The article details the steps on how to set up a franchise business in Malaysia. The article includes the cost of starting, financing, laws, and regulations for this process.
1. What is a Franchise Business?
A franchise business is a business where the owners (“franchisors”) license the rights of their business including the logo, trade name, and business model to a third party to operate. The franchise rights takers also referred to as (“franchisees”) can then operate branches whether retail outlets or online stores. Franchising is one of many ways of expanding businesses in other markets and locations and has become a common way in Malaysia for brands to set up their outlets due to the advantages of using a proven business model and lower start-up costs compared to other businesses. Examples of franchise businesses in Malaysia include McDonald’s, KFC, and Tealive.
Other benefits of choosing a franchise business model include training and support, leveraging a trading name for branding, and easier access to capital.
2. Plan Your Budget
Starting up a business will require capital whether it is a franchise business or not. For franchise businesses, there will be an initial upfront capital investment fee/franchise fee to secure the license and then there will be an ongoing fee to continue with operating under the franchise agreement.
Before starting up a franchise business you need to consider the initial capital investment to start the opportunity and the ongoing fee.
Below you can see the top 10 lowest cost franchise setup costs in Malaysia:
Top 10 Low Cost Franchise Opportunities in Malaysia
|Franchise||Initial capital investment|
|The Soya Shop||From RM49,000|
|Apple Hotel||From RM70,000|
|Burger BakarAbang Burn||RM85,000|
|Daily Fresh||From RM85,000|
|Each A Cup||RM100,000|
|Hot & Roll||From RM100,000|
|Metro Driving Academy||RM110,000|
|World of Cartoons||From RM114,100|
3. Survey the Market
The first step when embarking on your franchise journey is to survey the market. Look at other successful franchises; what led to their success? How can you replicate that?
Go to Franchise Expos: The next step is to attend a franchise expo. This is a great way to see what franchises are out there and how they’re performed. Talk to the people at the booth and ask them what makes their franchise different from others. If the franchise is a good fit for you, after you’ve done the research and have the money to invest, take the plunge.
Other ways to research franchise opportunities are online via search engines like Google and franchise comparison websites.
4. Draw up a Business Plan
It’s important to have a plan for your new venture that includes things like marketing, branding, staffing, and financial projections. You should consider how much money you want to invest in getting started and what your timeline is for starting the business. Having a business plan is one of the most important things you need to do before starting any type of business. The process includes identifying your target market, estimating costs for start-up, and more. This may seem like an afterthought, but it’s one of the most important parts of setting up a Franchise. Your business plan should include your mission statement, your products, and services, menu items, pricing structure, marketing strategies, operational models, location considerations – anything that will impact your business.
5. Ask Consultants or Lawyers for Advice
Once you have found the franchise you wish to operate you will have to review the license agreement carefully. A good starting point is to consult an expert in the field to review the agreement. There are law firms and consultants who specialise in this field which can save you a lot of time and money later on in the event there are any terms that should be considered further before signing the agreement.
6. The Franchise Act in Malaysia
Franchise businesses in Malaysia, are governed by the Franchise Act of 1998 that regulates the franchising industry not only in terms of any franchise agreements, but also implements a process of registration for the franchisors, franchisees, and franchise brokers to ensure compliance in the industry. Furthermore, the Franchise Act and Registrar also manage the application to publish certain advertising material.
The registration of a franchise in Malaysia requires strict compliance with the Franchise Act. The process may appear to be straightforward, however, all contracting parties must be diligent in the preparation in the registration process. This is important in order to avoid issues or delays in the registration and/or operation of the franchise business. Parties should ensure that the franchise agreements/sub-franchising agreements are carefully drafted to cater to the needs of the parties who intend to open a franchise business. You may contact an expert in the field to ensure you have everything in order.
7. Setting up a Legal Entity for your Franchise Business
Quadrant Biz Solutions can help you set up your Sdn Bhd legal company entity to comply with the SSM requirements. Contact us today to learn how we can help you get started fully online with our digital company secretary.