The franchise industry in Malaysia is a significant contributor to the nation's economy, with a consistent growth rate and a strong regulatory framework. The government actively supports the sector, viewing it as a catalyst for entrepreneurship and a driver of economic growth.
Key Aspects of Franchising in Malaysia
1. Regulatory Framework: The industry is primarily governed by the Franchise Act 1998 (FA 1998). This act establishes a comprehensive registration system to regulate franchise businesses for both local and foreign entities. All franchisors and franchisees are required to register their businesses with the Registrar of Franchises under the Ministry of Domestic Trade and Consumer Affairs (KPDNHEP).
Registration and Disclosure: Franchisors must register their franchise and provide a detailed Franchise Disclosure Document to prospective franchisees at least 10 days before a franchise agreement is signed. This document outlines critical information such as the franchisor's experience, financial stability, and the franchise system's operational support.
Foreign Franchises: Foreign franchisors must obtain prior approval from the Registrar before offering a franchise for sale in Malaysia.
Minimum Term: The FA 1998 mandates a minimum franchise term of five years.
Market Growth and Economic Impact: The Malaysian franchise industry has shown a robust growth rate, contributing a significant amount to the nation's Gross Domestic Product (GDP). In recent years, the industry has seen an average growth of 15% per annum, and its value is expected to reach over RM46 billion by 2025.
Popular Franchise Sectors: While diverse, the franchise landscape in Malaysia is heavily dominated by the food and beverage (F&B) sector, which accounts for the largest share of the market. Other popular sectors include:
Retail & ServicesEducation and ChildcareHealth and Beauty
Well-Known Franchise Brands: The market is home to both international and homegrown franchise brands. Some of the most recognizable names include:
International: McDonald's, KFC, Subway, 7-Eleven
Local: Marrybrown, Oldtown White Coffee, Secret Recipe, Tealive, The Chicken Rice Shop
These brands have successfully leveraged franchising to expand their presence not only within Malaysia but also internationally, showcasing the potential of Malaysian entrepreneurship on a global scale.
