Without owning a particular brand, especially one that is well-recognised globally, local business owners, under agreed licensing conditions, can sell products and services related to that brand. This idea of “franchising” is mutally beneficial setup for both parties involved. A prestigious multinational brand can expand its business throughout the world without having to actually deal with the hassles of registering and operating a local business entity, while local entrepreneurs can minimise the many risks of starting up from scratch, with a name and product (and also operating model in many cases) already well-established instead of a brand new unfamiliar one. 7-Eleven, KFC and Subway are prominent global franchises that have found their way into most nations. Home-grown franchises in Malaysia include Marrybrown, Focus Point and Oldtown White Coffee.
Register a Company Malaysia
In Malaysia, franchising is governed by the Franchise Act 1998 and its amendments, which regulate items such as registration of franchisor and franchisee, application for registration, requirements of franchise agreement, conduct of parties, period of effectiveness, etc. Before proceeding with company registration Malaysia to start a franchise business, it is important to be familiar with several key aspects of registering and operating a franchise business.
Malaysian Franchise Association (MFA)
When franchising was acknowledged as a strong economic driver in Malaysia, the MFA was created by the Malaysian government to help create a franchise-friendly economic environment. MFA began organising events, supporting franchisees and offering training courses to facilitate franchise entrepreneurs to succeed in their venture. Therefore, the MFA is a great resource to turn to after you register a company Malaysia to start a franchise business.
Attending organised franchise events is a welcome way of meeting franchisors looking for franchisees, which allows one to interact with franchise mediation companies as well as regulatory bodies such as the MFA. Perhaps more importantly, these events help you network further and gather all the necessary information first hand, even receive offers.
A general business plan should have been drawn up while you’re researching and attending franchise events, and when which franchise to join has been decided, a business plan that will serve as a guideline for your first few years of operation, even convince investors if you need external funding, must be carefully drawn up. You will need to include a broad scenario and risk analysis to cover all your bases, while being conservative in your revenue and profit estimates. Some essential areas to include are:
- General company description
- Operational: overview of products and services offered / personnel/hours / suppliers
- Marketing: branding strategy / customer engagement / marketing mix analysis
- Legal: Analysis of legal environment/tax implications / proposed business form
- Financial: capital needs / break-even point / revenue estimates / pro forma financial statements
- Liability measures / Insurance structure
Filing of the Franchise
As franchise agreements must be registered with the Franchise Registry, the final step would be to file your franchise. During registration, the following information will be required:
- Name and the description of the product which will be produced by the business
- The rights granted to the franchise which must be in accordance with the specifications listed in Malaysia’s business laws
- Fees which are expected to be paid by the franchisee including promotion fees
- Obligations of the franchisor and franchisee
- Effects of termination or expiration of the franchise-related agreement
- The rights of the franchisee to use the trademark or intellectual property of the franchise
- Conditions under which the franchisee may assign the rights of the franchise.