Franchise in Malaysia

Franchise in Malaysia, a good business?

Franchise is today considered one of the preferred ways to grow, expand and sustain a business. With the right ingredient and a well-engineered system, a business can grow faster than anyone can imagine, crossing the national and even the international boundaries and making impact to the society through franchising their business operation.

If you must know, the history of franchising started way back in the 19th century – 1850 to be exact – when a small scale entrepreneur by the name of Isaac Singer invented the method of giving right to dealership distribution in the US. Singer is one of the popular sewing machine brands and was making a big wave in Malaysia in the 80s.

Inspired by Singer’s success, many companies began to adapt the idea of franchising and soon many big corporations followed suit. The most successful franchise in the world so far is arguably McDonalds, the premier fast food chain. McDonalds is also one the earliest franchises, if not the first, to have entered the country, brought home by one of the Malaysia’s richest businessmen, Vincent Tan, the Berjaya Group tycoon.

The government of Malaysia, through its statutory bodies, has been playing an important role in developing and nurturing homegrown franchise entrepreneurs. 3 of the most important establishments are the Ministry of Entrepreneur and Cooperative Development (MECD), its agency Perbadanan Nasional Berhad (PNS) and the SME (Small and Medium Enterprises) Bank.

Is franchise for you?

Many think that franchise is a sure-fire way for them to make good in business, jump into the bandwagon and eventually met with failure, and then admit making an erroneous mistake. Investing in a franchise business is by no mean a small commitment. Before making that decision, you must think thoroughly if the business model is suitable for you.

“While the franchise concept has its advantages, it also possesses its own peculiarities that may or may not be suitable for everyone.

The mechanisms of cooperation between franchisor and franchisee, for one, must be thoroughly understood before inking the collaboration. The success or failure of a franchise depends on a variant of factors not least of which is hard unrelenting work and perseverance”. – Mukhriz Mahathir, Chairman, MFA, Business Times, 5 March 2008

Malaysia Franchise Association (MFA)Malaysia Franchise Association, MFA was established in 1994 to support the implementation and promotion of business through franchising. It is a body where franchisors, would-be franchisors, master franchisees and others, including financing bodies can register and participate in programs organized by MFA under one roof.

The MFA also acts as a registry and source of information for those planning to embark on a franchising business locally. Additionally, MFA hosts, facilitate and organizes franchise trades, talks and workshops for professionals, businessmen and entrepreneurs related to franchising.

Some of the Malaysian homegrown companies have established themselves as franchising powerhouses in this country. Examples are Marrybrown, Smart Reader, Secret Recipe, 1901 Hot Dog, Daily Fresh and Nelson’s which have not only tasted success in local scene but also abroad. As of today, Malaysia has a total of 318 franchise systems, of which 211 are homegrown brands. Looking at the number, it looks like Malaysia is still lagging behind the neighboring country, Singapore, which has 380 brands and serving smaller population. Therefore, it is not surprising to see the government aggressively promoting wannabe entrepreneurs to pick franchising as their way of entrepreneuring.

Image credit: Business Times

Leave a Reply