnership that can also support the Medium Small Micro Enterprises (MSME) in Indonesia. Franchise business is one of the partnership form for the MSME based on the Act Number 20 of 2008 concerning MSME. Franchise business has advantages and disadvantages as one of business concept. The business pattern of franchising gives facility to develop the business. Franchisor can accelerate the development of the outlet without raising capital for so long because the franchise buyer/investor will give the capital to run the business. This pattern will grow the business networking faster. The development of MSME because of the franchising business eventually give a significant impact to economic growth of a state. Franchising business has advantages needed by MSME.