Franchise business in Malaysia has seen a significant growth lately. Franchise is now a popular trend of doing business among new entrepreneurs in Malaysia.
For those who have been eyeing of setting up and run their own business, franchising has provided a way to start a business with guidance and technical support from fanchisor with successfully proven way of running the said business. While, for franchisors, franchising has opens up opportunities for them to expand their brands and businesses.
As of August 2011, it was reported that the Malaysian Government through its various agencies has assisted and funded 80 local companies to franchise their businesses in order to expand their brands through franchisees local and abroad.
There are now 378 registered local franchise brands in Malaysia. And this number is seen growing almost daily as the government has provides more emphasis and support having realized that doing business through franchise system could create win-win-win environment (for franchisor, franchisee and government too) if carried out properly.
From these registered franchise brands 4912 franchisees have been created locally and another 1321 franchisees have been established in 53 countries worldwide.
What is franchising?
Franchising is the practice of using another firm's successful business model and brand to operate a similar business. For the owner of the business model or better known as FRANCHISOR, franchising is an alternative to expand the business through third party investment.
Is there any financial assistance available?
Incentives and financial assistance provided by Ministry of Domestic Trade, Co-operatives and Consumerism (MDTCC) are:
- Franchise Development Assistance Fund (FDAF)
- Local Franchise Development Programme (LFDP)
- Franchise Soft Loan Scheme (FSLS)
Financing assistance provided by Perbadanan Nasional Berhad (PNS) are:
- Franchisor Financing Scheme
- Pre-Franchise Scheme
- Executive Franchise Scheme
- Franchisee Financing Scheme
What if I want to invest in a franchise?
A good decision since investing in a proven business model like an established franchise will reduce the risk of doing business, especially for new entrepreneurs.
The franchisor is obligated to guide and train their franchisees to start, operate and manage the business as successfully as their own outlets. Franchisee can also leverage on the established brand and existing business networking and market.
Ensure that you invest in a registered franchise business. Check with the registry at Francais Malaysia.
The main advantage that franchising has over expanding a business on your own is that others are investing their resources such as time, skills and money to grow your business and brand.
A franchisee has greater incentive than an employee to manage the business well because of their direct stake in the business. The franchisee's success is the success of the franchisor and vice versa.
What type of business that can be franchised?
Any successfully legally approved business can participate.
Is my business ready to be franchised?
Signs that your business is ready to be franchised:
- Your business has been consistently profitable over a period of time (minimum three years).
- You have a business system that you can teach to franchisees and can be easily replicated in other locations.
- You have a unique and innovative business in a new or niche industry that has shown some profitability, then exceptions to allow franchising quickly may be given, to capture the market in that niche.
How do I franchise my business?
Submit your application to the Registrar of Franchise (ROF) at MDTCC to register your business as a franchise.
Fulfill specific terms and conditions stipulated under the Franchise Act 1998. Get more details from MDTCC franchise portal.