Liability of the Parties in Franchising Due to Pandemic Covid-19

Abstract

The occurrence of Covid-19 in recent years provokes a great deal of issues all around the world including Indonesia. It influenced every aspect of life and the most prominent one falls within the economic field. Businesses were dealing with a lot of difficulties and one of them is encountered within the franchising business between the relationship of Indonesian franchisee and foreign franchisor in which a dispute arose within their franchise agreement. This is due to the fact that plenty of restrictions were imposed that cause the Franchisor incapable of importing raw materials for the Franchisee in Indonesia, hence, the Franchisee is unable to start their business here in Indonesia. The Indonesian franchisee has likewise paid a certain amount of the initial fee, thus, the Indonesian franchisee requested a full refund for the delay of the service. Normative legal research is applied in determining the liability of each party and the best possible solution in overcoming the issues within this franchising business. Furthermore, this issue shall be contemplated as hardship instead of force majeure and renegotiation shall be conducted by both parties.