Selasa, 29 Mei 2012



1.1             Background
Franchise business is the business activities the sale of goods in retail to the public at large, so the popularity of these business activities, resulting in fast growing and covers many different types of businesses. Business franchising was introduced first by Isaac Singer songwriter sewing machine brand Singer in 1851 in the United States. In Indonesia, business sales in the retail franchise kind of started to be developed, many emerging businesses-local businessman glanced at the sale of goods or services as a franchise. In Indonesia, business systems sales in great demand by franchise businesses of foreign franchises where they gave permission to the local businessmen to manage this foreign franchises and certainly would be incurring a heavy for a rival small local entrepreneurs engaged in similar business fields.

1.2  Problem Statement
1.    What are the advantages and disadvantages of Franchise Agreement Franchisees and the Franchisor 's?
2.    How to franchise business development both in Indonesia and in the world?

1.3             Objectives of The Paper
1.     To know the advantages and disadvantages of Franchise Agreement Franchisees and the Franchisor's Franchise Agreement law basis;
2.    To know the franchise business development both in Indonesia and in the world.

1.4             Significance of The Paper
The primary benefit that can be gained from a franchise are:
1.    Offers benefits (profit);
2.    Prospective franchise businesses are given training in trying;
3.    Employees, raw materials, standard tools needed in business franchise is provided for free by freencisor;
4.    Businesses that run rapidly developed. Because with more and more companies are using the franchise means running businesses will quickly known society, the society also easily obtain products at standard quality and want equal;
5.    Promotional Costs cheap.


2.1             Review of Literature
2.1.1   The History of a Franchise
Franchise first started in America by the Singer Sewing Machine Company, a manufacturer of sewing machine in 1851. That pattern is then followed by General Motors company Automotive Industry who make sales of motor vehicles by appointing distributors franchise in 1898. Next, followed by the soft drink companies in America as distribution channels in the u.s. and other countries. Whereas in the United Kingdom the franchise was founded by j. Lyons through his Wimpy and the Golden Egg on the Decade of the 60 's.
The Franchise quickly became the dominant model in distribute goods and services in the United States. According to the International Franchise Association, now this is one of the twelve business trading in the United States is the franchise. Franchise absorb eight million workforce and achieve a forty-one percent of the entire retail business in the United States (David Hess, 1995: 333). 'S Franchising is then grown rapidly because of this marketing method used by many different types of businesses, such as restaurants, retail businesses, hair salon, car dealerships, hotels, petrol stations, etc. (Robert w. Emerson, 1994: 920).
In Indonesia the franchise is known since the 70 's when the influx of Shakey Pisa Swensen, KFC, and Burger King. Its looks very rapidly started around 1995. In 1997 recorded Data about Deperindag 259 recipient company franchise in Indonesia. After that, the franchise experienced a slump because of the efforts going on the monetary crisis. Recipients of foreign franchise his business forced to close because of the value of the rupiah are mired deeply in. Until 2000, the alien franchise still waiting to go to Indonesia. It is due to the political and economic conditions that have not been marked as stable with political elites feud. It was only in 2003, business franchise in the country is experiencing a very rapid development.
Franchise can be distinguished in two forms, namely product and trade and business format franchise franchisees. In a form that gives license to the franchisor's first franchise to sell the franchisor's products. An example of the first shape is a car dealership and petrol station. In the form of the latter, namely the business format of franchisees, gives the whole concept of a franchisor's business covers marketing strategies, guidelines and standards for the operation of the efforts and assistance in operating the franchise. Thus franchisees have an identity that is inseparable from the franchisor's (David Hess, 1995: 337).
In general form is used in businesses such as fastfood restaurant Kentucky Fried Chicken, Pizza Hut, Mc Donald, Hotel, and car rental services. This form is used for foreign market Indonesia franchisor's attack and is used also by local businesses such as the Es Teller 77, Rudi Hadisuwarno Salon, the roads were Berek, etc.

2.1.2   Definition of Franchise
Before peeling the aspects of Franchise Business pattern, it's good displayed in advance some understanding of the Franchise.
European Code of Ethics for the definition of Franchise's Franchising provides as follows:
“ a system of marketing goods and / or services and / or technology, which is based upon a close and ongoing collaboration between legally and financially separate and independent undertakings, the Franchisor and its Individual Franchisees, where by franchisors grants its Individual Franchisees the right, and imposes the obligation, to conduct a business in accordance with the Franchisor’s concept.”
Whereas according to the IFA, the franchise is:
“..Continuing relationship in which the franchisor provides a licensed privilege to do business, plus assistance in organizing, training, merchandising and management.”
Franchise in the meantime, according to REGULATION No. 16/1997 franchise is defined as the Alliance where one party is given the right to capitalize and or to use intellectual property or invention or hallmark business owned by another party with a reward based on requirements set these other parties, in the framework of the provision of and or sale of goods and or services. This definition applies to raw juridically formalized in Indonesia.
Based on the above , in some sense we concluded that the franchise is a license from owner of a trade mark or trade name permitting another to sell a product or service under that name or mark.

2.1.3     Elements of Franchise
                                    1.      Must have a brand name (including derivatifnya): Logo, motto or a company;
                                    2.      Must have a business system that can be duplicated. The system can duplicate the device is all business operations; includes the standardization of its products, services or methods of pengolahannya method, a standard ad, Financials system, system control inventory and so on;
                                    3.      Any charge or fee is paid. Costs associated with this is the initial franchise fee, initial cost, any initial investment to its name, which is associated with the franchise agreement;
                                    4.      The existence of the initial training. Training is ongoing, organized by the franchisor's in order to increase skill.

2.1.4     Legal Basis
In consignment processing, the vendor remains the legal owner of the material until materials is not withdrawn from the consignment stores or it is not transferred to company’s own stock. Once it is withdrawn or transferred to company’s own stock, the ownership also got transferred to the tune of quantity withdrawn or transferred.
                                       1.            Franchise. The Treaty as the legal basis of article 1338 KUH civil code (1), 1233 s/d 1456 KUH civil liability; the parties are free to do whatever as long it does not conflict with any applicable law, custom, propriety or other things related to public order, as well as about the terms of the Treaty as valid etc;
                                       2.            The law of Agency as a legal basis; KUH Trademark (Middleman & amp; Commissioner), provisions which are such a wide range of conditions from the administrative Department of industry, trade, etc. Often determined by contract firmly in the franchise that among the parties with the franchisor's franchisees does not exist a relationship Agency;
                                       3.            Trademark law, patent and copyright as a legal basis; Apropos join causes trademarks and logos belong to the franchisor's Party in a business franchise, let alone the possible existence of a new invention by a franchisor's Party, the discovery of which can be patented. Act No. 19 (1992) brand, Act No. 6 (1982) patents, Act No. 7 (1987) copyright;
                                       4.            Foreign capital investment LAW as the legal basis; If the franchisor's Party will open an outlet in a country that is not a country, the franchisor's party should dikonsultasi first to the foreign capital investment law experts about a wide range of possibility and alternative which might be taken and most his favor. Franchise is precisely selected to avoid specific prohibitions for a foreign company to operate via direct when the investment;
                                       5.            Other Rules as other legal basis:
a)      Administrative law Provisions, such as the licensing of businesses, the establishment of a limited liability company, etc. generally administration regulations issued by the Department of Commerce. Kepmen Trade No. 376/Kp/XI/1983 about the activities of the trade;
b)      Conditions of employment;
c)      Company law (UU PT No 1 (1995));
d)     Tax law-is there a double tax, income tax, value added tax, withholding tax on royalty and income tax on foreign labor;
e)      The law of competition.

2.1.5     Franchise Types
                           1.   Product Franchise
Manufacturers use the product franchise to govern how a retailer distributes their product. The manufacturer grants a store owner by the manufacturer and allows the owner to use the name and trademark owned by the manufacturer. The store owner must pay a fee or purchase a minimum inventory of stock in return for these rights. Some tire stores are good examples of this type of franchise.
                           2.   Manufacturing Franchises
These types of franchises provide an organization with the right to manufacture a product and sell it to the public, using the franchisor’s name and trademark. This type of franchise is found most often in the food and beverage industry. Most bottlers of soft drinks receive a franchise from a company and must use its ingredients to produce, bottle, and distribute the soft drinks.
                           3.   Business Opportunity Ventures
These ventures typical require that a business owner purchase  and distribute the products for one specific company. The company must provide customers or accounts to the business owner, and, in return, the business owner pays a fee or other consideration as compensation. Examples include vending machine routes and distributors.
                           4.   Business Format Franchising
This is the most popular form of franchising. In this approach, a company provides a business owner with a proven method for operating a business using the name and trademark of the company. The company will usually provide a significant amount of assistance to the business owner in starting and managing the company. The business owner pays a fee or royalty in return. Typically, a company also requires the owner to purchase supplies from the company.

2.1.6     Elementsin Products that was Found in the Franchise
1.   Franchisor is the owner or manufacturer of goods or services have certain brands , and give the rights or lease certain to marketing executive of goods or services;
2.   Franchise that the receiving party executives from the right of the franchisor;
3.   The rights cession ignominiously executive (in practice covering of various kinds of intellectual property rights or rights belonging to industry) of the franchisor to franchisee;
4.   The determination of a specific area, the area where franchisees franchise is granted the right to operate in a particular area. Example: only allowed to operate in Java;
5.   The existence of financial-feats of franchisees to the franchisor's in the form of initial fee and royalties as well as other costs agreed upon by both parties;
6.   The existence of a standard quality defined by the franchisor's for franchisees, as well as supervision at regular intervals in order to maintain quality;
7.   The initial training, continuous training, organized by the franchisor's in order to increase skill.

2.1.7     Step Make Business Franchise
1.   Making Thew Effort make it a business or businesses that have an identity. A business that has the identity that is a business that has a characteristic or differentiating power compared to other businesses. This is the main requirement. Although our talkative by developing business franchise, does not mean we are free imitation. Removing the products fried chicken fried in cooking oil use is the action that is not wise. Might be better off removing the products fried chicken fried in sand, for example.
2.   Create a standard Operation of Baku in order to dikembangbiakkan everywhere in quick time, we should have a standard operation of baku. Weakness of the majority of entrepreneurs of SMES are creating standard operation. It is not difficult to make standard operation of baku. As long as we understand the process and want to jot down that process on paper, be the standard operation of baku in its simplest form. The rest of our lives operating standards package standard it in book form (can ask for help to the author or the constituents of the system);
3.   Creating intellectual property rights (HAKI) one of the weaknesses of the SME entrepreneurs who protect the rights are rarely intellectual factors, either because of ignorance and assumption that take care of HAKi is expensive because it relates to bin ribet bureaucracy. Whereas business franchise that is supplied is his INTELLECTUAL PROPERTY. So now to register your trademark, patent, copyright, industrial design at tau Ditjen HAKI Depkumham. The cost is quite affordable. You can ask for help on existing INTELLECTUAL PROPERTY consultants in each College;
4.   Make the way Easy Duplication & amp; The practical one of the keys to our business easily dikembangbiakkan is the way the duplication that is easy and practical. We must devise a way to allow others to duplicate our efforts easily. This duplication systems are usually encapsulated in the system of training. How to make it easy. Write down just how others are able to do our business quickly and precisely;
5.   Make a profit Growing Business not worth dikembangbiakkan if it is still loss-making, so the only way that the business is worth dikembangbiakkan is making profits grow. Growing profits obtainable if within certain business we have a tendency to print continuous profit. Therefore, do not hesitate assign target revenues, strive always hit the target and always raise the target for the next period of time. So on. Try the business do not experience a loss;
6.   Make Supporting Sustainable Management one of the franchisor's obligations are very important in mengembangbiakkan her business is to provide supporting sustainable management for the duration of a contract to its franchisees. So our efforts began to develop, as soon as we fix the internal company. Use a professional business organization to handle the effort. Improve their skills in order to continue to provide the support needed by management of the franchisees;
7.   Create a Business Prospectus If the conventional business we are used to sell services or goods, it is in our franchise business selling his business. Here it takes more than just a brochure. We require a business prospectus that prospective business partners we are able to see bright prospects of the business. How to make it almost identical to make business proposals, only the business usually enclosed with the prospectus financial statements for some specific period which shows our company profit. If it is not capable of compiling its own prospectus business, we can use the services of a consultant with affordable fees;
8.   Making Indonesia Franchise Agreement has the freedom of berkontrak. We are free to create and compose business cooperation agreement. Making agreement franchise is the same as making regular cooperation agreement. Franchise agreement there are few things specially regulated, i.e. what type of INTELLECTUAL PROPERTY that are franchise-kan, whatever his business activities, how supporting management done, anywhere business area exchanged, how the procedures for the payment of the cost of the franchise, as well as how ownership, changes of ownership and the right of the beneficiary if the franchisees franchise contract died before end;
9.   Create a business entity or entities it's franchise business law requiring complex business organizations in the form of a business entity or legal entities. Bentuklah business entities or legal entities. Can be in the form of a CV or PT We can no longer run a business individually if you want to difranchisekan.

2.2            Discussion
2.2.1     The Advantages and Disadvantages of Franchise Agreement Franchisees and The Franchisor

a)    Advantages for the Franchisor's (The Parent Company)

1)      The product or service is distributed widely without the cost of promotion and investment costs of new branch;
2)      The product or service is consumed with the same quality;
3)      Profits from royalties or licensing sellers;
4)      His business could expand rapidly in many locations simultaneously, increased profits by leveraging the investment of franchisees.

b)    For Franchisees (owner of resell rights):

1)      The popularity of the products or services have been known to consumers, saving the cost of promotion;

2)      Get some management facilities in accordance with training conducted by the franchiser;

3)      Get the image together with the parent company.

c)    Loss for franchisee ( rights holders sell ):

1)      Startup costs costæ a high because its investment needs beginning , franchisee have to pay for purchases franchise which is usually enough expensive;

2)      Franchisee not free developing its business because various regulations given by franchisor;

3)      Franchisee usually attached to purchase materials for production to of standardized products / services sold;

4)      A franchisee not being stuck on the agreement with franchisor , because anywise usually agreement will be inclined to the principal / franchisor by comparison 60 : 40 . The income continue to flow into franchisor of royalty and sale of advice to franchisee more important is the source of income from the initial cost to sell franchise . Thus , franchisor and franchisee reach success with help each other.

2.2.2     Development of Franchise Business Both in Indonesia and in The World
a.    Franchise business development in Indonesia
1)      Development of franchise in the 1970s: the existence of KFC, Swensen, and Shake Pisa in the 1970s, led to the presence of such a concept's franchising or better known as the franchises in Indonesia, followed by Burger King and Seven Eleven;
2)      The development of franchise Business franchise in the 1980s experienced growth during this era. This is evident with the introduction of various business franchise in 1985 mainly on food business, such as: Pizza Hut, Mc. Donald, in the business of retail such as: Carefour, Smart etc;
3)      Franchise development in the 1990 's , franchise development in indonesia , the more significant into the 1990 's especially of the franchise , which comes from abroad which totaled 29 6 the franchise , which comes from domestic and mines-prone less than 300 outlets in the country in 1992 . Franchise attract investors , especially foreign investors to participate in invest their capital in indonesia because it had been think that the indonesian economy is getting better , which has been stable political and security can be guaranteed . In 1997 , while the number of increases back with 235 franchise come from foreign and local franchise 30 so if dijumlah to 265 with 17,379 outlets sebanyak more or less 2000 . But in 1998 franchise industry in indonesia to fall due to the economic crisis in this country in 1997 . This condition leading to a lot of foreign investors ( franchisor ) hengkang from indonesia and more or less 500 outlet had to be closed for the condition that does not allow this . But conditions like this in fact favorable to indonesia because its local market began in the franchise than 30 trademark of being 85 which evolved;
4)      Franchise development in the 2000an-sekarang : entering twentieth century franchise development in indonesia is increasing . Particularly in the franchise local which annually to rise . As for business franchise foreign relative stable because only decrease and gains not high enough.

b.    Franchise business development in The World
The word franchise stems from old French which means it is free. In the middle ages franchise is defined as a prior right or freedom. At that time, the local government or special rights, such as the lord gave to operate the ferry or for hunting in his possession. At that time the franchise known as the overall business activities aimed at building roads, brewery. In essence, the King gave the rights to monopoly to a person in the performance of a particular business activity. Around the 1880s large cities began to give the right to public works and equipment maintenance for water, sewer, and gas procurement.
Franchise concepts developed in Germany in the 1840s. then, have started to be given the rights to sell beverages drinks. This is the beginning of a concept's franchising we know today. The concept of franchise experience very rapid developments in the United States, starting in 1951 the singer sewing machine company in the United States began providing distribution franchise for sale sewing machines. For about the 1960s and 1970s happened a lot of abuse of the franchise is going because the amount of demand for goods and services is increased due to the baby boom. Along with this, the concept of franchise also thrives in the United States. Many people are tempted to run a franchise business concept.
Franchise business models such as irregular as well as containing high risk requires a change, for it established The International Franchise Association (IFA). IFA created a code of conduct to be observed by its members. IFA in cooperation with the Federal Trace Commission (FTC). IFA and FTC team up in order to improve the image of the franchise as well as improving the relationship between franchisee and franchisor 's. In 1978, the FTC issued a document governing the franchise, this document is known as The Uniform Offering Circular (UFOC). The contents of the UFOC will hopefully help the franchisees in taking the decision to start business through franchise.


3.1             Conclusion
Based on things that have pointed out above, the conclusion is
1.      Drawn that the legal business franchise (franchise) is very dependent upon the suitability of the franchise business and business system as well as their collaboration with Islamic principles of mechanism and the absence of any challenge Syariah in business is however in General. Doing business via franchising is a good way to try, because this method also brings advantages for the parties.
2.       The Advantages and Disadvantages of Franchise Agreement Franchisees and The Franchisor

a)   Advantages for the Franchisor's (The Parent Company)

1)      The product or service is distributed widely without the cost of promotion and investment costs of new branch;
2)      The product or service is consumed with the same quality;
3)      Profits from royalties or licensing sellers;
4)      His business could expand rapidly in many locations simultaneously, increased profits by leveraging the investment of franchisees.

b)   For Franchisees (owner of resell rights):

1)      The popularity of the products or services have been known to consumers, saving the cost of promotion;

2)      Get some management facilities in accordance with training conducted by the franchiser;

3)      Get the image together with the parent company.

c)   Loss for franchisee ( rights holders sell ):

1)      Startup costs a high

2)      Franchisee usually attached to purchase materials for production to of standardized products / services sold;

3)      A franchisee not being stuck on the agreement with franchisor.

3.2             Suggestion
As for which must be made by prospective franchisees to be able to know the prospects franchise to be bought, among others:
1.       take a look at the business that has been running, whether successful or not. Successful or whether a business in detail can be seen from the financial statements of the company.
2.       take a look at what was the attraction of the business. What is your business that can attract more visitors compared to similar business. This is important because in a market the goods or services, or the uniqueness of the main thing in the interest of visitors.
3.       thorough is the company already has a system and standard procedure in the conduct of its business. These systems should be tested is able to troubleshoot problems that may occur in field. In addition promotion program conducted by the franchisor's should be known by franchisees, since this promotion is very influential to the continuity of the business.
4.      find out how many franchisees who run a franchise, and if possible to seek information from the franchisees of it on businesses that are already running, support from the franchisor's in troubleshooting and the prospect of the fore regarding business.
5.      find out about other franchise is moving in the same line of business, what are the advantages and disadvantages of these franchise  we are compared to the viewfinder, to get a more objective in determining choice. Does anyone know any other franchise that has better prospects.


Malik, Vinay Kumar, 2012. Franchase Paper [Internet], <, access on 20th of May 2012
Internet Brands Company, 2012. Franchasor and Franchasee [Internet], <, access on 22th of May 2012

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