Franchise Agreement as A Legal Instrument of Technology Transfer in Business Activities

I Nyoman Sukandia

Faculty of Law, Universitas Warmadewa, Denpasar, Bali, Indonesia

I Nyoman Putu Budiartha

Faculty of Law, Universitas Warmadewa, Denpasar, Bali, Indonesia

Abstract:

The franchise system in Indonesia is subject to the Government Regulation No. 16 of 1997, regulating franchising, through the Ministry of Trade, and general regulations relating to franchising. A franchise contract under the Law essentially covers an organizational intellectual asset and licensing privileges as well as the rights and duties of the owner and the franchisee to license and resell them.  The aims of this research were to analyze the franchise agreement in relation to the government regulations for technical assistance and the potential management of Indonesian franchise agreements. This study applied a normative legal research design, and examined the legal literature and archives based on franchise agreements and transfer of technology within the intellectual property rights. The findings of this study suggest that the franchise agreements made in Indonesia are do not comply to Transfer of Technology Code (TOT-Code), nor follows the franchise and agreement regulations prescribed by the established laws.  The result of this research also suggest that the Indonesian franchise agreement is not purposely regulated yet in the form of law; it is regulated in the form of governmental regulation and ministerial decree. The study recommends that franchise agreements in Indonesia should be regulated under separate laws; the Indonesian entrepreneurs should get the benefit of transfer of technology through franchise agreements with foreign entrepreneurs; and both the franchisor and the franchisee should have a strong legal protection.

Keyword:

Franchise agreement, technology transfer, legal protection, Indonesia