CHAPTER 2:

FRANCHISE INDUSTRY
IN MALAYSIA

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 CHAPTER OBJECTIVES
• To explain franchise scenario in Malaysia.
• To explain the objective of National Franchise
Development Master Plan (NFDMP 2012 – 2016)
• To examine franchise statistic in Malaysia
• To explain the parties directly involved in franchise
industry in Malaysia.
• To introduce franchise schemes in Malaysia.

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 INTRODUCTION
• New Economic Policy (NEP) ended in 1990 and
replaced with National Development Policy (NDP)
(1991-2000) which is focusing on Vision 2020.
• The objective is for national unity – so that the
Bangsa Malaysia can lives in harmony.
• In the economic strategy of NDP, one of the
program is to increase the number of Bumiputera
Commersial and Industry Community (BCIC).
• Franchise Development Program was introduced as
one of the main programme to develop Bumiputera
entrepreneurs.
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 The scenario of franchise
industry in Malaysia
• The government focus on franchise program in the early 1990s.
• In1992 –Franchise Development Division (FDD) or
Implementation & Coordination Unit under Prime Minister
Department.
• In1994 – Malaysian Franchise Association (MFA) established
and Franchise Development Program implemented.
• In 1995 – FDD shifted to the Ministry of Entrepreneurship and
Cooperative Development (MeCD) under Francais and Vendor.
• In 1998 – Franchise Act 1998 was gazetted.
• In 2004 – the responsibility to develop franchise industry was
taken over by Perbadanan Nasional Berhad (PNS).

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• In 2008 – MeCD was abolished and franchise
program was taken over by the Ministry of
Domestic Trade, Cooperatives and Consumerism
(MDTCC).
• In 2011 – The National Franchise Development
Blueprint (2012–2016) was launched.
• In 2013 – Franchise Act 1998 (Amendment 2012) -
franchisees were compulsory required to register
with Registrar of Franchise (RoF) and submitting
their financial report.

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The National Franchise
Development Blueprint
(NFDB) (2012–2016)

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 NFDB Objectives
• To assess the development of the industry based
on key indicators such as participation franchisors
and franchisees, franchise sales and contribution
to the economic and employment contribution;
• To review the policy, strategy and franchise
development program; and
• To determine the direction of the franchise
industry towards making Malaysia as a franchise
hub in Southeast Asia and the Middle East by year
2020 .

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The National Development Agenda

Vision 2020 • to achieve the status of developed country

New Economic • to achieve the status of high income society
Model (NEM) • inclusiveness
• sustainability

10th Malaysia Plan • private sector based economy

(RMK-10) • human capital development

The master plan of • modern and efficient industry

the distributive • free markets and less government intervention
trade

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 GLOBAL AND
REGIONAL TRENDS

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 Multi Types Franchising
Part time franchising Franchisees work as part-time business with the
capacity of less than 40 hours a week . This type
of franchising is more suitable for service-based
franchise.
(example : car wash service that only requires a
part-time commitment from franchisees)

Multi brands franchising Franchisees own multiple franchise brands that

provide synergistic complement each other.
(example : Franchisees obtain franchises Dunkin
Donuts and Baskin Robin to open shop dessert) .

Single and multiunit A franchise owners obtain a single franchise

franchising brands and manage multiple franchised outlets.
(example : Franchisees obtain and manage
multiple outlet Smart Reader and multiple outlets
Avon.
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Co-branding Co-branding has been around in Malaysia
when franchisees combine business
operations and also strengthening both
brands simultaneously.
(example: Subway and Petronas petrol
station )
Mobile franchise Franchisees market their brands and
products by lorry, van or motorbike.
(example: franchise kopisatu using
lorry) .

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 Online Technology
• Online technology has been used in developed
countries to raise efficiency and business friendly
especially in registration and annual filing.
• By using state-of-the-art of technology, documents
can be archived and administrative costs can be
reduced.

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 The ‘Big Bang’ approach
• to expand their franchise business by opening
multiple outlets within a short period in order to
attract more customers.
• this method requires large capital and appropriate
marketing strategies to generate interest in his
business.
• Kopitiam Pappa Rich has achieved moderate
success using this method.

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FRANCHISE STATISTIC
IN MALAYSIA

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Franchise Licensed as of February
2015
STATUS TOTAL PERCENTAGE
(%)
LOCAL 533 69.67
FRANCHISE
(FRANCHISOR)
FOREIGN
FRANCHISE
(MASTER 232 30.33
FRANCHISEE &
FRANCHISEE
TO FOREIGN
FRANCHISOR)
TOTAL 765 100 16
 List by Industry / Sector as of May
2016
SECTOR / INDUSTRY NUMBER PERCENTAGE %
FOOD BUSINESSES 317 39
CLOTHING & 85 11
ACCESSORIES
SERVICE & 90 11
MAINTENANCE
LEARNING CARE & 91 11
NURSERY
HEALTH & BEAUTY 81 10
CARE
CONVENIENCE SHOP & 18 2
SUPERMARKET
IT & ELECTRONICS 28 3
OTHER BUSINESES 103 13
TOTAL 813 100 17
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 IMPLEMENTING
AGENCIES AND ITS
OBJECTIVES

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 Franchise Development Dept.
(MDTCC)
• To create a dynamic industry and a strong franchise
through the development of the industry that
elastic, sustainable and competitive.
• To ensure the enforcement of discipline and ethics
in franchise industry through Franchise Act 1998
(Amendment 2012).

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 Perbadanan Nasional Berhad
(PNS)
• To develop franchise industry and to increase the
number of franchise entrepreneur.
• To develop local products and exploring markets
abroad.
• To provide a guide and a special scheme for
franchisors and franchisees.

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 Malaysian Franchise Association
(MFA)
• To support the implementation of government
programs and to encourage entrepreneurship through
franchising.
• As a resource centre for both franchisors and
franchisees as well as the media and the public.
• MFA provides a platform for franchisors, prospective
franchisors, master franchisees, banks, accounting
firms, franchise consultant, lawyer, suppliers and
sellers of franchises forming relationships and
business networks.

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SCHEMES AND
FRANCHISE
PROGRAMS

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 Executive Franchise Scheme
• To encourage Bumiputera who served in both
public and private sectors involved in the franchise
business
• Focus will be given to those who intend to stop
working through the voluntary separation scheme
(VSS) or early retirement. .

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Franchisee Financing Scheme

• The scheme provides funding to Bumiputera

franchisees to start and grow a business.

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Business Transformation Program

• The program aims to help small businesses that

could potentially be developed into a modern
business.
• Small entrepreneurs are given the opportunity to
expand the business to be more competitive and
systematically to generate more profit and to
increase competitiveness in the market.

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Community Franchise Program
(Micro Franchise )
• To provide financial assistance to the local
franchisee of low and middle income with minimum
funding up to a maximum of RM5,000 and
RM50,000.

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 Conclusion
• Many franchise opportunities provided by the
government through the agencies involved .
• Prospective franchisees especially Bumiputera in
particular should seize the opportunities.

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