Franchising refers to the method of practicing and using another person's philosophy of business. The "franchisors" authorize the proven methods and trademarks of their businesses to "franchisees" for a fee and a percentage of gross monthly sales. Various tangibles and intangibles such as national or international advertising, training, and other support services are commonly made available by the franchisor. Agreements typically last five to twenty years, with premature cancellations or terminations of most contracts bearing serious consequences for franchisees. HOW TO START A FRANCHISE BUSINESS IN MALAYSIA? - For a local business operator who wishes to become a franchisor and franchise his/her business the following are the guidelines:-
- Proven business track records with 3 years audited accounts and reasonable profitability achieved
- Having a prototype concept which will be duplicated as a franchise outlet model
- Having a good and strong branding of the product/services in the market will be an added advantage
- Good, committed and reliable management team
- Owners have a vision and objective to expand the business progressively towards franchising
- Owners have good or sound knowledge on the franchising system
- Have developed or ready to appoint a specialist to develope a franchise operation manual, training manual and other related documents on franchising
- Register as a franchisor under Registrar of Franchise, KPDNKK
- Concept to be franchised has been proven in terms of profitability, reliability, sustainability and suitability in the market
- For an international franchisor who wishes to expand their business in Malaysia by opening their own outlets through appointing a master franchisee, the procedure is to get Form 2 which is a Form For Application For Registration of Franchise By Franchisor/Franchisee of Foreign Franchisor from the Registrar of Franchise office, KPDNKK, Putrajaya. This is prescribed under Section 7 and 55 of the Franchise Act 1998. Among the documents to be submitted are as follows:-
- Company disclosure document
- Franchise Agreement
- Operations Manual
- Certificate of Incorporation, Form 8 or 9
- Forms 24 and 49 of the Companies Regulations 1966, certified by the Malaysian Companies Commission (SSM)
- Form of Annual Return of a Company having a Share capital
- Latest audited balance sheet and profit and loss account
- Company's organization chart together with the names and positions of key personnel
- Company's brochures on the business
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Last Update : 08 December 2011
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