Franchise Business: A Hybrid Contract Approach from the Perspective of Islamic Business Law

Abstract

This qualitative study examines the franchise practices of Kebab Pyramid in Sidoarjo, East Java, through the perspective of hybrid contract theory (al-uqud al-murakkabah) in Islamic jurisprudence (fiqh). Data were collected through field observations and documentation of the franchise agreement and were analyzed descriptively without the use of statistical software. The findings indicate that a franchise agreement is not a single, simple contract but rather a combination of at least three underlying contracts that operate simultaneously: syirkah inan (a partnership involving capital and labor, in which the franchisor contributes intellectual property rights (IPR) as capital); ijarah accompanied by wakalah (the lease of rights to use a trademark, logo, and business reputation in exchange for a fee (ujrah)); and murabahah (a sale and purchase transaction in which goods are sold at their cost price plus a mutually agreed profit margin). The study also demonstrates that intellectual property (haq al-ibtikar) is recognized by the majority of Islamic scholars (jumhur ulama) as a form of property (mal) that may be used as capital, traded, inherited, and endowed as a charitable endowment (waqf). Because these three contracts have different legal consequences but are combined within a single franchise agreement without contradicting one another, the arrangement is classified as al-uqud al-mujtami'ah (combined contracts). According to the majority of Hanafi, Maliki, and Hanbali scholars, such arrangements are permissible (mubah) provided that they do not involve elements of usury (riba), excessive uncertainty (gharar), or injustice (zhulm).