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					Franchise Regulation
    in Malaysia
   FRANCHISE DEVELOPMENT
         DEPARTMENT
  MINISTRY OF ENTREPRENEUR
      AND COOPERATIVES
        DEVELOPMENT
           (MECD)
  Franchise Act 1998
       (FA’98)
 Enforced    since 1999

 Regulatesand governs
 franchise arrangements in
 Malaysia

 Appliesto the sale of
 franchises throughout
 Malaysia

 Enforced    by MECD
   Approval and
  Registration of
Franchise Business
    Approval under Sec.54
     Franchise Act 1998
   Apply to foreign franchisor

   Prerequisite before offering
    their franchise for sale in
    Malaysia or to Malaysians

   Procedure under Sect.54 FA’98

   To ensure the foreign
    franchises are not contrary to
    public interests.
              Approval (Section 54)
   Applicant: ………………………………………………

1)Letter Of Intent

   - date of incorporation and commencement of
      business

   - franchise concept and background of company

   - franchise experience (self-owned and franchise
      outlets)

   - proposed master franchise / franchise in Malaysia
     (if already identified)

*2. Certified True Copy of Incorporation

*3. Certified True Copy of Proof of Trademark
     Registration

4. Processing Fees (RM 50.00)

5. Brochures and pictures of outlets

Checked by,

……………………...                        Date: ……………………


To be certified by Advocates & Solicitor/Magistrate/
Judge / Commissioner For Oaths / Notary Public
WORKFLOW OF APPLICATION FOR APPROVAL BY FOREIGN
FRANCHISORS UNDER SECTION 54 (1) FRANCHISE ACT 1998

                                        Receives the application




                                        Check the documents

          Not complete

                                        Complete

Request to the applicant
to complete the documents

                                        Prepare the Application Paper



                                        Submit the Paper to the
                                        Registrar for the decision




                                        Approve / Reject



                                        Issuance of Approval /
                                        Rejection Notice


Period of working process : 1 months upon completion of documents
                      and information requested
         REGISTRATION
     3 categories :

(i) Franchisor (Section 6 Franchise Act 1998)
    A person who grants a franchise to a
    franchisee and includes a master franchisee
    and his relationship with a sub-franchisee.

(ii) Master Franchisee of Foreign Franchisor
     (Section 6 Franchise Act 1998)
    A person who has been granted the rights
    by a franchisor to sub franchise to another
    person, at his own expense, the franchise of
    the franchisor

(iii) Franchisee of Foreign Franchisor
     (Section 55 Franchise Act 1998)
    A person who has been granted the rights by
    a foreign franchisor but does not sub
    franchise to another person.
Checklist for Registration of Franchisor /
Master Franchisee of Foreign Franchisor
    ( Section 6 Franchise Act 1998 )

1. Disclosure Document (BAF 1)

2. Form BAF 2

3. Sample Franchise Agreement (B.M and B.I)

4. Operation Manual (B.M / B.I)

5. Training Manual (B.M / B.I)

6. Latest Audited Accounts (3 years)
  (with detailed income statement )

7. 5 years Franchisee Financial Projection

8. Prototype/s Outlet photographs

9. Certified True Copy Certificate Of
   Incorporation of Company (Form 9, 24, 44,
  49) or Certificate of Business Registration
                     Cont’…
 (Borang D, Kaedah 13) together with
  Memorandum of Association (MOA) and
  Articles of Association (AOA)

11.Certified True Copy of Registered of Trade
  Mark or Intellectual Property mark
  documents
  (if trademark/intellectual property mark has been
  assigned to applicant, a certified true copy of the
  relevant legal instrument/document must be
  submitted)

12. Company Annual Report

13. Brochures of the Company

14. Company Profiles (ROC) and Business
    Profiles (ROB) from Companies
    Commission of Malaysia (SSM)

15. Processing Fee (RM50.00)
Additional Information for Financial
              Analysis

   Number of company’s outlet/branch
    together with address, opening date,
    closing date (if any)

   Initial Investment Cost according to the
    prototype outlet (states the location,
    opening date of the outlet)

   Audited Account or Management Account of
    the prototype outlet (must be certified true
    copy)

   Details on initial investment cost (example :
    list the elements of the cost i.e.: working
    capital, rental deposit etc.)

   Justification on the fees being imposed on
    the franchisee
      Requirements of Franchise
    Agreement (Section 18 of FA’98)
   The Franchise Agreement shall contain but
    is not limited to :

   the name and description of the products
    and business under the franchise;

    the territorial rights

    the fees

    the obligations of the franchisor

    the obligations of the franchisee

   the franchisee’s rights to use the mark or
    any other intellectual property

   Assignment of rights by the franchisee

   Cooling Off Period (not less than 7 days)
                   Cont’…

   a description pertaining to the mark or any
    other intellectual property owned or related
    to the franchisor which is used in the
    franchise

   type and particulars of assistance provided
    by the franchisor

   duration of franchise (not less than 5 years)

   term of renewal

   the effect of termination / expiration of the
    agreement

   Operation / Training Manual

   Alternative Dispute Resolution
Checklist for Registration of Franchisee of
Foreign Franchisor (Section 55 Franchise
                Act 1998)

1) Form BAF 2

2) Certified True Copy of duly
   executed and stamped franchise
   agreement between foreign
   franchisor and franchisee

3) Certified True Copy of Certificate
   of Incorporation (Form 9 or 13, 24,
   44 and 49)

4) Certified True Copy of Registered
   trade mark or intellectual property
   mark documents with Malaysian
   Intellectual Property Office
   (MIPO)

5. Brochures/Company Annual
   Report

6. Processing Fee RM 50.00
         Contact Information
   Website MECD:
      http://www.mecd.gov.my
   E-mel:
       abdullah@mecd.gov.my
   Address:
       Franchise Development Department
       Level 4, Tower Block
       No.18, Persiaran Perdana
       Presint 2
       62652 Putrajaya

   Telephone:
        03-8880   5611   (Abdullah)
        03-8880   5589   (Norzaimimi)
        03-8880   5590   (Ridhwan)
        03-8880   5000   (General Line)

   Fax :
        03-8880 5617

				
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