Definition of Franchise

Franchise is the granting of a license by a person (the franchisor) to another party (franchise). The license gives the rights to the franchise to use the franchisor's trademark and all elements needed to run its business with the basics that have been predetermined. 

Each country has its own definition of the franchise. America through the International Franchise Association (IFA) defines franchise as a contractual relationship between franchisor with franchises, where the franchisor is obliged to maintain a continuous interest in the field of business carried on by the franchisee for example through training, under the same trademark, format and operational standards or owner control (franchisor), where the franchisee menamankan investment in the business of the sources of its own funds. Meanwhile, according to the British Franchise Association as a contractual license warranty by one person (the franchisor) to another party (franchisee) to: 

• Allow or require a franchisee to run the business within a certain period in a business that uses a brand owned by the franchisor.

• Require franchisors to exercise control continuously during the period of the agreement.

• Require franchisors to provide assistance to the franchisee-run business on the subject in relation to the franchisee business organizations such as training of staff, merchandising, management or others.

• Urge the franchise periodically during the joint franchise franchisee to pay some fee or royalty for the product or service provided by the franchisor to the franchisee.

Some experts also give a definition of the franchise. Campbell in his book Black's Law Dict Black' describes franchising as a licensed brand of the owner who allows another person to sell a product or service on behalf of the brand. David J. Kaufmann defines franchising as a marketing and distribution system run by the institution of small businesses (franchisees) are guaranteed by paying a fee, the right to market access by the franchisor with the operating standards established under the franchisor's assistance. 

Meanwhile, according to Reitzel, Lyden, Roberts & Severance, the franchise is defined as a contract for goods intangible owned by a person (the franchisor) as the brand given to another person (the franchisee) to use goods (brands) at its operations in accordance with the agreed territory . 

In addition to the definition according to foreign glasses, in Indonesia is also developing the definition of franchise. One of them as given by LPPM (Institute for Management Education and Development), which adopted the translation of the word franchise. IPPM interpret it as an attempt to give a very special gain or benefit in accordance with the word is derived from franchises which means special and significant earnings gains. 

Meanwhile, according to Government Regulation No.16/1997 interpreted as a franchise agreement where one party is given the right to exploit or use intellectual property or characteristic of the invention or a business owned by another party with a return based on the requirements of the other party, within the framework of the provision and or sale of goods and or services. This definition of a formal judicial standard applicable in Indonesian.